If you’re wondering how to buy a house with less money down, you’re not alone. Many buyers think that home ownership is out of reach if they earn less than the median income – but that’s not always true.
Buying a home with a low income is possible. The important thing is to understand which is which loan programs designed for low-income borrowers, how lenders assess affordabilityand what steps can improve your chances of approval.
From FHA and USDA loans to down payment assistance programs, there are real ways to become a homeowner – even if you have little savings.
Can I buy a house with no down payment?
Yes, you may be able to buy a house with less money down. Low income is generally defined as being below a certain area income limit (AMI), which can vary by location and family size.
Each loan option we will discuss has AMI eligibility requirements, as well as other factors such as credit scores and income-to-income ratio (DTI).
If you meet certain program requirements and can afford the mortgage, taxes, and other monthly expenses, you may qualify for a loan.
How to buy a house on a low income
There are a few things you can do on your own to improve your chances of qualifying for a loan and buying a home with a low income:
1. Improve your credit score
A high credit score makes you more likely to get favorable loan terms from a the creditor. Pay on time, avoid opening new lines of credit, and pay off debts to improve your score.
2. Do financial planning
Know how much you can afford with your current budget. Take note of your current DTI, credit score, and down payment savings amount when talking to a lender to help guide you to the best loan option.
3. Save for a down payment
Not all low-income consumer loans require large down payments, but the more you can save, the better. A large down payment can save you on the down payment Private mortgage insurance (PMI) with a conventional loan.
4. Pay off debts
Reducing your debts can raise your credit score and lower your DTI, which will look good to lenders when you’re ready to apply for a loan.
5. Work with a real estate agent
Good real estate agent it can help you understand the current housing marketincrease your budget, and connect you with lenders who will find the right loan programs and help for your specific situation.
6. Consider a co-signer or co-buyer
Buying a house with a friend or a co-buyer is a great way to pool resources and break into home ownership on a low income. If you prefer not to have a roommate, a co-signer with good credit and a stable income can improve your chances of getting a loan. The co-signer assumes legal responsibility for the loan if payment is not made.
7. Research first-time homebuyer programs and loans
We’ll go into some of the most common loan programs and assistance for low-income consumers below.
Lending options for low-income consumers
There are many low-income home loan options, and many are designed for first-time and low-income buyers. Some require 3% down, while others offer 0% down payment options. The right loan depends on your income, credit score, and location.
Prepared Home by Fannie Mae
I HomeReady A Fannie Mae loan is a type of conventional loan with variable terms. It may offer a borrower credit of $2,500 toward the down payment or closing costs in certain cases, and it considers rental payments toward loan eligibility. While you will need to pay PMI, you have the ability to cancel once you reach 20% equity.. Homeowner’s education course is required to qualify for this loan.
- Credit score: 620
- Minimum down payment: 3%
- DTI: 43-50% in some cases
- AMI: 80% or less
Home May be Freddie Mac
Freddie Mac At Home It Happens the loan is a conventional loan such as HomeReady. It offers affordable mortgage insurance and flexible access to low payments, including gift money and employer assistance programs. Homeowner’s education course is also required for this loan.
- Credit score: 620-660
- Minimum down payment: 3%
- DTI: 43% or less
- AMI: 80% or less
FHA loan
A Federal Housing Administration (FHA) The loan is a flexible option for those who do not meet the requirements of a standard loan. Houses bought with FHA loan must FHA-approved and meet minimum architectural standards. Proof of solid income is required to qualify for this loan.
- Credit score: 580 with 3.5% down payment, which is less with 10% down payment.
- Minimum down payment: 3.5%
- DTI: Less than 43%-50%
- AMI: no need
HFA loan
Housing Finance Authority (HFA) loans are offered through Freddie Mac again Fannie Mae in partnership with the state’s non-profit housing authority. The property purchased with this loan must be a primary residence, and a homeowner’s course is required.
- Credit score: 620
- Minimum down payment: 3%
- DTI: 45% or less
- AMI: It varies by location and program
USDA loans
United States Department of Agriculture (USDA) The loan is backed by the government and is designed to help low-income borrowers purchase homes in eligible rural and other urban areas, as defined by the USDA. This loan typically requires a credit score of 640, but there is no legal minimum and no down payment is required. There are upfront and annual costs associated with a percentage of the home’s value, but these can be reduced by saving on mortgage insurance and a down payment.
- Credit score: Usually 640
- Minimum down payment: 0%
- DTI: 40%-55%
- AMI: Cannot exceed 115%
VA loan
Veterans Affairs (VA) loans. for eligible veterans, active duty service members, and their surviving spouses only. The interest rates on these loans are low, and they usually don’t require a down payment. However, a VA subsidy payment is required, which varies depending on the minimum payment amount and whether this is your first VA loans. This payment is usually a one-time payment and supports the VA home loan program.
- Credit score: Usually 620, but no minimum is required
- Minimum down payment: 0%
- DTI: 41% or less
- AMI: no need
Using the low-income housing assistance program
Using a down payment assistance program can provide additional support when buying a house on a low income. There are many national and local options to explore.
The Next Good Neighbor
The US Department of Housing and Urban Development (HUD) has The Next Good Neighbor system. This program offers a 50% discount off the HUD home listing price for renovations to law enforcement officers, teachers, firefighters, and emergency medical professionals. If you meet the requirements of the program and agree to live in the home for three years, it can be a great way to save a lot on a home and contribute to a growing community.
Housing Choice Voucher
Housing Choice Voucher (HCV), or Section 8, helps low-income families pay rent with rental vouchers. Some areas also have a home ownership option where families can use their vouchers to buy a home instead of continuing to rent. Ask your local housing authority for information and eligibility requirements for this program if it is offered in your area.
State and local aid programs
There are many other types of housing assistance programs offered by local and state agencies. Down payment assistance options, mortgage certificates, special financing offers for certain types of homes are all available in different areas. Your local housing authority can show you what’s available near you and how you can qualify for different options.
What to look out for when buying a low income home
Buying a home on a low income is possible, but it’s important to understand the financial realities before you commit. Low payment plans make it easy to get your foot in the door – yet they can change what your monthly expenses look like in the long run.
- Lower payment = higher monthly payment. Putting 3% down instead of 10% means more debt, more interest over time, and mortgage insurance (PMI). That can add up to $100–$300+ per month.
- Lower income does not automatically mean lower interest rates. Your ranking is based largely on credit score, debt-to-income ratio, and market conditions — not income alone.
- You may qualify for more than you should spend. Some plans allow higher DTI rates, but stretching your budget can leave less room for emergencies, repairs, or rising taxes and insurance.
Just because you’re approved doesn’t mean you’re free. Make sure that house payment it fits your actual budget – not just a lender’s formula.
