How can I get a mortgage on low income?


Quick Answer

A person can get a mortgage with a low income by applying for a Federal Housing Administration loan, according to SFGate. Those looking for an FHA loan can get information from the Department of Housing and Urban Development. Applicants should research the lowest mortgage rates before applying for the loan.

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Full Answer

Mortgage companies are more likely to approve low-income applicants if the mortgage is supported by the FHA. These loans are approved based on a person's income and credit history, explains SFGate. Applicants must have proof of a steady income source, and they must be employed by the same company for a minimum of two years. An application may be rejected for such reasons as high tax liabilities and excessive student loan debt.

While no minimum credit score exists for FHA loans, overall credit history is a determining factor and those with lower scores have a more difficult time finding competitive rates. In particular, approval is also based on the borrower's debt-to-income ratio. The monthly debt threshold cannot be over 43 percent of the monthly income, and the mortgage payment each month must also be less than 31 percent of a person's income.

Additionally, in order to get an FHA loan, the property itself must meet certain standards, and the purchase price of the home must be within the maximum loan qualification amount. The property will also need to be appraised before the loan is approved.

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