How To Buy A House With Low Income | Loans & Programs

By: Gina Freeman Updated By: Ryan Tronier Reviewed By: Paul Centopani
May 16, 2024 - 18 min read

A guide to low-income home buying in 2024

Low-income home buying programs offer a beacon of hope for those dreaming of homeownership on a tight budget.

These specialized loans help aspiring homeowners overcome financial barriers, particularly the obstacle of saving for a down payment while juggling rent payments.

If you’re wondering how to buy a house with low income, exploring the various low-income home loan programs available could be the key to unlocking the door to your future home. Read on to discover how these programs can turn your homeownership vision into a reality!

Verify your home buying eligibility. Start here

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Can I buy a house with low income?

Yes, you can buy a house with a low income by qualifying for housing assistance 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.

Check your mortgage eligibility. Start here

What are 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.

Review your low-income home buying eligibility. Start here

By providing support in key areas, these programs help to break down the barriers that often prevent low-income individuals from becoming homeowners. Low-income home buying programs may offer the following types of assistance:

  • Minimal down payment requirements: Low-income home buying programs often require smaller down payments, making it easier for buyers to purchase a house.
  • Competitive interest rates: Low-income home buying programs often offer mortgages with lower interest rates compared to conventional loans, making monthly payments more affordable for buyers with limited financial resources.
  • Reduced mortgage insurance premiums: Some programs offer discounted or waived mortgage insurance premiums, which can further lower the monthly mortgage payments for low-income buyers.
  • Flexible credit requirements: Many low-income home buying programs have more lenient credit score requirements compared to conventional mortgages, making it easier for buyers with less-than-perfect credit to qualify for a home loan.
  • Homebuyer education and counseling: Most programs require participants to complete a homebuyer education course and offer access to housing counselors who can provide guidance and support throughout the home buying process.
  • Affordable home inventory: Some programs work in partnership with local governments and non-profit organizations to provide access to a selection of affordable homes specifically designated for low-income buyers.
  • Down payment assistance: Many programs offer grants or low-interest loans to help cover the cost of a down payment, which is often one of the most significant obstacles to homeownership for low-income buyers.
  • Closing cost assistance: Some programs provide grants or loans to help with closing costs, such as appraisal fees, title insurance, and legal fees, which can add up to a significant portion of the home buying expenses.

By offering these types of assistance, low-income home buying programs help to level the playing field and make homeownership a reality for many individuals and families who might otherwise be unable to purchase a home. Next, let’s take a look at how to qualify for a low-income home buying program.

Eligibility: Low-income home buying program requirements

Low-income home buying programs help eligible participants overcome barriers to homeownership, making buying a home more accessible and affordable.

Check your eligibility for a low income home loan. Start here

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.

Low-income home buying programs

Now that we’ve covered what low-income home buying programs are and their general eligibility requirements, let’s explore the specific programs available. Each of these programs offers unique benefits and requirements, providing a range of options to help you achieve homeownership.

Review the low-income home buying programs available to you. Start here

ProgramDescriptionWho Is Eligible
HomeReadyLow down payment, flexible sources of funds.Income limits based on area
Home PossibleLow down payment, flexible credit terms.Income limits based on area
HFA loansLoans with reduced interest rates and down payment assistance.First-time or repeat buyers with low to moderate incomes
Down Payment AssistanceGrants or loans to cover the down payment and closing costs.Low- to moderate-income families
State or Local AssistanceVarious grants, loans, or tax credits. Low- to moderate-income families.
Hud HomesDiscounted homes sold by HUD.Low- to moderate-income families
Housing Choice Voucher ProgramVouchers to subsidize the cost of housing.Low-income families
Good Neighbor Next DoorSignificant discounts on homes for essential workers and first responders.Must commit to living in the property as a primary residence for at least 36 months.
Manufactured and Mobile HomesLoans or grants specifically for manufactured or mobile homes.Low- to moderate-income families
Mortgage Credit CertificatesTax credit to reduce federal income tax liability.First-time home buyers who meet income requirements

HomeReady and Home Possible mortgages

Fannie Mae’s HomeReady program and Freddie Mac’s Home Possible loan 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.

