Low income loans are meant for those who have a very low or low to moderate incomes. Income is defined usually on the basis of area median income. If the borrowers income is 50 percent of area median income then it is very low while 50 to 80 percent is low income. Those people who are without sufficient housing but are in a position of making housing payments including principal amount, interest on it, taxes and insurance, are eligible for low income loans.
If you want to buy a new home or to refinance your existing home but have insufficient income, a low-income home buying program will help you qualify for a mortgage loan and purchase a home. In other words, its a program designed to assist home buyers who might not otherwise qualify for a loan.
Low income loans can be availed from governmental sources or private lenders who are willing to provide financial assistance to such borrowers. The options provided by government bodies or subsidiaries are easier and take especial care of the personal circumstances of such borrowers. For instance, if a low income earner wants to buy a home, he has many options in taking loan from government through programs like Freddie Mac and Fannie Mae, Federal Housing Authority (FHA), Veterans Administration Home Loans (RHA), Rural Housing Authority and many other state sponsored programs.
FHA is the federal agency within the US Department of Housing and Urban Development (HUD) whose primary objective is to provide an opportunity to become home owners to those with low income. To facilitate this, the FHA program offers potential borrowers two options. To apply for a FHA loan, you must submit an application with a HUD approved lender. Most traditional lenders already are approved by HUD.
FHA home loans are also a great option because you can get into a new home for as little as 0-5% down on the home. What this means is that instead of having to come up with 15-20% of the purchase price of the loan, you will be able to move in for considerably less. In addition, there are many FHA based programs that will also help you come up with any money that is needed for closing costs or a down payment. This can help you make home ownership much more affordable in the short term as well as in the long term.
The Rural Housing Authority (RHA) can assist low-income home buyers in certain situations. The RHA is part of the United States Department of Agriculture (USDA). Unlike the organizations listed above, the RHA actually makes direct loans to home buyers. They also guarantee loans for home buyers in rural areas. RHS also offers direct loans to low income family, those with income 80% or less than the areas average income and cannot get credit from financing companies. These mortgage loans can be extended to 38 years and require no down payment.
The Veterans Administration (VA) helps home buyers by guaranteeing loans made by mortgage lenders. The VA does not actually make direct loans. The VA home loan program is reserved for U.S. military veterans and their spouses. To apply for this type of loan, you must be qualified by the VA. Once they approve your application and verify your qualifications, they will issue you a certificate which you present to a traditional mortgage lender as part of your application paperwork.
![[Valid RSS feed]](http://www.articlesinsight.com/images/icon_Rss.png "XML Feed For RSS"){kind=icon}
Category Rss Feed
Print This Article
Add To Favorites
