Working a job that provides a low-income can make homeownership seem like an impossible goal. Luckily, there are a variety of options available to assist those with a low income in buying a suitable home.
In this article, we’ll cover some of the most well-known home loans that cater to low-income individuals and families in some way.
Homeownership Vouchers
The Housing Choice Voucher (HCV) allows families assisted in the program to use a voucher to purchase a home. Families will also receive monthly assistance to help with household expenses. The voucher is only available to those families who are enlisted in the program. It’s also not available in every single housing authority.
Other qualifications for this home loan program are to meet specific income requirements as well as having gainful employment. Participants also need to be first-time homeowners, attend and complete a housing counseling program, and meet any other local eligibility requirements.
Indian Home Loan Guarantee Program
Indigenous people and native Alaskans make up some of the poorest populations in the United States. Because of this, the Indian Home Loan Guarantee Program was created. This program is exclusive to native people and guarantees them a reasonable home loan through private financial institutions.
In order to qualify for this program, you and your family must be enrolled members of your native tribe. You must also be in the process of searching for a home. The maximum loan length through this program is 30 years and there are no prepayment penalties either.
HomeReady and Home Possible Loans
Home Possible and HomeReady are two different loans but they have very similar benefits. HomeReady is a loan program backed by Fannie Mae. It is meant to help low-to-moderate income homeowners either buy or refinance their homes. They do this by reducing the standard down payment and mortgage insurance requirements.
Home Possible is backed by Freddie Mac. It is essentially the same as HomeReady, except that it requires a slightly higher minimum credit score to apply. This is perhaps the most helpful for the general population of low-income individuals as a lower required down payment means you don’t need to save nearly as much in order to purchase your home.
Good Neighbor Next Door
The Good Neighbor Next Door Program is an exclusive program to firefighters, K-12 teachers, law enforcement officers, and emergency medical technicians. The loan allows those in these professions to purchase a home at up to 50 percent less than the list price so long as they promise to live in the residence for at least three years.
Down Payment Assistance
Although it’s not technically a loan on its own, down payment assistance can be paired with your loan to decrease the amount you need to pay down on your house. There are approximately 2,000 down payment assistance programs across the country and they’re typically run through the city government.
There are four main types of down payment assistance: grants, loans that are paid alongside your mortgage, loans with deferred payments, and loans that are forgiven after a number of years. This assistance is typically used by first-time home buyers and past homeowners can use most programs after three years of not owning a home.