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Buying a Home with Low-to-Moderate Income and a Low Down Payment

Key takeaway

Low-to-moderate income earners may be able to become homeowners, even with a modest down payment or a limited credit history. Opportunities may also 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.

Beth: Just starting out

Beth 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.

Low down payment options from Wells Fargo might help Beth achieve her goal to buy a home. Some features include:

  • Low 3% down payment on a conventional, fixed-rate mortgage
  • May be layered with grants and credits to assist eligible buyers with down payment and closing costs
  • Flexibility for buyers with a limited credit history or a less-than-perfect credit score

Keep in mind that with a low down payment, mortgage insurance will be required, which increases the cost of the loan and will increase your monthly payment. We'll explain the options available, so you can choose what works for you.

Talk with a home mortgage consultant about loan amount, type of loan, property type, income, first-time homebuyer, and homebuyer education requirements to ensure eligibility.

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).

If you want to improve your credit as your prepare to purchase a home, try getting your credit balances below 30% of the credit limit of each card. That could make a big impact on your credit score.

Learn other tips to help you build credit.

Becoming a successful homeowner

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

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

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What can you afford as a monthly mortgage payment?

Understanding what monthly payment is comfortable for you may help your confidence during the homebuying process.

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Down payments: What you need to know

There are several ways lenders can help you determine a down payment scenario that works for you.

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