How to Buy a House With Low Income

A smaller paycheck doesn't necessarily disqualify you from owning a home. There's no universal minimum salary, and several loan programs exist to give low-income earners an easier path to homeownership, including assistance for a down payment and closing costs. Here's what you need to know about your options.

Can you buy a house with low income?

There's no income floor on a mortgage application, only a test of whether your income is enough to cover the payment alongside your other obligations.

"A classic example is what I call the overqualified borrower — a small W-2 income buyer who qualified because of little or no debt," says Chloe Shubin, VP of operations and strategy at Griffin Funding. "You can have a borrower making $48,000 a year with no car payment, no student loan balance, and low credit card utilization, leaving their housing payment well within FHA's ratios. Income by itself will almost never paint the full picture."

The number that matters most is your debt-to-income ratio (DTI), which compares your monthly debt payments to your gross monthly income. In particular, you may be able to get by with a housing payment of up to 31% of your gross monthly income. Your total DTI, which includes all your debt payments, typically needs to be under 45% for a manually underwritten conventional loan, though some government programs go higher.

As for down payments, the median is 10% for first-time homebuyers, according to 2025 data from the National Association of Realtors,^[1] but that's far from a requirement. The minimum for a conventional loan is 3%, and some federal programs — like VA and USDA loans — don't require one at all.^[2]

Home loan programs for low-income buyers

If you're worried about your income level, the following programs are best suited to help you get approved for a mortgage loan.

FHA loans

FHA loans are insured by the Federal Housing Administration (FHA) and built for buyers with limited savings and short credit histories. The minimum down payment is 3.5% of the purchase price if you have a credit score of 580 or higher; if your score is as low as 500, the down payment requirement starts at 10%.

The tradeoff is mortgage insurance, which many FHA borrowers pay for the life of the loan unless they refinance.

FHA also stacks well with other assistance programs. "One of the most memorable cases is a single parent, a caregiver earning around $40,000 a year, whose friends were advising her to keep renting," says Cody Schuiteboer, president and CEO of Best Interest Financial in West Bloomfield, Michigan. "It worked not because of a bigger salary but because she stacked the resources: an FHA loan for the low down payment, a state down payment assistance second that covered most of the cash to close, and a seller credit we negotiated for closing costs. Her cash contribution was below $3,000."

USDA loans

The U.S. Department of Agriculture (USDA) offers two loan programs that can help low-income buyers in eligible rural areas, which includes many small towns and outer suburbs. Neither program requires a down payment. There's no fixed credit score requirement by the USDA, but many lenders require a 620 or higher.

The Direct Loan program involves borrowing directly from the federal agency. Your adjusted income must be at or below the low-income limit for the area — generally 80% of area median income — to qualify.^[3]

Meanwhile, the Guaranteed Loan program works through a private lender that USDA backs, and allows income up to 115% of the area median. It can be a good option if you earn too much for the Direct Loan program. Rather than charging mortgage insurance, there's an upfront and annual guarantee fee.^[4]

VA loans

For veterans, active-duty service members, and surviving spouses, a loan backed by the U.S. Department of Veterans Affairs (VA) is usually the most affordable financing available. Qualified borrowers buy with no down payment and no monthly mortgage insurance.

Most pay a one-time funding fee instead, which can be rolled into the loan, though veterans receiving compensation for a service-connected disability are usually exempt.^[5]

A VA loan calculator can help you estimate your payment and funding fee before you apply.

State and local first-time homebuyer programs

Many state housing finance agencies and local governments offer a variety of programs to help first-time homebuyers under certain income limits.

Examples include loans with below-market interest rates, deferred payments, or even forgiveness options, as well as down payment grants and tax credits. Keep in mind that income caps and other program requirements can vary. Check with your state's housing agency to learn more.

Down payment assistance programs

There are more than 2,700 programs that offer down payment and closing cost assistance nationwide, according to Down Payment Resource.^[6] Assistance comes in several forms:

• Grants — Money toward your down payment or closing costs that don’t need to be repaid as long as you meet program requirements.
• Forgivable loan — This second mortgage is usually forgiven over time, but it may require repayment if you move before it's completely forgiven.
• Deferred loan — You won't have to repay this second mortgage until you sell or refinance the original loan.
• Repayable loan — This is a small, no-interest second mortgage that requires repayment immediately or after a set period.

