One of the greatest worries that folks trying to buy houses have, especially if it's the first time, is that their incomes might lock them out of the real estate system. Fortunately, there are many low income housing programs available that can help. This article will look at 5 of them and how you might be able to put them to work for you.
The Federal Housing Administration is an arm of the government that provides loans for potential homebuyers who are working with other agencies, particularly Housing and Urban Development. FHA mortgages are government-backed, insured loans aimed at people who are trying to purchase single-family houses that they will personally live in. The down payment on a mortgage may be as low as 3.5%, and this allows borrowers to finance 96.5% of the cost of purchasing a house. If you have some cash savings, an FHA loan may help you bridge the gap to homeownership.
Rural Housing Loans
Some USDA loans are used to fund the purchases of single-family houses in economically depressed rural regions. Lenders are given 90% guarantees on loans in exchange for offering 100% financing. Funds from the loans can be used to purchase a house and land, perform repairs, upgrade energy efficiency, and even pay connection fees. They also can be utilized to make improvements to help family members with disabilities make better use of a house.
The Veterans Administration offers help with financing on houses up to specified prices that vary on a county-by-county basis. These loans are available to service members, veterans, and some spouses. VA loans are made available to people who've served at least 90 days of active service in wartime or 181 days in peacetime. Guard and Reserve members who've put in 6 years of service may also qualify.
In addition to the FHA, HUD also works with Fannie Mae, a private, not-for-profit corporation. HomePath is focused on enabling the purchase of foreclosed houses. They also handle loans for short sales, which are situations where the current owners are selling for less than their original costs in order to get out from under houses they no longer want. Unlike many other programs on this list, HomePath also offers home buying help for those who want to invest in real estate.
The HOPE Program
Aimed at individuals on public assistance, HOPE offers assistance with financing and economic self-sufficiency. Participants can receive counseling and skills training in addition to help with paying administrative costs on loans.