How To Buy A House With Low Income | 2025

Can I buy a house with low income?

Yes, you can buy a house with a low income by qualifying for low income home buying programs and special mortgage loans. That’s because there is no minimum income requirement to buy a house.

However, your ability to do so will depend on a variety of factors specific to your financial situation. A mortgage lender will examine your credit score, debt-to-income ratio, and down payment to determine if you qualify.

In this article (Skip to...)

• Buying with with low income
• Low income home buying programs
• Low income home loans
• Eligibility requirements
• Tips for low income buyers
• FAQ

How to buy a house with low income

Buying a home on a low income may seem challenging, but understanding how to get a loan for a house with low income can make the process more achievable. Many loan programs and resources are specifically designed to help, offering financial support that suits your situation and assists with costs like down payments or closing fees.

Working with a lender who knows how to buy a house with low income is also crucial—they can guide you through available options, explain eligibility requirements, and help secure a loan that aligns with your budget.

Let’s explore the available low income home buying programs and home loans that can help you secure a property.

Low income home buying programs

Low income home buying programs are designed to help individuals and families with limited financial resources achieve the dream of homeownership. These programs offer various forms of assistance to make purchasing a home more accessible and affordable for low income buyers.

Each of the programs listed below offers unique benefits and requirements, providing a range of options to help you achieve homeownership, even if you’re unsure how to get a loan for a house with low income.

HomeReady and Home Possible

Fannie Mae’s HomeReady and Freddie Mac’s Home Possible are designed to help lower-income home buyers achieve homeownership. These programs offer several benefits:

• Low down payment: You only need a 3% down payment to qualify, and the funds can come from various sources, including gifts, grants, or loans from acceptable sources.
• Seller contribution: Home sellers can pay closing costs up to 3% of the purchase price. Instead of negotiating a lower sales price, consider asking the seller to cover your closing costs.
• Discounted private mortgage insurance (PMI): These low income home loans may offer lower PMI rates compared to standard conventional mortgages, potentially saving you money each month.
• Special allowances for low income applicants: For example, HomeReady allows you to include income from a renter on your mortgage application, provided they’ve lived with you for at least a year prior. This can help increase your qualifying income and improve your chances of securing financing.

To qualify for HomeReady or Home Possible, your household income should be below local income limits, and your credit score should be between 620 and 660.

These programs provide an excellent opportunity for lower-income individuals and families to achieve the dream of homeownership by offering more accessible and affordable financing options for those looking to understand how to buy a house with low income.

State and local down payment assistance programs (DPAs)

Down payment assistance is a low income home buying program that helps to cover the upfront expenses of down payments and closing costs on home purchases. These programs, offered by government agencies, nonprofits, and other sources, usually cater to low income home buyers and have guidelines that make qualifying easier.

• Some programs also provide assistance for buying in “underserved” or “redevelopment” areas, regardless of income.
• Assistance is typically in the form of grants or loans (which may be forgiven if you stay in the house for 5–10 years) and can be worth tens of thousands of dollars. For example, Virginia Housing offers down payment assistance grants and loans to eligible first-time home buyers.

Check with your local government resources for more information on available programs and their eligibility requirements.

HUD Homes

When the Federal Housing Authority (FHA) forecloses on homes, those properties are often put up for sale as HUD homes, offering a low income home buying program with steep discounts.

• To qualify, the home will need to be your primary residence for at least 12 months, and you must not have purchased another HUD home in the past 24 months.
• HUD homes are sold as-is, often requiring repairs, and are purchased through a bidding process. You’ll need a HUD-licensed real estate agent or mortgage broker to bid on an FHA property.

Find available HUD homes on the official HUD.gov website, hudhomestore.com, which lists all HUD real estate-owned (REO) single-family homes in your area.

Good Neighbor Next Door

The Good Neighbor Next Door program is a unique low income home buying program that offers benefits for nurses, first responders, law enforcement officers, and teachers.

