How to Buy a House With Low Income [Factors, Tips & More]


Are you eager to buy your dream home but aren’t sure if you have enough funds or don’t know how to buy a house with a low income? This article will help you find ways to afford your dream house, even with a low income.

We’ll also provide tips to make home-buying easier and examine government-supported programs that provide flexible terms for first-time homebuyers.

How Much Money Do You Need to Buy a House?

According to research, the average price of a house in the US is around $280,000. House values increased by 11.6% in 2020 from 2019. Data suggests that they’ll rise another 11.8% in 2021.

Low-income families are those living below $50,200 (representing a family of four, including two children), which is about twice the federal poverty threshold. Buying a house with a low income will be a challenge for most. But it’s possible if you know where to go.

Your income plays a vital role in your home-buying ability. Firstly, you assume the down payment and other costs associated with buying a house. Secondly, lenders consider your pay grade as a crucial metric of your ability to pay a loan back in full. Your income will also dictate how long you’ll pay your mortgage or loans to fully acquire the house.

NOTE: In 2021, the inventory of homes for sale fell by 26%, and there’s only a 1.9-month supply of homes on the market, pushing prices up for first-time homebuyers with low income.

What Other Factors Influence Your Ability to Buy a House?

Factors, other than income, also affect your home-buying ability. If you apply for a mortgage loan, the lender will consider the following:

Credit Score

The first thing most lenders do is check your credit score. A higher credit score means better chances of approval and better interest rates. If your score is on the low end, you might want to consider mortgage lenders working with bad credit.

Debt-To-Income Ratio (Dti)

The DTI ratio is the amount of debt you have relative to your income. A good DTI ratio is at or below 43%.

Work History

Low-income home-buying lenders also look at your work history to ensure you have a steady income and solid work history.

Condition of the House

Lenders will appraise the house you’re considering buying based on its condition. If major issues are discovered in the house, they need to be fixed before the loan is approved.

NOTE: If the appraised value of the house is lower than your proposed loan, you can negotiate for a lower loan amount to avoid overpaying.

Key Takeaways

The average price of a house in the US is around $280,000, and it continues to rise each year as fewer houses are put up for sale.
Low-income families live below $50,200, which is about twice the federal poverty threshold.
Apart from your income, lenders also gauge your credit score, debt-to-income ratio, work history, and conditions of the house you want to buy to know whether you’re qualified for a loan.
You can buy a house using loans, grants, and programs that make paying easier and more flexible.

How to Buy a House With Low Income

Based on the aforementioned factors, you can take advantage of the following ways to secure your dream home.

Fix Your Credit Score

Home sellers and lenders often have a minimum credit score requirement, and they often provide better terms to those who meet that requirement. With a higher credit score, you can get better rates, better monthly mortgage payments, and even discounts.

As a result, fixing your credit score is the obvious first step to securing a successful low-cost housing loan. Having a bad credit score, however, isn’t the end of the world; you can use credit repair companies to help improve your score and rating.

Save Money

To better save money, you should create a budget, which should define your fixed and flexible expenses. Find areas where you can cut costs and ensure that all fixed payables are paid on time to avoid interest. Learning how to buy a house with a low income means learning to be financially savvy.

The money you save will often serve as your down payment. The higher the amount you put down, the lower your overall interest and payments will be. So, saving money and paying upfront will help ease your expenses in the long run.

Pay Off Debt

Paying off debt not only increases your chances of securing financing but also helps you focus your resources on your dream home. It’s also a requirement for those who want to know how to qualify for low-income housing.

You can pay off the debt in many ways, such as strict budgeting, taking on extra work, or using consolidation loans. With debt consolidation, you apply for a loan to cover the number of your existing debts. The lender in this case should have lower interest and better terms. This method also helps put all your existing debts in one place. Credit card consolidation loans are a popular alternative to pay off debt.

Apart from this, you should come up with a viable plan to quickly pay your debts off. Create a budget and change your spending habits. Aim to first pay off the most expensive debt. When you’ve achieved your goal of dissolving debts, commit to not returning to bad spending habits.

Use First-Time Homebuyer Programs

Knowing how to buy a house with no money means knowing what programs can help. Such programs are typically government-backed and require a low down payment and credit scores. Consider the following types of loans:

FHA Loans

Insured by the Federal Housing Administration, FHA loans require smaller down payments and a credit score as low as 500, making it a great choice for first-time homebuyers with bad credit.

