How to buy a house with a low income

Housing prices remain at historic highs, as homebuyers face elevated mortgage rates, an ongoing housing shortage and stagnant incomes that aren’t keeping up with rising costs.

The national median list price for a home at the end of 2024 was $419,200, according to data from the Federal Reserve Bank of St. Louis, up almost $100,000 from the first quarter of 2020.

That’s kept the dream of homeownership out of reach for many Americans. But there are lender- and government-backed community mortgages aimed at homebuyers who don’t make a lot of money.

The U.S. Department of Housing and Urban Development (HUD) defines a low-income household as earning no more than 80% of the area median income (or AMI). There are also community mortgages available to borrowers who make up to 100% of the AMI.

You can find the AMI in your area by typing your ZIP code into Fannie Mae’s AMI lookup tool.

Area median income is the middle range for incomes in a specific region, as defined by HUD. It differs based on family size, as well.

AMI is used to help define income bands:

• Extremely low income: 0% to 30% of the area median income
• Very low income: 31% to 50%
• Low income: 51% to 80%
• Moderate income: 81% to 120%
• Middle income: 121% to 165%
• High income: 165% or above

As an example, a household of four in Manhattan could earn as much as $124,240 and qualify for a low-income mortgage.

Many large lenders have special community mortgage programs aimed at homebuyers with modest incomes.

Rocket Mortgage RocketONE+

Details: RocketONE+ gives borrowers who put as little as 1% down a grant of 2% for homes priced at $350,000 or less, starting them with 3% equity.

Income requirements: 80% or less of AMI.

Other requirements: Rocket Mortgage requires borrowers to have at least a 620 credit score and a debt-to-income ratio of no more than 50%. The loan must also be used to purchase a primary residence.

Details: Guild Mortgage gives eligible borrowers that put at least 1% down a 2% down payment grant. It will also fund a 1% interest rate buydown for the first year of the mortgage.

Income requirements: 80% or less of AMI.

Other requirements: At least a 620 credit score and a down payment of no more than 5% (including any grant). Homebuyer education is required and the loan can only be a purchase mortgage for a primary residence.

Details: With a Chase DreaMaker loan, eligible homebuyers can put as little as 3% down on a conventional mortgage and Chase will lower the requirements for private mortgage insurance.

Income requirements: Borrowers in most regions must make no more than 80% of the AMI. There is no income limit for borrowers in 15 metro areas, however, including New York, Chicago and Atlanta.

Other requirements: A credit score of 620 and a debt-to-income ratio of 45% or less.

Details: New American Funding‘s Pathway to Homeownership loan allows eligible first-time buyers in cities like Miami, New York, Dallas, Cleveland and St. Louis to put as little as 3% down and receive up to $7,500 for down payment, closing costs or other upfront expenses. There is also an option for the seller to buy down your rate.

Income requirements: Depending on the program, borrowers are required to make no more than 80% of the AMI or no more than 100%.

Other requirements: Borrowers living in an eligible metro area can purchase a home anywhere, not just locally. 

Details: United Wholesale Mortgage allows borrowers to put just 1% down and get an additional 2% grant, up to $4,000.

Income requirements: 50% or less of AMI

Other requirements: UWM does not lend directly to borrowers, so you’ll have to go through a mortgage broker to secure a loan.

There are also government-backed loans available through banks and other commercial lenders, including Rocket Mortgage and Guild Mortgage.

• Freddie Mac’s Home Possible: Available to homebuyers who earn 80% or less of the AMI and can put at least 3% down on a home that is their primary residence. A credit score of 660 is typically required.
• Fannie Mae’s HomeReady: Available to homebuyers who earn 80% or less of the AMI and can put at least 3% down on a primary residence. A credit score of 620 is typically required.
• Community loans: Some lenders have community lending programs for borrowers that make as much as 100% AMI.

Offered by lenders, government agencies and other entities, down payment assistance (or DPA) programs provide a grant or loan toward a down payment, closing costs or other upfront expenses.

Many down payment assistance plans are geared towards first-time or low-income homebuyers. Freddie Mac’s DPA One lists hundreds of programs throughout the country.

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CNBC Select analyzed dozens of U.S. lenders to determine the best mortgages for low- and middle-income buyers, focusing on the following features: 

• Income requirements: We only considered lenders with community loans available to borrowers making 80% of the area median income.
•  Down payments: We considered the minimum down payment for income-specific loans, as well as the number and type of DPA programs offered.
• Approval requirements: Lenders were reviewed based on maximum debt-to-income ratio and credit score needed.
• Fees: We weighed lenders more heavily if they had discounts or grants that could be used toward closing costs and other upfront expenses. 
• Streamlined application process: We considered whether lenders offered an online application and/or an in-person experience.  

We also considered CNBC Select audience data when available, such as general demographics and engagement with our content and tools. 

Rates and fee structures cited for mortgages may fluctuate with the Fed rate and company policies.