Low Income Home Loan Programs

There are non-government programs aimed at helping lower income borrowers achieve homeownership and get qualified for a mortgage. In most cases, you don't need a lot of money for down payment (as low as 3% down), but you do need to have an OK credit score (at least in the mid 600s). In order to qualify for these types of low-income programs, your income cannot be above a certain amount. This amount is based on the area where you live, and is called the "area median income" (AMI). For example, a program by Freddie Mac called HomePossible® requires that your income is 80% or less of the median income in your area. In some places, such as Fairfax County, Virginia, the median income is pretty high at over $150,000/year. So if you make $120,000 or less (120K is 80% of 150K), then you still might qualify for a HomePossible loan.

Home Possible® loan by Freddie Mac

The Home Possible® mortgage program offered by Freddie Mac is designed for "very-low to low income borrowers." The downpayment requirements are as low as just 3%. For example, a $400,000 loan could require as little as 3% x $400K = $12,000 as down payment for qualified borrowers. It also allows you to have a co-borrower on the mortgage that doesn't have to live in the home. This can be useful if you need a co-borrower (like a family member who has good credit history) to help you qualify for a loan that doesn't plan to live in the home. You're not restricted to only having borrowers that live in the home. The exception, however, is that the primary borrower must live in the home.

In order to qualify for a Home Possible mortgage, your income needs to be below a certain percentage of the median income in your area. Specifically, it can't be more than 80% of the "area median income." You can check out the official Home Possible Income & Property Eligibility Tool to see if your income level falls within the limits in your area. The Home Possible is a good option for first-time homebuyers, move-up borrowers, or retirees and seniors. Mortgage insurance is required if you put less than 20% down, but it can be cancelled once the loan balance drops below 80% of the home's appraised value.

HomeReady® loan by Fannie Mae

Fannie Mae's HomeReady® Mortgage is a similar program to Freddie Mac's HomePossible. Some features of the HomeReady loan are:

• As low as 3% down payment for a home purchase or refinance loan
• Low-income focused
• A $2500 assistance for very-low income borrowers*
• Cancellable mortgage insurance

In order to be eligible for a HomeReady® mortgage loan, the borrower must have an income less than 80% of the area median income. You can find out what the income limits are in your area by visiting the Fannie Mae Area-Median-Income Lookup Tool. Additionally, if all borrowers are first-time homebuyers, then at least one is required to take a homeownership education

*For whole loans purchased on or after March 1, 2024, to February 28, 2025, and for loans delivered into mortgage MBS with issue dates on or after March 1, 2024, to February 1, 2025. Visit Fannie Mae for details.