05 Aug How to Qualify For a Home Loan as a Low Income Earner
Owning a home is a dream for many Aussies. However, if you are a low income employee you may have doubts on how realistic it is to achieve your dream. With a variety of home loan options available, government support programs, some careful planning and a control of your finances, you should be able to accomplish your dream even if you are a low income earner.
Even though the path to owning a home while on a low income may be quite different from the traditional process of approaching a lender and submitting your home loan application, home ownership is still possible for those in the low income group.
As a low income earner, what are some of things you need to do to make home ownership a reality?
Knowing Your Ratios and Credit Score
When going through your application, lenders look at two main ratios to be able to determine your ability to buy a home – your debt-to-income ratio and your credit score. Your DTI, debt-to-income ratio, examines the amount of money that is being used to pay any debt that you already have. If you have any pending loans, you need to get in touch with your lender and set up a payment agreement and ensure they are paid on time.
Shared Home Ownership
One secret to owning a home when you are a low income earner is through the shared home ownership program offered by the government. With this program the government can invest up to 30 percent of the total cost of the home making them part owners. You may purchase it back in future when you are able to making you a sole owner of the property. In the event you choose to sell the home, the government will claim their share of the property.
First Home Owner Grant
The first home owner grant program which includes relocation grants, standard grants and various concessions such as stamp duty exemptions, begun in 2000. However, each territory and state has its own eligibility requirements and types of grants available. Depending on where you live or your specific circumstances, you can expect to receive a lump sum grant from anywhere between $5,000 and $25,000 with this program.
If you are initially denied a home loan because you do not qualify, it might pay to talk to an Australian mortgage professional to help fix your credit score and point you in the right direction.