USDA Loans

Guaranteed by the US Department of Agriculture, rural home borrowers living in USDA-approved areas can acquire up to 100% financing. You don’t have to own a farm; you just need to live in a location that the USDA supports.

VA Loans

If you’re a military veteran wondering how to get a free house from the government, then VA loans are for you. They offer low interest rates and don’t require a down payment or a minimum credit score.

Each state has low-income housing programs and first-time home buying grants. To attract new residents, municipalities offer grants that you don’t need to repay. Before buying a house, check whether your city or state’s housing authority offers such programs.

Get a Loan

You can use a helping hand from mortgage lenders, which are financial institutions that underwrite home loans. If you want to know how to buy a house with no money down or with a low down payment, go to them for help.

Each mortgage lender has specific borrowing guidelines to check your ability to pay the loan back. They also set the terms, interest rates, schedules, and other aspects of your mortgage. It’s best to scrutinize their guidelines and policies before engaging in business with them.

Some great home equity loans can also help you learn how to become a homeowner. Home equity loans allow you to borrow against the equity of your home. The loan amount is derived from the difference between the home’s current market value and your mortgage balance due.

Eligibility requirements vary per home equity lender. You need to generally meet the following requirements to get approved:

  • At least 15% to 20% home equity.
  • 620 credit score or higher.
  • DTI ratio of 43% or lower.

Lenders also require a home appraisal to confirm your home’s fair market value, which they use to calculate the amount of money you can borrow.

Those learning how to buy a house with low income and good credit should understand that other people can help them through co-signing a loan. If your income doesn’t quite meet the lender’s criteria or your credit score falls short of their minimum requirement, lenders often allow a co-signer who meets their criteria and serves as a guarantor that you can pay the loan back. If you fail to pay, then the co-signer takes responsibility for the loan. Using a co-signer allows you to receive better terms and rates than when you take out the loan yourself.

Buy a House Contingent on Yours

Apart from knowing how to buy a house for sale by its owner, you should also know how to sell a house while buying a new one. You should buy a house only when your current home sells.

Your realtor or agent will add a contingency clause to the terms of the home offer, and the sale can go in three directions:

  1. Find a buyer, and your contract for the new home moves forward.
  2. If you fail to find a buyer within the target timeframe, the offer, and contract for the new home are voided.
  3. The seller activates a kick-out phase, where you have 72 hours to continue the contract or drop it so they can accept another buyer’s offer.

The best way to learn how to buy a house contingent on selling yours is by having the best realtors or agents around. They should have aggressive selling capabilities to help you find buyers for your current home and must be savvy enough to strike good deals with the sellers of your new dream home.

NOTE: In 2019, 48% of all homebuyers owned their previous houses, meaning buying a house contingent on selling another one is common for buyers, sellers, and real estate agents.


Knowing how to buy a house with no money is knowing where you can get the best deals to afford your dream home. You can go to different venues and try different strategies that will allow you to pay for a house. Government-backed programs are helpful and offer the best terms. Mortgage loans, home equity loans, and buying a house contingent on yours are also good options.


How does a low-income person buy a house?

Low-income individuals can buy a house through various methods, such as using government-backed programs (VA, FHA, USDA) that require no down payments. You can also try mortgage or home equity programs that have flexible terms and contracts, as long as they meet the lenders’ various eligibility requirements.

What is the minimum income to qualify for a home loan?

This varies from lender to lender. Currently, no minimum income is required by VA, FHA, or USDA lenders; they only need you to meet their eligibility requirements. Meanwhile, more traditional lenders use your credit score and credit history rather than income to gauge your eligibility for their home loan programs.

Can you get a home loan with low income?

Yes. If you meet their criteria, government-backed lenders offer flexible loan terms that allow you to buy a house with a low income. Often, you won’t have to pay any down payment. Interest rates are also lower than what more traditional lenders offer. Criteria vary from lender to lender.

How can I afford a house on one income?

It’s best to save money, follow a strict budget, and pay off debt. This makes you more financially flexible and able to take on the task of buying a house. You can also take out loans or join government programs that teach how to buy a house with a low income.



Alex is an IT wizz gone SEO gone fire-juggler. We’re not even joking. When he isn’t researching why one personal loan is better than the other and which piece of hardware you should buy next, he’s rollerblading or selling homes (because he does that, too, the smarty-pants).

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