If you dream of home ownership but don’t think that you make a high enough salary or bring in enough yearly income to qualify for a mortgage, read ahead! Home ownership may be closer than you think, regardless of your income.
The National Association of Realtors (NAR) recently reviewed mortgage data across the country and released new information about income and home ownership for the different regions across the country. According to NAR, a family in the Midwest, with a 20% down payment should be able to qualify for a mortgage loan to buy a median-priced home for their region with an income as low as just over $33,000 a year. In the Northeast, that same family will qualify for a mortgage for a median-priced home as long as they make at least $46,000 a year; in the South they will need to make an annual salary of at least $38,000 and in the West they will need to make almost $64,000 to qualify. If your family is on the cusp of these income suggestions, remember that they are simply estimates by a trade association and may be based on somewhat conservative assumptions regarding mortgage rates and other factors. You should always speak with an experienced mortgage lender in order to see whether or not you qualify for a mortgage loan for the home of your dreams.
If you have a significant cash down payment, a mortgage may be even easier to qualify for than you previously assumed, but if you don’t have a large cash down payment don’t worry: according to the Consumer Financial Protection Bureau about 14% of the mortgage loan products available on the market today require absolutely no down payment! One of the most popular low-down payment options are FHA loans, which are guaranteed by the Federal Housing Authority. These loans require a down payment of just 3.5% and prospective buyers with credit scores into the 500’s can qualify. Additionally, one of the benefits of FHA loans is that lenders using this mortgage program can approve mortgage loans with debt-to-income ratios of up to 50%, which means that as much as half of your income could go towards your total mortgage payment. Many conventional loans top out debt-to-income ratios at around 25%. FHA loans give lower income buyers the ability to put more of their monthly income towards their mortgage, making a FHA mortgage loan easier to qualify for if you don’t make a ton of money.
If you are ready to jump from renting to owning but are not sure whether or not your income or credit score will qualify you to move into home ownership, contact a mortgage professional today to see what options are available to you and your family.