• Eligible participants can purchase HUD foreclosure homes at a 50% discount and use an FHA mortgage with a down payment of just $100.
• Homes are listed on HUD.gov, and offers must be submitted by a HUD-licensed real estate agent.
• If your offer is accepted and you qualify for financing, you’ll receive the home with the 50% discount applied as a second mortgage, which requires no interest or payments.

Live in the home for three years, and the second mortgage is forgiven entirely, making homeownership significantly more affordable.

Mortgage Credit Certificates (MCCs)

Mortgage Credit Certificates (MCCs) are a housing assistance program that can increase your home-buying power. If you meet income requirements, you could receive a tax credit equal to a percentage of your mortgage interest.

• Lenders can add this credit to your qualifying income during the underwriting process, allowing you to qualify for a higher mortgage amount.
• There are numerous states, counties, and cities that issue MCCs, each with different rules and amounts.

Check with your local housing finance authority to learn about MCC availability in your area and how they can help you achieve affordable housing and fair housing opportunities.

Low income home loans

Even if you don’t qualify for low income home buyer programs, you may still secure a home through government-backed loans and other mortgage options. Programs such as FHA, VA, and USDA loans cater to a variety of financial situations, making it possible for many to purchase a home. Here’s what you can expect.

FHA loans

FHA loans offer flexible approval requirements for repeat and first-time home buyers alike. This program, which the Federal Housing Administration backs, relaxes borrowers’ standards to get a mortgage. This can open up the home-buying process to more renters.

• You might be able to get an FHA home loan with a debt-to-income ratio (DTI) up to 45% or a credit score as low as 580 while paying only 3.5% down
• Select FHA lenders even allow credit scores as low as 500, provided the buyer can make a 10% down payment

Thanks to these perks and others, the FHA loan is one of the most popular low-down-payment mortgages on the market. With its favorable terms, it helps potential homeowners navigate how to get a loan for a house with low income effectively.

VA loans

Department of Veterans Affairs-backed VA loans provide military home buyers with a number of advantages, making them an appealing option for those seeking how to buy a house with low income.

• You can finance 100% of the purchase price with no down payment requirement. You can also refinance 100% of your home’s value using a VA loan.
• There is no mortgage insurance, but you will pay a one-time VA Funding Fee. You can wrap it into the loan amount.
• There is no minimum credit score, although lenders are allowed to add their own minimums. Those that do often require a FICO score of at least 580 to 620.
• Sellers can pay up to 4% of the purchase price in closing costs. So if you find a motivated seller, you could potentially get into a home with nothing out of pocket.

If you’re a veteran, active-duty service member, or surviving spouse, the VA mortgage program should be your first stop.

USDA loans

If you’re not buying in a large city, you may qualify for a USDA home loan. Officially called the Single-Family Housing Guaranteed Loan Program, the USDA loan was created to help moderate- and low-income borrowers buy homes in rural areas.

• USDA loans allow you to buy a home with no money down in USDA-approved rural areas.
• Use the USDA’s eligibility maps to check if the property qualifies and if you meet income limits.
• USDA loans often have lower interest rates and mortgage insurance rates compared to FHA or conforming loans.
• A credit score of 640 or higher is typically required to qualify for a USDA loan.

There are two types of USDA loans.

• The Guaranteed Program is for buyers with incomes up to 115% of their Area Median Income (AMI)
• The Direct Program is for those with incomes between 50% and 80% of the AMI

Standard USDA-guaranteed loans are available from many mainstream lenders. But the Direct program requires borrowers to work directly with the U.S. Department of Agriculture.

HFA home loans

State governments and local housing finance authorities partner to offer this low income home buying program, which provides conventional HFA loans backed by Fannie Mae and Freddie Mac.

• To qualify, a credit score of at least 620 is typically required, but eligibility varies by program.
• Borrowers may qualify for down payments as low as 3%, discounted mortgage rates, and reduced mortgage insurance premiums.

