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How to Buy a Home with a Very Low Income



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hey this is Katie and I want to share

with you how I was able to purchase a

home making only twenty thousand dollars

a year at the time I was young I was in

my early 20s and I was also a single

parent rent prices are really high right

now and a lot of the areas of the

country sometimes it makes more sense to

buy a house in this video I'm not going

to go into whether you should buy a

house or not I'm just going to tell you

how I did it after I had decided that I

should purchase a house that it was

going to be in my best financial

interest so when you go and apply for a

loan the banks are going to look at

three main things they're going to look

at your income your debt to income ratio

and your credit score because my income

was so low I did not qualify for a

traditional home loan but I did qualify

for an FHA loan and what the FHA loan is

is by the Federal Housing Administration

it's a government program where the

government actually insures your loan so

that more people will qualify for a home

loan through the FHA it's for people who

have a lower income or maybe have a

lower credit score or haven't had great

credit or finance financial situations

in the past but that have established

themself as improving their financial

situation so in order to qualify for the

FHA loan you need to have a credit score

of at least 580 typically there are

exceptions to most of the things that I

say but these are the typical standards

so a credit score of at least 580 you

can have had a bankruptcy and a

foreclosure in the past but you have to

have good reestablished credit they are

also going to look at your debt to

income ratio and there's two different

types of debt to income ratio one is a

front end and one is the back end in the

front and

is your mortgage payment including your

insurance and property taxes and that

needs to be around 31% and then the back

end includes all of your debt including

credit cards student loans car notes

anything like that and that needs to be

typically between 43 and 50 percent a

benefit of the FHA loan is the down

payment is usually a lot less than a

traditional loan usually it's around

three and a half percent but there are

grants that will even lower that even

more I actually had a zero percent down

payment on my purchase with an FHA loan

there's also an option to get a 203k

renovation loan which is what I did and

what that is is it'll give you the

renovation loan we'll give you extra

money to make certain renovations to the

house and when they calculate the the

value of the house it's after the

renovations are complete so if you

purchase a house for $60,000 in the

house after your proposed renovations is

going to be valued at $100,000 then you

would be able to get a loan for $100,000

if you qualified for a loan in that

amount

specifically in my situation because I

made such a low income the way that I

was really able to get and qualify for

the FHA loan is because my debt to

income ratio was really low I had no

other debt when I went to go purchase my

house so my debt to income ratio was met

the qualifications since I didn't have

any other debt I also had a little bit

of money in savings even though I didn't

have a down payment the bank liked to

see that I had saved money I had a

little bit of a cushion and that I was

financially responsible responsible

enough to be able to save money and it's

just smart to have money saved because

when you do own a home something might

go wrong your air-conditioning might

break a month into the purchase and you

might need to replace your air

conditioning or something could always

go wrong after you closed on your house

so it's smart to have savings whether or

not the bank requires it another thing I

did was I found my house it was a

foreclosure so I got a really good deal

on a house that looked pretty ugly

initially I saw there was a lot of

potential in it and I knew that after

the renovations the house was going to

be nice but because the house was pretty

ugly when I initially purchased it it

was structurally sound and the layout

the floor plan was nice of sonna acres

in a nice area but I got a really good

deal on it because cosmetically it was

pretty shabby when I went to purchase my

house I did I didn't only look at it as

a living space but also an investment

property and I bought it about six years

ago and at this time I have at least

fifty thousand dollars of equity in the

house because I've been doing some other

minor renovations over the past few

years just to increase the value of the

house so not

only did I have I been living in this

house for a few years but I've also

earned some equity so when you look when

you go to purchase a home do you

consider it an investment and maybe you

can make a little bit of money on it

also thank you guys for watching let me

know if you have any questions about

anything that I've said or any other

advice you want to throw out there

hopefully this will be helpful for you

and if you're considering looking into

purchasing a home

if rent seems too expensive and you

think that you might qualify for the FHA

loan definitely look into it because it

has been a really good choice that I

have made in purchasing a home versus

renting I've saved so much money plus I

have lots of equity in my house now

you