Low Income Home Loans

Information on getting home loans for
low income families.

If you are a low income person or family looking for a home loan, there are many questions that you will likely have. Most states have housing agencies that provide programs for low income home loans. Some states also provide down payment assistance grants. By contacting these state agencies, you'll find answers to just about all of your questions, including questions about getting a first time home buyer loan.

Best Lender For Low Income Home Loans

Unfortunately, some lenders do not like to work with low income borrowers, and prefer instead to only provide mortgages to people who have above average income. When searching for a mortgage lender, it is important to find one that eagerly works with low income families and individuals. We recommend ING DIRECT Orange Mortgage. They have great rates, an easy online application, and welcome low income borrowers. Additionally they have not been as severely hurt by the subprime mortgage crisis and are still approving the majority of applications.

It is highly recommended the you get pre-qualified for a mortgage before you make an offer on any home. This will have two very powerful advantages: first, you will know how much you can afford to pay for your home, and second, it will give you a very powerful edge in negotiating the best price for that home. The seller will know that you are a serious buyer and that your loan will close more quickly. Often a seller will reduce the price in exchange for a quick closing.

Applicants for low income home loans must have very low-, low- or moderate incomes. Very low-income is defined as below 50 percent of the area median income (AMI), low-income describes an income between 50 and 80 percent of AMI; moderate income is a household income below 115 percent of AMI. In some instances, families must be without adequate housing, but able to afford the housing payments, including principal, interest, taxes, and insurance (PITI). Qualifying repayment ratios are 29 percent for PITI to 41 percent for total debt. In addition, applicants must be unable to obtain credit elsewhere, yet have an acceptable credit history.

Be advised you should also visit the First Time Home Buyer Grants page for information on down payment assistance that can help you qualify for low income home loans.