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How to Buy a House in California with Low Income

Asian couple stands in front of their recently bought town house

Buying a home in California with a low income might be more attainable than you think. Much of the state offers a picture-perfect landscape ranging from plains to coastlines. If you are flexible with location and have an experienced lender and quality real estate agent in your corner, it’s possible to achieve the goal of homeownership.

New American Funding has multiple loan opportunities and programs designed to help you fund your California dream. Review these useful tips to have a general idea of how to begin your journey to homeownership. 

Can You Buy a House in California with Low Income?

Several programs make it possible to buy a house in California with a low income. For example, programs at the private, local, state and federal level work to ensure the goal of homeownership remains within reach for Californians at different income levels. Opportunities include mortgage programs, down payment assistance programs, state assistance programs, local programs, and government-backed loans like Federal Housing Administration (FHA) loans dedicated to making access to funding achievable. Lenders such as New American Funding often provide a vast selection of funding opportunities such as FHA loans, VA loans and USDA loans.

9 Steps to Buying a House in California with Low Income 

Before purchasing a house, research your eligibility, explore low-income buying programs and examine possible down payment assistance programs. When it comes to searching for a way to finance your housing future, finding the right program might be able to help you achieve your dream of homeownership. 

1. Search for Low-Income Homebuying Programs

Low-income homebuying programs often aim to make the goal of homeownership possible by easing the burden of funding. The programs typically strive to offset and lower fees like closing costs. For example, the California Housing Finance Agency (CHFA) provides homebuying programs intended to assist with down payments and closing costs.

When navigating how to obtain funding, private lenders like New American Funding provide loans and a down payment assistance program that may be able to assist low-income buyers.

2. Determine Eligibility

California has multiple housing programs and agencies, including the California Housing Agency and the CalWORKs Housing Support Program. The programs and agencies assist individuals from different income levels to obtain access to housing. Keep in mind income limits vary by location in California. According to the CHFA, the government and conventional income limits on loans for San Mateo County are set near $300,000 while Fresno County sits closer to $160,000. It’s possible to meet the eligibility requirements in one location while failing to meet the criteria in another area of the state. As the saying goes, location, location, location.

3. Look for Down Payment Assistance

Third parties, such as the government, may programs or loans that give borrowers concerned about down payments more flexible options. USDA and FHA loans may be able to lower or eliminate down payment costs. Lenders like New American Funding offer government-backed loans that may be able to decrease the amount spent on upfront housing costs.

New American Funding also offers a down payment assistance program called the Pathway to Homeownership. This program offers up to $8,000* in down payment assistance to eligible borrowers. This money can also be used to help finance closing costs and can be combined with other assistance programs.

4. Gather Required Documents

Applying for assistance programs and mortgages will require a lot of documentation. This documentation includes things like personal identifying information, proof of income, evidence of your credit score, and information regarding current debts. Proving income will require pay stubs, bank statements and tax documents. Lenders will also look at things like your credit history.

Review requirements for the program or loan that you are interested and check the accuracy of your documents prior to applying to expedite the process.

5. Apply for a Mortgage

California doesn't have a set minimum income to obtain a mortgage. Agencies such as CalHFA offer mortgage loans designed for low-to-moderate-income borrowers. CalHFA does not directly approve individuals for mortgages. Instead, a CalHFA-approved lender like New American Funding will service the loan.

New American Funding offers helpful resources such as calculators and blog posts designed to empower potential borrowers. You can use a mortgage calculator to determine possible mortgage payments to give yourself an idea of what loan terms you may need before you apply.

6. Find a Local Real Estate Agent in California

When searching for a local real estate agent, get as much background as you can and consider your own needs and wants. If possible get a referral from someone you trust. Prior to meeting agents, draw up a list of goals and questions. Your goals can be specific to the market conditions and questions should include things like details about the duration of their experience in the field.

NAF Homes,** an affiliated company of New American Funding, is a service that connects prequalified or preapproved homebuyers with local real estate agents. They can help you find an agent that will suit your homebuying goals.

