Home ownership can seem distant and difficult to attain, given the obstacles many individuals face based on their income. To purchase a home, as much as a 20 per cent down payment is usually required to begin the process. That alone is enough to deter a low-income family from realising such a dream. Fortunately, there are several programs that can assist low-income home buyers, allowing them to invest in a piece of affordable real estate they once thought was out of reach.
Prepare all financial documents before applying to any home buying assistance programs, to help accelerate the process. Mortgage lenders will request proper identification, such as driving licences and a Social Security cards for each applicant, in order to obtain credit reports and scores. Other documents requested in the application process are pay stubs, W-2's, tax return documents, checking and savings account statements, current loans and credit card statements, and retirement and investment records. These documents are used to verify employment history and current income, as well as identify funds that may be used toward the purchase of a home. Veterans Administration lenders will request additional documents such as a Certificate of Eligibility and discharge documents, to verify that you are eligible for a VA loan.
Speak to a mortgage broker about federally funded buyer assistance programs, such as Fannie Mae and Freddie Mac, which are aimed at low and middle-income families. Freddie Mac's Home Steps program offers a two-year warranty on appliances installed inside purchased foreclosed homes and provides up to 3.5 per cent of the purchase price of the home, to help towards closing costs. The First Look program, which is operated by Fannie Mae, allows future home buyers to place a down payment as low as £325 on their foreclosed properties and have up to 45 days after the acceptance of an offer, to close.
Contact lenders who are approved by the Federal Housing Administration (FHA), in your area. FHA programs assist low and middle-income home buyers to purchase real estate. Although the FHA does not provide loans to purchase homes, they do insure them, allowing home buyers to qualify for reasonable loans and place down payments as low as 3.5 per cent, based on the purchase price of the home. The FHA assists individuals who may have little or poor credit and allow relatives, organisations or charities to provide down payment assistance to the homebuyer.
Submit a Request for Certificate of Eligibility (VBA Form 26-1880) to a VA Regional Loan centre, as provided on the Veterans Benefits Administration website. VA loan assistance programs, are aimed at active duty military personnel and retired veterans. To be eligible, veterans and active duty personnel must have served a minimum of 90 days of service during wartime or 181 days, during times of peace. Individuals on reserve are required to have served a total of six months to become eligible. Spouses of deceased veterans are also eligible, if not remarried. Although there isn't a down payment required for a home, a funding fee of 2.15 per cent, as of 2010, is required by the buyer, to help reduce the amount funded by taxpayers.
Request information about first time homebuyer programs offered through housing administrations in your state or local government. These programs offer grants, which can help lower or eliminate down payments and closing costs. The majority of these agencies are state funded and paid through revenues developed through mortgage loans, helping to avoid the use of taxpayer funds. Individuals who haven't lived in their own home in the past three years, are considered first time homebuyer's and may qualify for these programs.
Apply with Habitat for Humanity, to qualify for a home offered by their association. Habitat for Humanity is a non-profit organisation, that assists families and individuals with home ownership. The program is based on need and is only available to lower income families. You must also be willing to become a partner of the program and assist in building homes for other families or individuals in need, as well as have the ability to repay the no-interest loan provided.