Buying your first home could be overwhelming and nerve racking, especially if you are a low-income earner. Scraping and scrounging to save up a down payment and additional closing costs could be challenging. Nonetheless, your socio-economic status does not have to be a disqualifier from owning a home if you are an honest, hard-working individual trying to make something for yourself or provide for your family.

Lenders typically want a down payment of 20% or more of the purchase price, to finance your home purchase. For example, a house valued at $200,000 would require a minimum down payment of $40,000. Down payments less than 20% usually attract additional monthly fees in the form of Private Mortgage Insurance (PMI). The PMI protects the lender but borrowers (you) are stuck with paying the fees. This is money that could potentially go into paying down your principal and expediting the payoff of your loan if you had it to spare.

The good news is that there are several programs designed to assist first time home buyers. Some are state and local programs. Therefore, the requirements and processes are tailored to each state or local government agency responsible for managing the program. Below are some programs available for first time home buyers.

One of the programs available for first time home buyers is the Down Payment Assistance (DPA) program. DPA may be in form of a grant or a low- to no-interest loan to cover part or all of a home buyer’s down payment and closing costs. The terms of the DPA vary by providers so do your due diligence if shopping for a DPA. A grant will significantly reduce the financial burden on a low-income earner while paving a path to home ownership.

Department of Housing and Urban Development (HUD) offers a Housing Choice Voucher (HCV) homeownership program for low-income earners. With this program, beneficiaries use their voucher to buy a home and receive monthly assistance in meeting homeownership expenses. To qualify, you must be a first-time buyer as defined by HUD, meet a minimum income requirement set by the local public housing authority (PHA), have at least one adult working full-time and for at least one year and complete homeownership and housing counseling program.

For teachers (pre-Kindergarten through 12th grade), law enforcement officers, fire-fighters and emergency medical technicians, HUD’s Good Neighbor Next Door Sales Program offers a 50% discount for the list price of a home. Houses available in this program are in specially designated areas and may not be in abundance; nonetheless, it is worthwhile to seize the opportunity, if available, to capitalize on owning a home through this program. The primary condition attached to such ownership, other than being in the aforementioned professions, is that eligible buyers must commit to live in the property for three years (36 months) as their principal residence. 

If you are a veteran of any of the US armed forces (currently serving or honorably separated), the Veteran Affairs (VA) Administration offers the VA Home Loans program. Through this program, loans are provided by private lenders, such as banks and mortgage companies to the beneficiary. While you are primarily responsible for servicing the loan, the VA guarantees a portion of the loan, thereby making it possible for the lender to provide you with more favorable terms. The best part is you may not have to make a down payment and still not be faced with (PMI) premiums. This is definitely a huge savings to you.

There are classes offered to help first-time home buyers understand and navigate the nuances of home buying. These classes are strongly recommended for all first-time home buyers, including persons who are not financially challenged. These classes cover a wide range of topics ranging from financing your home purchase to maintaining your home after purchasing it.

The programs highlighted above do not constitute an all-conclusive list so be sure to check out the additional resources provided for more information. There is bound to be a program that fits your situation and would work best for you.

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Additional Resources:

A Guide To First-Time Home Buyer Programs & Loans | Rocket Mortgage

Help Buying a New Home | USAGov

First-Time Home Buyer Programs by State – NerdWallet

First-Time Home Buyers Class: What Is It? | Rocket Mortgage