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.

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.

Talk to a lender about your options. Start here

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 website,, which lists all HUD real estate-owned (REO) single-family homes in your area.

Housing Choice Voucher Program (HCV)

Also known as Section 8, this low-income home buying program provides rental and home buying assistance to eligible low-income households. Participants can use housing vouchers to purchase their own homes, including condominiums and multifamily properties.

  • Eligibility varies by location but typically requires meeting program-specific income and employment conditions, being a first-time home buyer, and completing a pre-assistance homeownership and housing counseling program.
  • Not all states offer voucher programs, and some may have waiting lists or restrictions on future home sale prices

To find out if your area offers a participating program, use the locator web tool.

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, 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.

Compare low-income home loans with multiple lenders. Start here

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.

Compare low-income home buying programs. Start here


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.

Government low-income home loans

Even if you don’t qualify for a low-income home buyer program, you may still secure a home through other government-backed loan 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.

Check your government-backed mortgage eligibility. Start here

Loan TypeCredit ScoreDown PaymentUnique Requirements
FHA loans580 for 3.5% down, 500 for 10% down3.5% with a 580+ score, 10% with a 500-579 scorePrimary residence required, mortgage insurance necessary
VA loansVaries by lender, often 580+No down payment requiredMust be a qualifying service member, veteran, or eligible spouse; primary residence only
USDA loansUsually 640No down payment requiredMust be in a qualifying rural area, income limits apply, primary residence only

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.

Check your FHA loan eligibility. Start here

VA loans

Department of Veterans Affairs-backed VA loans provide military home buyers with a number of advantages.

  • 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.

Check your VA loan eligibility. Start here

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.

Check your USDA loan eligibility. Start here

How to buy a house with low income

Securing a low-income home buying program may seem complex, but by following these steps, you can successfully navigate the process. Here’s what you need to know to get started on your journey to homeownership.

Step 1: Assess your financial health

Before applying for a low-income home buying program, make sure you have a clear picture of your financial situation. This includes your credit score, monthly income, debt-to-income ratio, and savings for a down payment. Knowing these factors will help you understand what type of loan you qualify for and how much you can afford.

Take a comprehensive look at your spending habits, existing debts, and credit history. This complete financial overview helps in creating a realistic budget that aligns with your goal of homeownership.

Step 2: Explore low-income home buying programs

There are various types of low-income home buying programs available, each with its own requirements and benefits. Research each option to determine which home loan aligns best with your financial situation and homeownership goals.

For example, a USDA loan might be ideal for those looking to purchase in rural areas, whereas a VA loan provides excellent terms for veterans and active military personnel.

Step 3: Gather necessary documentation

When applying for low-income home buying programs, you will need to provide documentation such as proof of income, employment verification, tax returns, and pay stubs. Getting these documents ready ahead of time can expedite the loan approval process.

Step 4: Find a lender

Choose a lender experienced in low-income home buying programs. They can guide you through the application process and help you understand the terms and conditions of your loan. Compare rates and fees from multiple lenders to ensure you get the best deal.

Compare low-income home loans from multiple lenders. Start here

According to a Freddie Mac survey, home buyers who compare lenders can save between $600 and $1,200 on their mortgage payments each year. For example, on a $200,000 mortgage, the difference between a 7% and a 7.5% interest rate amounts to approximately $20,000 in additional interest costs over a 30-year loan term.

Step 5: Complete home buyer education courses

Many low-income home buying programs require applicants to complete home buyer education courses. These courses provide valuable information about the home buying process, managing finances, and maintaining homeownership.

These courses equip buyers with the knowledge to make informed decisions about the different types of mortgages and the impact of varying interest rates on their finances.

Step 6: Apply for the low-income home buying program

Once you’ve completed the above steps, you’re ready to apply for the loan. Work closely with your lender to submit your application and respond to any requests for additional information or documentation.

