Long-term mortgages that take a large percentage from one's income, along with a hefty downpayment to start, are not a viable option for many. For many mortgage lenders, there are three basic requirements for a person to be able to buy a home. These consist of but are not limited to 1) a sizeable downpayment on hand, 2) a steady income stream, and 3) a good credit score.
Unfortunately, these requirements cannot be met by everyone. For low-income families in Ogden, for example, there are other viable options, such as government housing grants, housing assistance, and low-income loans.
Let's talk about these options one by one:
A housing grant is given to individuals or families who are in the low-income category so that they are able to afford an apartment or a house. In the United States, organizations such as the Wasatch Peaks Credit Union and the United States Department of Housing and Urban Development (HUD) offer grants to low-income families if they meet the required prerequisites. For many low-income families, a housing grant is the best option to explore first.
To qualify for a grant, here are some of the requirements you need to meet:
- You are buying a house for the first time or have not owned a house in the past three years
- You have completed a Homebuyer Education course
- Your income falls under 80% of HUD area median income (adjusted depending on the size of your family)
- You agree to be placed in a deed restriction for a certain amount of time
Government housing loans
The HUD offers several types of housing loans for individuals or families that satisfy their requirements. You can apply for a housing loan depending on the prerequisites you meet:
- FHA Loans. FHA loans are given to first-time homebuyers to make it easier for them to afford the loans.
- Indian Home Loan Guarantee Program. A type of mortgage for American Indian and Alaska Native families, as well as tribes or tribally designated housing entities.
- Homeownership Vouchers. These are housing subsidies for first-time homebuyers who belong in the low-income level.
- State programs. Depending on your state, there may be specialized programs specifically available in your area.
- Veteran and service member programs. The Department of Veteran Affairs has housing loan programs for veterans and service members on active duty.
Public housing developments
In the United States, the federal government designates buildings that are to be used as housing for low-income families. Public housing developments consist of high-rise and low-rise buildings that have hundreds of units available for meager rent. These buildings are subsidized by the government, which is the reason why households living in these units only pay a small fraction of the actual price of the unit.
Households that can afford monthly payments but not a huge downpayment can opt for a land contract. Land contracts are legal agreements between a buyer and seller wherein a buyer will make gradual payments to the seller instead of the bank.
Buying a home in this economy is not always a feasible option for everyone. But with these alternative options, you can have your own home for a fraction of a traditional mortgage if you manage to meet the requirements.