Contact your state’s public housing finance agency or authority to learn more about affordable housing options and see if you qualify.

Manufactured and mobile home loans

A manufactured home usually costs less than a traditional, site-built home. When placed on approved foundations and taxed as real estate, manufactured homes can be financed with mainstream mortgage programs.

• Many programs require slightly higher down payments or more restrictive terms for manufactured homes. For example, HomeReady increases the minimum down payment from 3% to 5% for manufactured homes, and other programs may require the home to be brand new.
• Lenders may also have guidelines regarding the home’s construction year and the property’s foundation. Mobile homes not classified as real estate can be purchased with personal loans like the FHA’s Title 2 program, but these are not considered mortgages.

Check with lenders for specific requirements and options for affordable housing.

Low income home buying programs requirements

Low income home buying programs help eligible participants overcome barriers to homeownership, making buying a home more accessible and affordable for those seeking how to buy a house with low income.

To be eligible for most low income home buying programs, buyers must typically meet the following requirements:

• Income limits: Buyers must have a household income that falls within the program’s low income limits, which are based on the Area Median Income (AMI) for the region. The specific income limits vary depending on the household size and location.
• First-time home buyer status: Many programs require buyers to be first-time home buyers, meaning they have not owned a home in the past three years. Some exceptions may apply, such as for displaced homemakers or individuals who have only owned a home with a former spouse.
• Credit score: While a high credit score is not always mandatory, buyers should generally have a minimum credit score of 580 to qualify for most programs. Those with lower credit scores may still be considered on a case-by-case basis and may be required to complete additional financial counseling.
• Debt-to-income ratio: Buyers must typically have a debt-to-income ratio (DTI) of 43% or less. This means that the buyer’s total monthly debt payments, including the prospective mortgage, should not exceed 43% of their gross monthly income.
• Homebuyer education: Many low income home buying programs require participants to complete a homebuyer education course approved by the Department of Housing and Urban Development (HUD). This course helps prospective homebuyers understand the responsibilities and challenges of homeownership.
• Residency: Buyers must be legal residents of the United States and must intend to occupy the purchased home as their primary residence.

If you meet these general requirements, you may be eligible for one or more low income home buying programs. Explore the specific programs in your area by contacting your local housing authority or a HUD-approved housing counselor, and learn more in the next section.

Tips for buying a house with low income

These tips can help you achieve your homeownership goals, even with a low income. Remember, low income home loans are a great resource for this endeavor. By utilizing these loans, you can better understand how to get a loan for a house with low income and make your dream of homeownership a reality.

Improve your credit score

A higher credit score increases your chances of loan approval and helps you qualify for lower mortgage rates. Check your credit report and work on improving your score by paying down debts and making timely payments.

Save for a down payment

Many loan programs require as little as 3% down or no down payment at all. However, you’ll still need to pay closing costs and may need cash reserves to assure lenders of your ability to make payments.

Lower your debt-to-income ratio

Paying down debts, especially high-interest credit card balances, will improve your debt-to-income ratio and increase your odds of mortgage approval.

Explore first-time home buyer programs

Because of the flexible rules and government support of these programs, lenders are able to offer lower interest rates and credit score requirements.

Create a realistic budget

Owning a home involves ongoing costs like insurance, taxes, and maintenance. Model your budget to include these expenses and start saving accordingly.

Consider a co-signer

If you’re on the edge of qualifying, a co-signer can help. Both parties will be responsible for payments and will share in the home’s equity.

FAQ: Low income home buying programs

Explore low income home buying programs

Now that you understand the process and tips for buying a house with a low income, it’s time to take action.

The best way to start your journey towards homeownership is by comparing low income home loans from multiple lenders. This will help you find the most suitable housing program for your unique financial situation and give you a clear picture of your options.

By clicking the links below, you can connect with various online lenders and explore the low income home buying programs they offer. Start comparing lenders today and take the first step towards securing your future home.