Low Income Mortgage

Owning your home gives oneself a sense of pride, security and represents financial and personal success. Plus a home offers significant tax benefits. If you want to buy a home, and are looking for a low income mortgage - then you should be aware of the fact that you CAN buy and own your own home with less than three percent down. You can do this with private mortgage insurance or government mortgage insurance for your low income mortgage.

More often than not, home buyers think that they have to come up with a down payment of 20 percent of the price of a home. However, this is not true. There are low down payment mortgages for low income earners. Look for a home that you can really afford, for the entire time period of the loan. If you are putting a low down payment, then you will probably be required to get mortgage insurance, which guarantees the lender against loss of the home. The two primary investors in home loans are: Fannie Mae, Freddie Mac.

As we mentioned before, a low down payment mortgage for low income earners, can be insured in two ways – through government insurance and private insurance. If you are looking at a mortgage backed by the government – your mortgage will be insured by the Federal Housing Administration (FHA) or Department of Veterans Affairs (VA) or the U.S. Department of Agriculture’s Rural Housing Service (USDA-RHS). Make sure you check around with several lenders to get the best rates.

FHA loans are for the purchase of a single family home. In the past, they have required 3 percent down payment. (Check the loan amount limits as they vary according to region.)

VA loans are offered to eligible veterans and reservists.

USDA Rural Housing Service loans are for construction and purchase of home in rural areas.

Private mortgage insurance is available for home buyers. Here there is no pre-set limit on the loan amount and you can also negotiate for a low down payment for a low income mortgage.

If you want to check to see if you qualify for a low down payment loan – check this list:

- You have enough income to support the monthly mortgage payment

- Enough cash to cover the down payment.

- Enough cash to cover the closing costs

- A good credit background that indicates your payment history or “willingness to pay.”

- Sufficient appraisal value, which shows the house is at least equal to the purchase price.

- In some instances, a cash reserve equal to two monthly mortgage payments.