It’s easy to feel like home buying may not be possible based on your income. Homes are expensive, and it’s not uncommon to hear horror stories about how difficult it is to qualify for a loan, how often borrowers took out loans that were more than they can handle, and more.
What you may not know is that reputable lenders already take into account how much you can afford. They also look at many factors, not just income, in determining how much of a mortgage is possible. Right now, with interest rates still historically low, you may be surprised to find out that qualifying for a loan is easier than you think, even for those living with a low income.
How Low An Income Do You Need?
Lenders are looking for two things: how much you make, and how much you have to pay a month toward debt. That is why income is not the only factor. If you make $4,000 a month and have no debt, you’ll qualify for a higher loan than someone that makes $10,000 a month with $7,000 a month taken out for debt payments.
Similarly, lenders want to be sure that the monthly mortgage payments are affordable. There are numerous ways that these payments can be made more affordable:
- You can pay down your debt, thus increasing income availability.
- You can make a 20% down payment, which will remove PMI and other fees.
- You can improve your credit score, which allows you to qualify for a lower interest rate.
With these factors in mind, it is possible for lenders to provide you with a mortgage even if your income is $43,000 a year. In fact, in some areas of the country, you may be able to qualify for a home loan if you make $33,000 a year.
If you can’t afford the 20% down payment, there are still multiple assistance programs available that can help as well with no-down payment options, and while your income may need to be a bit higher, it may be much lower than you initially thought.
Talk to a Loan Originator
Right now, interest rates are low, which means lower monthly payments. Homes are also available in some areas for far less than you think, despite real estate going up overall. All of these factors make homeownership possible for modest incomes, around the country.
To find out if you qualify for any of these loans, contact Open Mortgage today!