Owning one’s own home has always been the American Dream—one that in recent years has seemed to become more inaccessible than ever, with the economic decline in the United States. However, there are programs available for home financing for low income people which can help make the dream a reality for those other than the very wealthy.
The federal government has several programs to make home ownership accessible to low income people.
One program is directed primarily at rural areas. This program is managed by the United States Department of Agriculture (USDA) under its rural development program. Called the Very Low to Moderate Income Housing Loan Program it provides direct loans as well as guaranteed/ insured loans.
To qualify applicants must be purchasing a property intended to be their permanent, primary residence in a federally designated rural area. Home value cannot exceed the local limit (as determined by USDA program criteria). Properties must be decent, safe and sanitary. Applicants must have good credit and have their income fall in the very low, low to moderate income range as specified by the federal government (see HUD guidelines at http://www.hud.gov). They must lack adequate housing but be able to afford payments including principal, interests, insurance and taxes. The direct loans offer a payment assistance feature that reduces the installment, depending on adjusted family income, to an effective interest rate as low as one percent with repayment term of 33-38 years. Guaranteed loans are amortized over 30 years and interest rates are negotiated with the lender.
For more information on this program:
For those not in rural areas the Federal Housing Authority part of the United States Department of Housing and Urban Development, similar programs are available. The FHA offers insured loans which feature low down payments; low closing costs and easy credit qualification. While traditionally the FHA aims to help first time home buyers, it also offers other programs for low income people to repair an existing home as well as buy a “fixer upper”, make existing homes more energy efficient, and reserve mortgages for seniors to enable them to convert a portion of their equity in a property to cash. The FHA also has specialized loan products for mobile and manufactured homes which are often the most affordable types of housing for low income people.
For advice on qualifications the best source of information is a HUD approved housing counselor
One can also search for HUD approved lenders at: