If you’re wondering how to buy a house with low income, you’re not alone. Many buyers assume homeownership is out of reach if they earn less than the area’s median income — but that’s not always true.
Buying a home with a low income is possible. The key is understanding which loan programs are designed for lower-income borrowers, how lenders evaluate affordability, and what steps can improve your approval odds.
From FHA and USDA loans to down payment assistance programs, there are real pathways to homeownership — even if you have little savings.
Can I buy a house with low income?
Yes, you may be able to buy a house with low income. Low income is generally defined as being below a specific threshold of the area’s median income (AMI), which can vary by location and household size
Each loan option we’ll discuss has qualification requirements for AMI, as well as other factors like credit score and debt-to-income ratio (DTI).
If you meet the specific program requirements and can reasonably afford the mortgage, taxes, and other monthly costs, you may still qualify for a mortgage.
How to buy a house with 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 house with low income:
1. Improve your credit score
A higher credit score makes you more likely to get favorable loan terms from a lender. Make payments on time, avoid opening new lines of credit, and pay down debts to improve your score.
2. Do some financial planning
Know how much you can afford with your current budget. Be aware of your current DTI, credit score, and down payment savings amount when you speak to a lender so they can help direct you to the best loan option.
3. Save for a down payment
Not all loans for low-income buyers require large down payments, but the more you’re able to save, the better. A bigger down payment can save you from paying for private mortgage insurance (PMI) on conventional loans.
4. Pay down debts
Reducing your debts can both increase 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
A good real estate agent can help you understand the current housing market, maximize your budget, and connect you with lenders who will find the right loans and assistance programs for your specific situation.
6. Consider a co-signer or co-buyer
Buying a house with a friend or co-buyer is a great way to pool resources and break into homeownership with 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 qualifying for a loan. A co-signer takes on legal responsibility for the loan if payments aren’t made.
7. Research first-time homebuyer programs and loans
We’ll dive into some of the most common loan and assistance programs for low-income buyers below.
Loan options for low-income buyers
There are several loan options for buying a house with low income, and many are designed specifically for first-time and lower-income buyers. Some require as little as 3% down, while others offer 0% down payment options. The right loan depends on your income, credit score, and location.
HomeReady by Fannie Mae
The HomeReady loan by Fannie Mae is a type of conventional loan with flexible terms. It may offer a $2,500 borrower credit toward the down payment or closing costs in certain cases, and considers positive rent payments towards loan eligibility. While you will need to pay PMI, you have the ability to cancel it once you reach 20% equity. A homeowner’s education course is also required to qualify for this loan.
- Credit score: 620
- Down payment minimum: 3%
- DTI: 43%-50% in some cases
- AMI: 80% or less
Home Possible by Freddie Mac
Freddie Mac’s Home Possible loan is a conventional loan similar to HomeReady. It offers affordable mortgage insurance and flexible sourcing for down payments, including gift funds and employer assistance programs. A homeowner’s education course is required for this loan as well.
- Credit score: 620-660
- Down payment minimum: 3%
- DTI: 43% or less
- AMI: 80% or less
FHA loans
A Federal Housing Administration (FHA) loan is a flexible alternative for those who don’t meet the requirements for conventional loans. Homes purchased with FHA loans must be FHA-approved and meet minimum property standards. Proof of steady income is required to qualify for this loan.
- Credit score: 580 with a 3.5% down payment, less with a 10% down payment
- Down payment minimum: 3.5%
- DTI: Below 43%-50%
- AMI: No requirement
HFA loans
Housing Finance Authority (HFA) loans are offered through Freddie Mac and Fannie Mae in partnership with non-profit state housing authorities. The property bought with this loan must be a primary residence, and a homeowner’s education course is also required.
- Credit score: 620
- Down payment minimum: 3%
- DTI: 45% or less
- AMI: Varies by location and program
USDA loans
United States Department of Agriculture (USDA) loans are government-backed and made to help low-income borrowers buy homes in eligible rural and some suburban areas, as defined by the USDA. This loan typically requires a credit score of 640, but there is no official minimum and no down payment required. There are upfront and annual fees associated at a percentage of the home’s value, but this can be offset by savings on mortgage insurance and down payment.
- Credit score: Typically 640
- Down payment minimum: 0%
- DTI: 40%-55%
- AMI: Cannot exceed 115%
VA loans
Veterans Affairs (VA) loans are only for eligible veterans, active-duty service members, and their surviving spouses. Interest rates for these loans are lower, and they typically don’t require a down payment. However, a VA funding fee is required, which varies depending on the down payment amount and whether this is your first VA loan. This fee is typically paid once and supports the VA home loan program.
- Credit score: Typically 620, but no minimum required
- Down payment minimum: 0%
- DTI: 41% or less
- AMI: No requirement
Using an assistance program to buy a house with low income
Using a down payment assistance program can offer extra support when buying a house with low income. There are a number of options both nationally and locally to explore.
Good Neighbor Next Door
The U.S. Department of Housing and Urban Development (HUD) has the Good Neighbor Next Door program. This program offers a 50% discount off the listing price of a HUD home in revitalization areas to law enforcement officers, teachers, firefighters, and emergency medical technicians. If you meet the program’s requirements and agree to live in the home for three years, it can be a great way to save significantly on a home as well as contribute to a growing community.
Housing Choice Voucher
The Housing Choice Voucher (HCV), or Section 8, helps low-income families afford rent with rental vouchers. Some areas also have a homeownership option in which families can use their vouchers to buy a home instead of continuing to rent. Ask your local housing authority for information and requirements to qualify for this program if it is offered in your area.
State and local assistance programs
There are many other types of housing assistance programs offered through local and state agencies. Down payment assistance options, mortgage credit certificates, special financing offers for specific types of homes are all available in different areas. Your local housing authority can show you what is available near you and how to qualify for different options.
What to watch out for when buying a home with low income
Buying a home with low income is absolutely possible, but it’s important to understand the financial realities before you commit. Low down payment programs make it easier to get in the door — yet they can change what your monthly costs look like long term.
- Lower down payment = higher monthly payment. Putting 3% down instead of 10% means a bigger loan, more interest over time, and often mortgage insurance (PMI). That can add $100–$300+ per month.
- Low income doesn’t automatically mean lower interest rates. Your rate is based mostly on credit score, debt-to-income ratio, and market conditions — not income alone.
- You may qualify for more than you should spend. Some programs allow higher DTI ratios, but stretching your budget can leave little room for emergencies, repairs, or rising taxes and insurance.
Just because you’re approved doesn’t mean it’s comfortable. Make sure the mortgage payment fits your real-life budget — not just the lender’s formula.
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