Is it possible to buy a home on a low income?
You don’t need a high salary to become a homeowner. Lenders look at more than just paychecks when reviewing your application, and there are low-income mortgage programs and assistance options designed specifically for buyers with limited earnings.
Your approval odds improve when you strengthen factors like your debt-to-income (DTI) ratio, credit score, employment history and savings. Strengthening these areas can improve your approval odds, and many buyers successfully combine a government-backed loan with down payment assistance to make their first home both attainable and affordable.
Loan programs that help low-income buyers
Low-income mortgage loans have unique requirements and benefits. Here are some of the most widely used:
| Loan Program | Best For | Key Benefits |
|---|---|---|
| FHA Loans | Buyers with lower credit scores (580+ for 3.5% down; 500-579 with 10% down) or limited savings | Down payments as low as 3.5%. Flexible credit requirements. Allows higher debt-to-income ratios. |
| USDA Loans | Buyers in eligible rural/suburban areas with income within USDA limits | No down payment. Competitive fixed rates. May cover closing costs. |
| VA Loans | Eligible veterans, active-duty members or qualifying surviving spouses | No down payment or private mortgage insurance required. Lower funding fees for some borrowers. |
| State/Local Down Payment Assistance | First-time or income-qualified buyers (limits vary by program) | Grants or forgivable loans to cover down payment and/or closing costs |
Understanding down payment assistance programs
If covering the down payment or closing costs is holding you back, down payment assistance programs (DPAs) can help bridge the gap. DPAs provide funds either as grants or low-interest loans to help cover these costs. They’re offered through state and local governments, nonprofits and even some employers.
Eligibility requirements vary, but many programs are designed for:
- First-time home buyers: A first-time home buyer is often defined as someone who hasn’t owned a home in the past three years. Our first-time home buyer guide looks in-depth at who qualifies, loan options, tips, and more.
- Buyers within certain income limits: These limits depend on your location and household size, and may be higher than you might expect.
- Homes under a purchase price cap: This will typically be based on the median home price in your area.
Where to start:
- Visit your state housing agency’s website for program listings and requirements.
- Check HUD’s network of local housing counseling agencies. If you’re already working with a lender, ask whether they partner with any down payment assistance providers. They may be able to connect you directly during pre-approval.
Some down payment assistance programs have income limits well above what most consider “low income.” You might qualify even if you earn close to your area’s median income.
Tips to strengthen your mortgage application
A strong application can help you secure a better interest rate and lower monthly payments —even if you qualify for a low-income home loan. Here are some ways you can set yourself up for success:
- Boost your credit score: Pay down revolving balances, fix errors on your credit report and review our guide on buying a house with bad credit.
- Lower your debt-to-income ratio: Eliminating even small debts can make a big difference—learn more about how your debt-to-income ratio affects mortgage approval to understand where you stand and how to improve it.
- Consider a co-borrower: Adding another trusted person with steady income can increase your buying power.
- Show income stability: Maintain steady employment and gather proof like W-2s, pay stubs and tax returns before applying.
Other costs to prepare for
Strong finances at the time of purchase are just part of the equation. Planning for ongoing and upfront expenses is equally important. Here are common costs to budget for:
Additional costs of buying a home
Be sure to include these in your budget.
| Cost | Estimated Range |
|---|---|
| Home inspection | $300-$500 |
| Appraisal | $300-$600 |
| Homeowners insurance | $1,000-$1,500/year |
| Closing costs | 2-5% of purchase price |
Want to better understand closing costs? Check out our guide on closing costs—what they include, how they’re calculated and ways to reduce them.
Common mistakes to avoid
Even the best low-income mortgage program can’t protect you from costly missteps. Here’s what to watch for:
Skipping pre-approval
Without it, you may not know your true budget. Use our Mortgage Calculator to get a sense of what you might qualify for.
Overestimating your budget
Just because you’re approved for a certain amount doesn’t mean you should spend it all. Aim for a monthly payment that still leaves room for savings and emergencies. Our Affordability Calculator is a great place to start.
Ignoring assistance programs
Many buyers miss out on thousands in grants or low-interest loans simply because they don’t research what’s available.
Overlooking ongoing costs
Factor in property taxes, insurance, HOA fees and maintenance before you buy.
Rushing the process
Taking time to improve your credit, pay down debt and save can help you get better terms and more long-term stability.
