There are several different mortgage types available for families and single people on lower incomes. Are you looking for a way to get on the property ladder, without bankrupting yourself? Check out our guide on how to qualify for a mortgage on a low income with various mortgage options. You don’t always need 20% down to buy your dream home.
VA Home Loans
The U.S. Department of Veteran Affairs will partially back home loans obtained through private lenders. VA Home Loans are exclusive to those who have served within the military. It allows veterans to purchase a house with no down payment financing up to 100% of the value. Generally you will pay less closing costs and not have to have private mortgage insurance for putting down less than 20%.
Some lenders require you to have met a certain threshold. Such as serving at least one day during wartime, or several years within the reserves. Spouses can also qualify if their partner died during active service, or as an injury suffered during their time.
One other perk, the benefit is lifetime. This means every time you need to purchase a primary residence, you are eligible to obtain a VA Home Loan.
FHA Home Loans
FHA Home Loans are backed by the Federal Housing Administration and tailored towards first time buyers and low-income families. Credit standards are reduced and interest rates are competitive allowing borrowers to meet mortgage requirements more easily. Your debt-to-income ratio will need to be less than 45%, with a credit score of 580 or better.
Additionally, each state may have a specific program to assist with FHA Loans so be sure to check.
USDA Home Loans
USHA Home Loans are designed for homes purchased in rural areas. The program was created specifically to help low- and moderate-income borrowers purchase homes in rural areas and small towns. The advantage of this loan is you are able to purchase a home with no down payment, although you must be purchasing in a USDA approved area.
The monthly payments are lower than those within a larger town or city, as interest rates are lower in comparison to conventional loans. Work with a loan provider who has experience within the USDA sector. The Home Loan Expert will be able to explain what a USDA loan is to you, helping you every step of the way, filing all the paperwork for you.
Down Payment Assistance
There are down payment assistance programs, known as DPAs, that assist home buyers with affording a down payment, and closing costs on a purchase. They are offered by government agencies and nonprofits through a loan or grant.
DPAs allow low-income buyers to get on the property ladder by observing guidelines. The average cost of a down payment is around $12,000, which can be a significant amount to pay at one-time for some families.
Other Home Options
Manufactured houses and mobile homes offer the most affordable type of property you can buy. If they are on approved foundations and taxed as real estate then they will be able to qualify for financing through a lender.
Mobile homes not classified as a piece of real estate will have to be purchased through personal loans. If you end up in this situation, you will likely need to have more upfront cash and be forced to pay higher interest rates. This will of course depend on your personal finances and the type of loan plan you are able to secure.
Summary
There are many options and resources available to help everyone get on the property ladder and to qualify for a mortgage on a low income. Research your local banks and find experts who mention things like “first-time homebuyer assistance” or “no down payment required.” Then, determine whether or not they are approved to provide services for the type of loan that best fits your needs.
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