Despite reports of rising house prices, low-to-moderate income earners can still become homeowners today; with even a modest down payment or a limited credit history, you could own a home. Opportunities exist for homebuyers with moderate incomes through programs from cities, nonprofit organizations, and financial institutions.

These examples, based on the experiences of typical homebuyers with low-to-moderate incomes, outline different paths to homeownership without large down payments or perfect credit scores.

Sarah: Just starting out

Sarah is a recent college graduate who just landed her first professional job.  She’s ready to become a homeowner because she has a stable career, plans to live in the home for the foreseeable future, and has enough money for a small down payment on a home.

yourFirst MortgageSM from Wells Fargo might help Sarah achieve her goal, even without a large down payment or traditional credit. Features for the fixed-rate option include:

  • Down payments as low as 3% on a fixed-rate mortgage
  • Flexible income and alternative credit history

Keep in mind that mortgage insurance is required and will increase the cost of the loan and monthly payment.

Even if you are not a first-time home buyer, this program is available to you. Speak with a home mortgage consultant to discuss loan amount, loan type, and property type to ensure eligibility.

Beth: Modest homeownership dreams

Beth lives near a small town in the country with her husband and little boy. Their income is steady but modest, allowing them to afford monthly housing payments but not save much. Beth is renting a home now and has always wanted to become a homeowner, but doesn’t know her options.

Beth’s family, like other low-to-moderate income buyers in rural areas, may be eligible for financing through the Guaranteed Rural Housing Program administered by the U.S. Department of Agriculture (USDA) Rural Development. These loans feature:

  • Financing of up to 100% with no required down payment
  • 30-year fixed-rate terms, helping to keep payments predictable over the life of the loan
  • The ability to finance closing costs, the guarantee fee, legal fees, and other prepaid fees

A one-time guarantee fee paid at closing is required and an annual fee is charged that is paid monthly which will increase the cost of the loan and monthly payments.

Rick: Finding a home for his family

Rick is an active-duty service member who recently has returned from a long tour overseas. He and his wife dream of raising their two young children in a home of their own.

Rick and his wife may be eligible to purchase their first home with a Department of Veterans Affairs (VA) loan. Benefits and considerations of doing so include:

  • Because VA loans offer low- and no-down-payment options, Rick and his wife can reserve part of their savings for home repairs and unexpected expenses.
  • Rick may be able to receive a grant from the government to use toward closing costs.
  • Because VA loans don’t require monthly mortgage insurance, Rick and his wife will instead pay a one-time VA funding fee (a percentage of the loan amount based on type of loan, military category, first-time and prior use of entitlement, and down payment amount).

Becoming a successful homeowner

To become a successful homeowner, think carefully about the decision to buy, making sure that homeownership suits your personal and financial situation. Buying a home involves much more than securing a loan and making your monthly payments.

To help get you started, the Wells Fargo My FirstHome® interactive module provides an overview of the path to successful homeownership, and the My Home RoadmapSM service provides free homeownership counseling and support materials to borrowers who are not yet ready to purchase a home.

If you’re ready to purchase a home but the scenarios discussed above don’t mirror your own, keep in mind that you may still be eligible for purchase assistance from your city, county, or state. Wells Fargo also has several programs to make homeownership a possibility for many low-to-moderate income homebuyers.