Treat the application process as your chance to present yourself as a reliable borrower. Make sure to double-check your application for accuracy and completeness to avoid any unnecessary delays.

Step 7: Close on your home

After your loan is approved, the final step is closing on your new home. This involves signing a lot of paperwork, paying closing costs, and finally getting the keys to your new home. Congratulations on becoming a homeowner!

At closing, be prepared to review and sign numerous documents. Make sure you understand what each document means, so don’t hesitate to ask questions if something is unclear.

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.

Compare low-income home loans. Start here

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

Compare low-income home loans. Start here

I make $25K a year; can I buy a house? 

Yes, if you make $25K a year, you can likely afford around $580 per month for a monthly mortgage payment. With a 6% fixed rate and a 3% down payment, this could buy you a house worth about $100,000. However, consult a mortgage lender for exact numbers tailored to your situation.

Can I buy a house with low income and no down payment?

Yes, programs like VA and USDA loans offer 0% down payment options for eligible low-income buyers. Other programs, such as FHA loans and down payment assistance grants, can help low-income buyers with small down payments.

What's the lowest amount you can put down on a house?

The lowest down payment option is 0% for VA and USDA loans. FHA loans require at least 3.5% of the home purchase price as a down payment, while conventional loans typically require a minimum of 3% down.

Can the government help me buy a house?

Yes, the government offers assistance for low-income individuals through various programs such as FHA loans, USDA loans, VA loans, and down payment assistance grants. These programs are designed to make homeownership more accessible.

Can I get a grant to buy a house?

Yes, qualified buyers can get down payment assistance grants to help cover a portion of the down payment, making a mortgage more affordable for low- to moderate-income buyers.

What is a first-time home buyer?

A first-time home buyer is typically defined as someone who has not owned a primary residence in the last three years. However, some programs may have different criteria for qualifying as a first-time buyer.

What programs are available for first-time home buyers?

First-time home buyer programs include FHA loans, USDA loans, VA loans, Fannie Mae’s HomeReady mortgage, and Freddie Mac’s Home Possible mortgage. These programs offer low down payment requirements and flexible credit score guidelines.

How do I buy a house without proof of income?

While traditional mortgages require W2 tax forms as proof of income, alternative options like bank statement loans allow you to use bank statements, assets, or retirement accounts to demonstrate your ability to repay the loan.

How do you rent to own?

In a rent-to-own agreement, you pay higher rent for a set period, with the extra amount going towards a down payment to purchase the house at a later date. This option may help if you need time to save for a down payment or improve your credit score.

Can I rent to own with no down payment?

No, rent-to-own agreements typically require an option fee, which is similar to a down payment. This fee is usually smaller than a traditional down payment but still requires an upfront payment to secure the right to purchase the home later.

Explore your options for 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.

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Gina Freeman
Authored By: Gina Freeman
The Mortgage Reports contributor
With more than 10 years in the mortgage industry, and another 10 years writing about it, Gina Freeman brings a wealth of knowledge to The Mortgage Reports as its Associate Editor. Gina works with a team of world-class real estate and finance writers to bring timely and helpful news and advice to the audience. Her specialty is helping consumers understand complex and intimidating topics.
Ryan Tronier
Updated By: Ryan Tronier
The Mortgage Reports Editor
Ryan Tronier is a personal finance writer and editor. His work has been published on NBC, ABC, USATODAY, Yahoo Finance, MSN Money, and more. Ryan is the former managing editor of the finance website Sapling, as well as the former personal finance editor at Slickdeals.
Paul Centopani
Reviewed By: Paul Centopani
The Mortgage Reports Editor
Paul Centopani is a writer and editor who started covering the lending and housing markets in 2018. Previous to joining The Mortgage Reports, he was a reporter for National Mortgage News. Paul grew up in Connecticut, graduated from Binghamton University and now lives in Chicago after a decade in New York and the D.C. area.