It must be nice for those families who can afford to buy a house in this market. Average housing prices have soared to over $300,000, and most average families would be hard-pressed to come up with that sort of money, let alone families living at or just above the poverty line.
However, low-income families shouldn’t be stuck with the mindset that they can’t afford a house because there are options available to them. This article will help you understand how low-income home loans work so you can start your journey to home ownership.
If you’re living on a low-income budget, it may be difficult to come up with the cash required for traditional mortgages as a down payment. Low-income home loans are subsidized by the government in cases where eligible applicants can obtain loans at reasonable interest rates for much less money down or even none at all in some cases.
The loans can be subsidized by the federal, state, or local governments. Since most banks typically require at least 5% as a down payment, most of the loan options provide homebuyers with more of the final home price financed, sometimes up to 100% financed.
Buyers will obviously need to prepare for homeownership in other ways, but these programs allow those with lower income the ability to take the down payment requirement out of the equation and get into a home.
The US Department of Agriculture back the USDA loan, which is specifically for urban residents. Since low incomes are common in areas of the country where agriculture is prominent, the USDA loan has more restrictive requirements and is meant for a specific purpose.
The US Department of Housing and Urban Development (HUD) is responsible for governing several programs that manage the housing needs for the country. Underneath the HUD umbrella is the Federal Housing Administration (FHA). This program backs the FHA loan program, which we’ll get into in the next section.
Tips for Low Income Home Seekers
If you meet most of the requirements but may still have questions, here are a few tips for those who want to explore low income home loans.
The government set up several programs to help low-income families find a way to buy a house. Low income doesn’t mean that you can’t buy a house, but it may take a bit of work to meet the requirements. Once you do, make sure you have a firm idea of which low income loan you need, then keep researching for additional help to get you and your family into a house you can afford.