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 area for the foreseeable future, and has enough money for a down payment on a home.

A fixed-rate mortgage might help Sarah achieve her goal. Features include:

  • An interest rate and monthly principal and interest payment that remain the same for the life of the loan
  • Protection from rising interest rates for the life of the loan
  • The option to add an extra feature such as a temporary buydown that may lower initial monthly mortgage payments for up to the first three years of the loan term

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

Rick: Finding a home for his family

Rick is an active-duty servicemember 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 buyer status, 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. Certain financial institutions also offer programs to make homeownership a possibility for many low-to-moderate income homebuyers. For example, the Wells Fargo Home OpportunitiesSM program helps those with small down payments and limited credit histories. Another option is the Wells Fargo Easy to Own SM Good Neighbor Next Door program , which encourages law enforcement officers, teachers, firefighters, and EMTs to buy homes in the neighborhoods in which they work.