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How To Purchase a Home with Low Income

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Want to purchase a home but a bit tight on funds? If so, you may be wondering how to purchase a home with low income. Fortunately, there are options such as down payment assistance programs and government-backed loans to help you out. Read on to find out how to purchase a home with low income.

Explore government-backed programs

Government entities, such as the Federal Housing Administration (FHA), the U.S. Department of Agriculture (USDA), and the U.S. Department of Veterans Affairs (VA), insure home loans, which protect a lenders’ investment in your property. This protection allows financial institutions like OVM Financial to offer more lenient qualifying criteria, lower interest rates, and lower monthly payments. Here are some options:

  • FHA loans are ideal for first-time buyers because they require no cash reserves, such as saved money you could potentially use toward mortgage payments and down payments.
  • VA loans provide benefits to active and veteran service members and their qualifying, surviving spouses. Nearly 90% of VA-backed home loans require no money down.
  • USDA loans help you purchase rural property, which can include a home in qualifying metropolitan areas. These loans also offer 100% financing with no down payment requirements.

Consider down payment assistance

Several down payment programs exist to help you cover that large, initial lump sum. Each program varies by location, and some programs allow you to use funds for closing costs.

These grants or low-to-no-interest DPA loans exist on the state, county, and city government levels. They can provide qualifying homebuyers with thousands of dollars upfront to cover your down payment with deferrable payment options, some of which you can delay up to 30 years. Some are even forgivable, which means you don’t have to repay them unless you sell, move, or refinance early. Here are a few DPA options:

  • Local DPA programs can provide assistance to first-time homebuyers and veterans within certain localities.
  • The Chenoa Fund is a national DPA program that offers eligible applicants 3.5% to 5% of your home’s purchase price.
  • The HOMEownership Down Payment and Closing Cost Assistance Program offers gap financing for first-time buyers who have an income of 80% or less of the area median income.

Though qualifications vary whether you’re applying for a government-backed loan or DPA, your lender will likely examine the following to determine your eligibility and ensure you can comfortably cover your expenses:

  • You have a minimum credit score of 600.
  • Your income must not exceed area limits.
  • You must primarily reside in your new home.
  • Your home’s purchase price must not exceed program limits.
  • You may be required to complete a homebuyer education course.
  • You must have a debt-to-income ratio (DTI) of less than 36% to 43%.

For more information on how to purchase a home with low income, reach out to an OVM Financial loan officer, who can help you explore options. You can also browse our blog for answers to questions, such as “Do you have to put down 20% on a house?” and “Can you get down payment assistance with a conventional loan?”

The post How To Purchase a Home with Low Income appeared first on OVM Financial.


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