Someone once asked me, can I buy a home if I only make $30,000/yr? The answer is YES YOU CAN! Heck, you could probably get a home loan if the home was only a few grand and you were earning only a few grand per year in income. The reality is that its not just ONE thing that will help you get a loan and buy a house. In fact you need to to have several things in alignment (like your credit, your taxes and your income and some savings). Also, most low income home loans are government insured through FHA (Federal Housing Administration) so if you follow FHA requirements, your lender can give you a better deal (such as low down payments, low closing costs and easy credit qualifying). The U.S. government is very supportive in helping it’s citizens invest in buying home because they have determined that the risk is favorable.
Here are 10 of the most critical pieces you will need to prepare and gather for your lender to get FHA loan assistance:
- LENDER: First, off vet a great Lender that you jive with! If they text and you text, great! If they don’t work Sundays and you’re cool with that, great! Start working with your lender to gather the essentials! They will be key and help guide you!
- TAX RETURNS: Gather 1–2 years of tax returns showing you make $30,000k. Keep in mind if you write off most or everything, you may not qualify for your loan. ALSO: if you are self-employed & once you start reporting income the IRS wishes for you to pay quarterly in advance. So you will need to save more money upfront to start paying at the beginning of that new tax year. If you are w2′d you will likely have a much easier time qualifing for a home loan since you have steady income. Also your taxes will come out with each paycheck so step 6 does not apply to you.
- DOWN PAYMENT:What do you have to put down as a down payment on your house. Are you bringing 1%, 5%, 20%. Again this is a lender question but you
- PRIMARY HOME. Determine if this will be your primary house. Most likely it will be if you are going to get an FHA loan. The good news is do you have at my house in two years you’re considered a first time buyer and you can qualify for a 1% down loan. Alas, at $30K you might also be considered low income and therefore be able to qualify for low income assistance program for you only have to bring a nominal amount to closing. It’s an awesome program, so check with your lender.
- SEASON MONEY: “Season” or store your down payment in a bank account for 30 days. Your lender can estimate the down payment you will need to afford in order to close on a house.
- CREDIT: Make sure your credit score is above 640. If it is not then you will need to spend sometime fixing your credit. I like Lexington Law Firm.
- PROSPECT: You may need to look in different cities and states. You can buy a home in Indianapolis for 1/3 the cost of Denver homes
- SAVE: Stop spending money asap and start saving! You will need every penny once you buy your house since you most likely have new miscellaneous expenses and taxes. Also remember to save 10-20% of every paycheck and PAY YOURSELF FIRST!!! Also, in order to close you will likely be required to have saved several months-worth of mortgage payments saved upfront, so be prepared in advance.
- LEVERAGE: Lenders are allowed to increase your home qualification amount in different areas. For example in Denver at your income of $30,000 you may be able to qualify for a $250,000 house. While in Indianapolis you probably will not. Again, ask your lender.
- CLOSING COSTS: Generally you will need to bring additional funds to the closing table but often the FHA low income loans help with this. Again your lender will be able to help you with this.If you would like more information on real estate investing and or how to do Airbnb real estate investing where you can learn to offset your entire mortgage with Airbnb by renting a room in your home, you can certainly set up a free coaching call with me here: rentalpreneur.com/letsdothis