Tips to Get a Good Mortgage Rate with Low Income

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Potential homebuyers are often discouraged from the idea of applying for a mortgage because of worries they might not qualify due to their low income. But did you know there are mortgage programs designed for low or moderate-income earners? Here are a few mortgage programs you can apply for with a lower income:

HomeReady Mortgage

The HomeReady mortgage is a low-interest rate loan given to low-income first-time homebuyers. To qualify for this mortgage program, you must have decent credit, around 620, and a 3% down payment in cash. Once your application is approved, you’ll enjoy minimal risk-based price adjustments and reduced mortgage insurance costs.

Home Possible Mortgage

The home possible mortgage is another mortgage program ideal for first-time and low- to average-income homebuyers. You need to meet the 660-credit score and 3% down payment requirement to enjoy flexible funding and favorable mortgage insurance that this mortgage program offers.

USDA Single Family Housing Program

Guaranteed by USDA Rural Development, single-family housing home loans allow low- or moderate-income homebuyers to build or buy a home in suitable rural areas. Depending on the lender, you may not be required to show your credit score to qualify for this program. All you need is to demonstrate you have the ability to service the loan.

Now that you’ve understood the different low-income mortgage programs you can pursue, below are four tips to help you get a good mortgage:

1. Create a Budget and Stick to It – Budgeting is important when taking a mortgage. Therefore, use a mortgage calculator to calculate your monthly income, debts, and estimated cost of living. This will give you an idea of how much you can pay each month and help you settle on a mortgage you can afford.
2. Improve Your Credit Score – A good credit score allows you to access mortgages easily and quickly. How? Your credit report gives a clear picture of your income level, payment history, and credit history, which mortgage lenders use to approve or disapprove your mortgage application. Therefore, ensure you have a healthy credit score. You can start by paying your bills on time and clearing any debts you may have.
3. Save for a Down Payment – While not all low-income mortgage programs require a down payment, having a down payment can help lower your interest rate. It also leaves you with less mortgage to finance and pay interest on.
4. Work with the Right Lender – Choose an experienced mortgage lender, has incredible mortgage offers and possesses great customer service. Such lenders understand your home buying needs and will offer you favorable terms.

Contact Better Rate Mortgage Today

Are you in St. Louis and planning to apply for a low-income mortgage loan? Contact the Better Rate Mortgage Team. We have incredible mortgage deals and smooth pre-approval processes. Get in touch for more details!