George L. Duarte - Mortgage Loans Fremont California Horizon Financial Associates

Owning a home may be the American dream, but for many who are in a lower income bracket, finding a loan can become challenging. Thankfully, there are several loan programs that can work well for lower income people considering homeownership. Here’s a closer look at some of these home loans designed to help people who have a low-to-moderate income find a way to buy a home.

FHA Home Loans

FHA home loans are loans backed by the Federal Housing Administration. Lenders are more likely to lend to “higher risk” borrowers through the FHA loan program because the loans have the FHA’s backing.

With the FHA loan, a borrower can have a credit rating as low as 500, as long as there is a reasonable explanation for it, and a fairly high debt-to-income ratio. According to the U.S. Department of Housing and Urban Development, these loans require only a 3.5% down payment, which can come from gifts, and have less stringent requirements for credit rating or income.

USDA Rural Development Loans

If you are shopping for a home in a small town or suburban area, you may qualify for the USDA rural development loan program. Only those borrowers who make no more than 115% of the average median income in their area qualify for this loan program, according to the United States Department of Agriculture.

USDA loans require no down payment and the loan has no debt-to-income ratio maximum. It has a low PMI fee even for a zero-down loan, and fair interest rates. For those who live in areas that qualify, the USDA rural housing loan simply makes sense.

97% Loan-To-Value Purchase Loans

One of the biggest challenges for lower income borrowers to overcome is the down payment, but the 97% loan-to-value loan makes that less of a concern. This program, which Fannie Mae and Freddie Mac have offered to help encourage more people to get loans, allows people to buy a home with just 3% as a down payment.

The 97% loan-to-value purchase loan is specifically for first-time buyers. Borrowers must not have owned a home within the last three years to apply.

This loan program offers fair interest rates and does not have stringent credit score requirements. Borrowers can use gift funds to pay for the 3% down payment if necessary.

As you can see, there are many home loans designed for lower income borrowers. If you are looking to buy a home but worry you can’t afford it, consider one of these options.

Without a doubt, the COVID-19 (coronavirus) pandemic has impacted every part of the economy. This is a dangerous virus and has left many parts of the country on lockdown orders to prevent it from spreading rapidly. The question many people are asking is how much the real estate is going to be impacted by the virus as well.

People Are Not Looking For Houses

One of the biggest impacts of coronavirus is that some people simply aren’t out looking for houses. Stay at home orders and social distancing measures have prevented people from touring homes that they may be interested in buying and sellers postponing the listing of their home for sale.

In some parts of the country, the new listings available for homes have dropped drastically. This includes areas of the country that have been hit the hardest by the virus such as New York and California. Even web traffic to various real estate sites such as Zillow has dropped as well. Without a doubt, the rate of weekly mortgage applications has been impacted as well.

The Impact Of International Trade

In addition, for those who want to move, they might find a slowdown in international shipping and trade challenging. Many of the items that people need to furnish a home such as couches, tables, stoves, washers, dryers, ovens, and more are made overseas. Many home building materials are also manufactured and shipped from abroad. This creates a challenge for home builders and remodelers to effectively source the materials they need. It may take some time for the supply chain to reset and catch up with pent up demand.

The Response Of The Federal Government

Right now, those who currently own homes can find some relief from monthly mortgage payments if they are struggling financially. The government has put a moratorium in place on foreclosures. They have also told mortgage servicers to offer forebearance options for many mortgages. While these grace measures will expire eventually, they may be helpful for the time being.

Looking Forward

The impact of COVID-19 on the nation’s real estate market is already apparent; however, the real question is how long the market is going to take to recover. The most recent report from National Association of Realtors states that 2020 is forecast for a 15% overall decline in the real estate industry. Many analysts believe that the real estate industry will be one of the fastest segments to recover across the country. Once the market does open up, the demand should increase quickly.

Loan Programs For Lower Income Buyers

How Will Coronavirus Impact Our Real Estate Economy?

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