5 Helpful Hints to Buying a Home with Low Income
Buying a home with low income can be a scary feat that just doesn’t seem possible. With monthly rent, insurance and other necessary costs of living, you might feel as though you will never save enough money to get the loan you need. Luckily, with some hard work and perseverance, these tips can help get you into a home of your own.
1. Work on Your Credit Score
It might be difficult to attain, but good credit is a large factor in buying a home with low income. Even if the other purchases you have made are miniscule compared to a home, you want lenders to see that you pay your debts. Having multiple lines of credit on which you make regular payments is important for getting the score you need.
2. Reduce Other Debt Payments
As with many financial endeavors, this one is a bit of a balancing act. You need to have a good credit rating while keeping the total sum of money you spend towards debt each month at a minimum. This may sound strange, but the reason is relatively simple: Lenders want to know that you have enough money to pay your current debts plus the amount of your mortgage each month. To get the largest sum possible you might try paying off your car or your student loan before you look into buying a home with low income.
3. Consider Down Payment Assistance
If you can’t save enough money for a down payment or are having trouble qualifying for a loan that has a low down payment option, down payment assistance (DPA) could be the right option for you. Many city, county, and state governments offer DPA for qualified families, eliminating the need to save a big chunk of money. There are also private charitable organizations, such as HUD’s HOME Investment Partnership Program, that distribute money across the country to help people towards buying a home with low income.
4. Find the Low Income Home Loan That Fits You
Depending on where you live, how much gross income you make and your employment status, there are many loan options available. These are just a few of the many options out there:
· USDA Home Loan or Direct Loan
· FHA 203k for buying and fixing a home with the same loan
· VA Mortgage for veterans
· Fannie May’s HomeReady 3% down mortgage
· Good Neighbor Next Door (GNND) for teachers, firefighters and law enforcement
5. Ask for Seller Paid Closing Costs
Buying a home with low income is difficult enough without adding in the thousands of dollars of closing costs. In many situations, the seller wants to get their home sold as much as you want to buy it. Your real estate agent can help you ask for the seller to pay closing costs and help reduce the amount you have to pay for your new home.
Don’t let low income get in the way of your life. Becoming a homeowner can be difficult, but it is not impossible. You may not get approved the first time you try, saving and preparing to buy a home can take some time, but with some effort and research, buying a home with low income is not outside of your reach.
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