Borrowers who may not qualify for traditional home loans can take advantage of specific programs designed to make homeownership more accessible. Let’s take a look at some low-income mortgage loans that help borrowers with low incomes or low credit scores buy a home. ONE+ by Rocket Mortgage allows you to get into a home with 1% down (maximum 3% down) while receiving a 2% grant from Rocket Mortgage.1 This allows you to get into a home you can afford even if you don't have tens of thousands suited for a down payment. Here are the basic qualifications: This can be combined with our BUY+ partnership with Rocket Homes℠.2,3If you use a Rocket Homes Partner Agent, you can receive a lender credit from Rocket Mortgage for up to 1.25% of your loan amount. Department of Veterans Affairs (VA) loans help eligible low-income borrowers buy a house. Because VA loans are guaranteed by the VA, lenders can offer favorable terms – such as low or no down payments and lower interest rates – to borrowers who struggle to satisfy traditional loan requirements.ONE+ By Rocket Mortgage®
VA Loans
Who Is Eligible?
VA loans are available to veterans, active-duty service members, National Guard members and reservists who meet minimum service requirements. Certain surviving spouses may also qualify for a VA loan.
VA loans offer a variety of benefits, including lower interest rates, no down payment in most cases and no mortgage insurance. The loan also has more lenient credit and DTI requirements.
FHA Loans
The Federal Housing Administration (FHA) loan is a popular home loan option among available government-backed mortgages.
Who Is Eligible?
FHA loans have more lenient requirements that can help low-income borrowers or borrowers with poor credit histories. They have lower credit score requirements, low down payment requirements, and potentially, low closing costs.
With an FHA loan, you can make a 3.5% down payment on your home purchase with a 580 credit score.
HomeReady® And Home Possible® Loans
Fannie Mae’s HomeReady® and Freddie Mac’s Home Possible® are two different conventional loan products.
Like government agencies that guarantee government-backed loans, Fannie Mae and Freddie Mac play a similar role with conventional loans (loans that aren’t backed by government agencies).
Low-income borrowers may find it harder to qualify for standard conventional loans, especially if they’re struggling to save for a down payment. HomeReady® and Home Possible® loans allow buyers to finance up to 97% of their home purchase. That means borrowers can make 3% down payments.
Both loans offer a loan level price adjustment (LLPA) credit based on the size of your loan. For loans over $200,000, your credit will equal 1% of the total loan amount up to $3,500. For loans under $200,000, you’ll receive a flat $2,000 credit. For those making up to half the median income where they're looking to buy, there is a $2,500 grant tied to these programs.
Who Is Eligible?
While there are some differences between the programs, they share similar requirements, including that borrowers make no more than 80% of the median income in their area and take a homeownership education course before purchasing a home.
USDA Loans
The United States Department of Agriculture (USDA) runs a loan program that offers mortgages to low- to moderate-income households in rural areas. It’s called the Single Family Housing Guaranteed Loan Program.
Because the USDA backs the mortgages, lenders can offer 100% financing. That means you won’t need to put any money down to buy a home.
Saving for a down payment is a common hurdle for hopeful home buyers, especially buyers with lower incomes. USDA loans can help qualified buyers get into a home they may not have been able to afford otherwise.
Who Is Eligible?
You must live in or purchase a home in an eligible rural area, meet credit requirements (typically a 640 credit score and a DTI below 41%) and meet income requirements.
To meet income eligibility requirements, your combined household income can’t exceed 115% of an area’s median household income. Check out the USDA website to verify location eligibility. You may be surprised to learn that many suburban areas are eligible for USDA financing.
At this time, Rocket Mortgagedoesn’t offer USDA loans.
