Mortgage Programs on Low Income in US

Posted On 03 Jun 2013

The U.S. Department of Housing and Urban Development, or HUD, has several home-buying options for low-income home buyers. HUD’s goal is to expand homeownership opportunities to low-income communities. These programs provide low-cost loan options and subsidy payments to purchase a home. You can contact a HUD-approved housing counselor to see what programs are available in your area.

Homeownership Voucher
The Homeownership Voucher program is for current Section 8 Housing Choice Voucher holders. The program helps the home buyer purchase a home with a mortgage payment subsidy. To qualify for help, the home buyer must have a steady source of income that does not include welfare benefits and they must have been employed for at least a year. The home buyer will pay 30 percent of  their income toward the mortgage payment, and HUD pays the remaining portion. The mortgage subsidy can be received for 15 to 20 years: The home buyer must attend homeownership counseling to qualify for a Homeownership Voucher.

FHA Loan
The Federal Housing Administration, or FHA, insures home loans that allow first-time home buyers and minorities families, to achieve home-ownership. FHA-insured mortgages allow lenders to ease their credit qualifying requirements: Those who would not typically qualify for a loan, are able to buy a home insured through FHA. Home buyers are required to make a 3.5 percent down payment toward the purchase of the home. The low closing costs also allow the home buyer to keep more money in his pocket.

Lease Purchase Option
Some nonprofit agencies across the country, are offering a lease-purchase option for low-income home buyers. Nonprofit agencies look for families that have a year of steady income, to qualify for the program. The home buyer’s credit score is not factored in to qualifying requirements, because it is expected to improve during the leasing period. A portion of the family’s monthly rent is set aside in a savings account, to be used for the down payment and closing costs when it is time to purchase the home. Once credit has improved and savings have accumulated, the home buyer can assume the loan from the nonprofit agency.

Neighborhood Stabilization Program
The Neighborhood Stabilization Program, or NSP, provides grant funds to local governments and community-based organizations, to purchase foreclosed or abandoned homes. The organization will rehabilitate the home and resell it at an affordable price to low-income families: NSP funds can also be used to help home buyers purchase a house. To qualify for NSP financing, the home buyer must be on low-to-moderate income. Financing is offered as a low-interest deferred loan: The loan is typically forgiven after a period of time, as long as the home is the primary place of residence.

Lucas Lamb
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