How Do I Qualify to Buy a House With Low Income?

How Do I Qualify to Buy a House With Low Income?

How Do I Qualify to Buy a House With Low Income?

If you are low-income earner, renting, let alone buying, a home is tough enough in most cities. While federal, state and local programs exist to help prospective low-income homeowners, each plan tends to cater to households at various income levels. In most cases, you qualify for home-buying assistance if your income is significantly less than your area's median. Just how much varies by program and the area in which you wish to buy a home.



Contact your local public housing agency (PHA) and ask about HUD's Homeownership Voucher program. An offshoot of the Section 8 rental assistance plan, homeownership vouchers allow eligible low-income households to use their HUD subsidy, generally used to pay a portion of their rent, to make a monthly mortgage payment. Not all PHAs participate. The San Francisco Housing Authority processed just two homeownership vouchers between 2004 and August 19, 2010, according to HUD data.


Ask your real estate agent about buying a HUD home. While HUD homes are generally offered at market-rate prices, you may qualify for a considerable subsidy if you are a teacher, firefighter, police officer or EMT. Through HUD's Good Neighbor Next Door program, the above-mentioned borrowers can secure a HUD home in a federally-designated revitalization area at a 50-percent discount.


Consult a lender who offers FHA-insured loans. While FHA products do not use low-income requirements, they do offer a more liberal underwriting process relative to conventional loans. For instance, as the Bankrate website points out, traditional loans typically allow borrowers to commit no more than 36 percent of their income to debt, including housing costs. According to HUD, FHA lenders can accept debt-to-income ratios as high as 41 percent, effectively increasing how far you can stretch your income.


Inquire with your lender or real estate agent about state homeownership subsidies. In California, for example, the Housing Finance Agency provides several programs to homeowners who fall below county-based income caps. The Cal30 first mortgage program offers 95-percent financing--which means you only have to come up with a 5-percent down payment--and a fixed interest rate to first-time homebuyers. To qualify in San Francisco, for instance, a two-person household can earn no more than $92,900, as of the last update of the income limits in June 2009. This number drops considerably in less affluent counties, such as Fresno, where the threshold is $53,500.

Consult your bank, credit union or broker about local government initiatives for first-time or low-income homeowners. The San Francisco Mayor's Office of Housing, for example, promotes several programs, including loan assistance for first-time buyers and below-market-rate (BMR) ownership opportunities. San Francisco restricts sales prices on BMR properties and offers them exclusively to low-to-moderate income households.


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