Most everyone wants to own their own home at some point, but many people do not know how to buy a home with a low income. Those who have a low income may not have good credit or may not have a long term job that provides the stability to buy a house. The good news is that if you meet certain income factors, there are types of loans available from some lenders that can help you buy a home. It is important to understand the income factors required to buy a home with a low income, as well as the types of loans available. It is also essential to work with the right lenders if you are trying to buy a home with a low income.
Income factors required to buy a home with a low income
Whether you make a lot of money or have a low income, most mortgage lenders are usually going to look at the same information. Lenders want to see your employment history, your credit score, how much debt you have, your payment history, and the amount of income you generate. There is a formula mortgage lenders use to combine all of these figures to determine your debt to income ratio (DTI). An acceptable DTI should be around 36%. This number means that all of your payments, including your home mortgage, should account for no more than 36% of your total income. Typically, people with a low income cannot qualify to buy a home with a conventional loan because their DTI is higher than 36%.
Types of loans available to buy a home with a low income
Conventional loans are not the only loans available to buy a home. VA, USDA, and FHA loans are also available for some types of homes and their requirements allow low income families to buy their own home. These programs allow for a much higher DTI, sometimes between 40 and 50%. The homebuyer must adhere to all other requirements for this type of loan, including minimum credit scores.
Work with the right lenders to buy a home with a low income
Not every mortgage lender is approved to work with VA, USDA, and FHA homeownership programs. If you are trying to buy a home with a low income, make sure you research lenders that are approved to finance using these methods.
If you would like to learn more about buying a home with a low income, contact the real estate experts at Elite Real Estate Group in Amarillo, Texas. Call us today at (806) 337-0883 or Contact Us by email to learn more about what we can do for you. You can also View Our Listings to see the real estate we have available in the Texas Panhandle.