How to Buy a House with Low Income in 2025
- Author: Noah Koch
- Posted: 2025-08-19
There isn’t a strict minimum income needed to buy a house, but lenders do look at your financial situation: your credit score, your debts compared to your income, and how much you can pay up front (your down payment).
These factors help lenders decide if you qualify for a mortgage.
What is “low income” when buying a house?
The U.S. Department of Housing and Urban Development (HUD) says “low income” means your household earns 80% or less than the average (median) income in your area.
“Very low income” is earning 50% or less, and “extremely low income” is 30% or less. Some programs even help people with incomes at or below the average.
For example, if the median income in your city is $100,000, earning up to $80,000 could qualify you as low income.
Home Buying Programs for Low Income
Several programs can make it easier for people with low incomes to buy a home. Some offer help with your down payment and closing costs, while others make it easier to qualify for a mortgage.
Main options include:
- HomeReady and Home Possible: These are special mortgage programs for people earning less than the average income in their area. They only require a 3% down payment. You can use different sources of income (even a roommate’s, if they’ve lived with you for at least a year), and sometimes get lower monthly costs for insurance.
- Down Payment Assistance (DPA): States, cities, and counties often offer down payment help. This could be a grant (which you don’t have to pay back) or a loan (sometimes forgiven if you stay in the home a certain number of years).
- State and Local Assistance: Local housing agencies often have programs that offer extra financial help, including tax breaks or small loans for your first home.
- HUD Homes: If a home is owned by HUD because its owner couldn’t keep up with payments, it may be sold at a discount. These homes might need repairs, but sometimes offer good savings if you agree to live there for at least a year.
- Good Neighbor Next Door: Teachers, police officers, firefighters, and emergency medical professionals may qualify for major home discounts (up to 50% off) in certain areas, provided they live there at least three years.
- Mortgage Credit Certificates: These give first-time buyers a special tax credit, making monthly mortgage payments easier to manage. Rules vary depending on where you live.
Government-Backed Home Loans
Even if you don’t qualify for special programs, government-backed home loans can help many low-income buyers.
Here are some of the most common:
- FHA Loans: These are very popular for first-time and low-income buyers. They allow a low down payment (as little as 3.5%), and you can qualify with a lower credit score than most other loans. You will have to pay for mortgage insurance.
- VA Loans: Offered to veterans, active-duty military, and some surviving spouses, VA loans require no down payment and no mortgage insurance. Sometimes, the seller can pay your closing costs.
- USDA Loans: These loans are for homes in rural areas and you need to meet income requirements. They don’t require a down payment and often offer lower interest rates.
- Housing Finance Agency (HFA) Loans: These programs are available through local or state agencies. They often give you better interest rates and additional down payment help.
- Manufactured and Mobile Home Loans: If your manufactured or mobile home is built on a permanent foundation and meets the requirements, you may be able to use an FHA, VA, or regular mortgage.
Conclusion
Even if you have a low income, becoming a homeowner is possible! These programs and loan options are designed to help you overcome some of the main challenges, like saving up for a down payment or qualifying for a loan.
The key is to check which options are available in your area and see which ones you qualify for. Talk to local housing agencies or home lenders for advice and next steps—your path to homeownership could be closer than you think.
-
Check out: Home Prices Decline in Many Cities While Listings Surge