"Many buyers aren't aware of the down payment assistance programs available to households earning less than 80% of area median income," says Dee Kemp, VP of impact at Acts Housing in Milwaukee, Wisconsin. "Depending on the program and the buyer's circumstances, families can receive $10,000 or more toward their home purchase. One of the biggest misconceptions is that families need to accumulate all of the money for a home purchase on their own."

Down Payment Resource can show you what’s available where you live.

How to lower your debt-to-income ratio before applying

To calculate your DTI, add up your monthly debt payments and divide by your gross monthly income. For example, if you have $2,000 in monthly debt payments on $6,000 in gross income, your DTI is 33%.

Here are four ways you can lower your DTI to improve your odds of getting a mortgage:

• Pay off small loans first — Once a loan is fully paid off, it disappears from your DTI ratio entirely. It’s why the snowball method can be a smart way to prepare for a mortgage.
• Pay down revolving balances — Lower card balances mean lower minimum payments.
• Hold off on new financing — A car payment taken on before you apply can undo months of progress.
• Document all your income — Overtime, bonuses, and side income may count if you can show two years of pay stubs or tax returns proving you’ve received it consistently.

Note that installment loans with 10 or fewer payments remaining usually drop out of the DTI calculation on their own.^[7]

Deferred debt is different: It stays in the calculation, and how much it counts depends on the loan program. "Most people assume deferment means the debt doesn't count against them. It counts," says Jason Skinrood, a loan officer with Edge Home Finance in Utah. "What varies by program isn't whether the debt counts, It's how much. FHA and Freddie Mac use 0.5% of the balance; Fannie Mae uses 1%; VA calculates 5% of the balance divided by 12. Same borrower, same student debt, three different calculations. For a buyer who is tight on debt-to-income, that difference decides whether they qualify."

Don't undo your progress in the last 60 days

The weeks right before you apply matter more than most buyers realize. Underwriters look at recent account activity, and a change you make with good intentions can still cost you the loan.

"The most common reason a low-income buyer doesn't reach the closing table isn't the income at all — it's what they did in the 60 days before applying: a cash gift deposited without a paper trail, a new credit line opened for furniture, a switch from W-2 to 1099 work," says Christopher Arco, president of 1st Nationwide Mortgage Corporation in Irvine, California. "And the advice I correct most often is 'wait until you have 20% down,' because for a lot of these buyers, the down payment was never the real obstacle. Documentation was."

How your credit score affects affordability

Your credit history determines which programs you can access and the rate you're offered. If your score falls below the minimum threshold for a particular loan program, you'll likely be denied.

Lenders also price mortgages based on your credit profile, so building your score can help lower your rate, your payment, and the total interest you pay over the loan's life.

The timing of that work matters as much as the work itself. "When told to pay down debt, buyers often scramble to pay every card to zero. While done with good intentions, this can actually hurt their credit score," says Jeff Hensel, a broker associate at North Coast Financial in Oceanside, California. "Under standard scoring models, having a small, healthy balance on one card while keeping others at zero often produces a higher score than clearing every account completely. In one deal, a buyer struggled to qualify because of a slight score deficit. Instead of asking them to pay off every account, we identified a single card's statement closing date and waited for it to report a minor balance drop. It took 11 days for the new statement to post, but that timing shift bumped their score enough to clear underwriting."

Other ways to make homeownership more affordable

Depending on your financial situation and goals, here are some other steps you can take.

Buy in a lower-cost area

A lower-cost market shrinks costs across the board. You need to save less for the down payment and closing costs, and you'll also need to borrow less, which translates to a lower monthly payment and less interest in the long run. Property taxes and insurance premiums will also be lower.

Consider a smaller home or fixer-upper

A smaller home costs less to buy, heat, insure, and maintain. And if you're willing to go with a fixer-upper, you'll likely have less competition. What's more, “renovation mortgages” like the FHA's 203(k) program let you finance the purchase and the renovation in one mortgage, making repairs and improvements more manageable.

Use a co-borrower

A parent or partner joining as a co-borrower puts their income on your application, expanding what you qualify for. Also, lenders evaluate both borrowers' credit and debts, so adding someone with a solid credit history can help you secure better terms. Just keep in mind that both people are legally responsible for repaying the debt.

Bottom line

Buying on a limited income takes more research, but thousands do it every year. Take time to research and evaluate different options to determine the right path forward for you.

Your credit history plays a big role in the interest rate you’re offered, and even a small improvement can help you pay less over time. Kikoff’s Credit Account is a free tool that reports your on-time payments to the major credit bureaus, helping you to build the credit history lenders look for.