7. Search for an Affordable Home

Location heavily impacts price. If possible, look for homes that have cosmetic issues such as unpopular paint colors or unkept yards because such details may lower the price of a home while being relatively simple to fix. Your real estate agent can help you find a home that is affordable for you.

8. Secure a Home Inspection and Appraisal

A home appraisal determines the value of a home while a home inspection often determines the quality and safety of a house. An appraisal is required by your lender to ensure that the home value is adequate to act as collateral to the loan amount being borrowed.

Home inspections detect safety issues or concerns that may be costly down the line. Inspectors may be able to safeguard your wallet by providing buyers with more room for negotiation while potentially indicating if a home is a bad investment.

9. Negotiate and Finalize Purchase Agreement

Negotiation allows buyers and sellers to create a more personalized deal. Once negotiations are settled, finalize the purchase agreement. The agreement is legally binding and includes many key details such as the agreed sales price and contingencies. 

5 Tips for Buying a House in California with Low Income

Consider improving your odds by boosting your credit score, saving for a down payment and determining a location that’s affordable to you. Having a clear plan while meeting or exceeding financial requirements may be able to improve your chances of becoming a homebuyer in California. 

Here are five tips that may help you buy a house in California with low income:

1. Improve Your Credit Score 

A strong credit score can provide favorable terms and rates. Check your credit to see if what loans and programs you may be able to qualify for. Although most lenders look for a minimum credit score of 620, some FHA loans make it possible to receive assistance with credit scores as low as 500 under certain conditions.

You can improve your credit score, regularly pay off your credit card balance and set up automatic payments for other bills. Automating bills can help you to avoid missed payments.

2. Save for a Down Payment and Closing Costs

Larger down payments may be able to tell lenders that you are a lower-risk borrower. Substantial down payments decrease monthly payments and may be able to make it easier to afford a home. Assistance programs typically cover some or all of the down payment and closing costs. 

3. Determine Where You Can Afford to Live in California 

Determining where you are able to live is a combination of finding the location you would prefer while understanding the capacity of your budget. Consider if living on the outskirts of major cities or in the suburbs might be more affordable. Review the costs of living in the area as well as the unique characteristics of the area that may be beneficial to you such as access surrounding schools and public transportation.

4. Use a Co-Signer 

A co-signer is a person who agrees to cover the loan if you are unable to pay. Before asking an individual to co-sign, consider how it might impact the dynamic of your relationship. Co-signers typically allow you to access better rates and more favorable terms. It’s common for co-signers to increase your chances of loan approval.

5. Ask for a Cash Gift 

A cash gift or mortgage gift is a lump sum given to a buyer. Cash gifts are not expected to be repaid and may be able to help a buyer achieve homeownership.

Loan Types Offered by New American Funding

When contemplating the best way to get funding, compare your personal situation to the loan opportunities provided by New American Funding. New American Funding has a wide selection of educational resources, tools and loans intended to help you on your way to affording housing. Some of the programs include:

FHA loans: The FHA loans were created by the Federal Housing Administration and backed by the government. The loan provides individuals with low credit scores the opportunity to access funding. FHA loans offer low down payments. Individuals that previously experienced foreclosure or bankruptcy are encouraged to apply. 

USDA loans: Government-backed USDA loans assist borrowers interested in living in rural areas. USDA loans are guaranteed by the Department of Agriculture and do not require a down payment. There is a geographic requirement to be eligible and exact loan limits vary by state.

VA loans: VA home loans are designed to help veterans and active-duty military access much-needed funding for homeownership. The loans provide lower interest rates, reduced funding fees and no down payment requirement for eligible borrowers.

Talk to your Loan Officer for details on what loan programs may be available. They are happy to answer questions and help you find what loan may be right for your needs.

Homeownership in California

The dream of cruising down the coast to your very own California home might be closer than you think. Several programs in California are designed to assist in the process of affording a home with low income. Review the steps as well as these tips as you begin the process of searching for the right funding opportunity for you. 


How Much Income do I Need to Buy a Home in California?

The income level needed to buy a home in California varies depending on factors such as size, location and type of property. A person probably needs to make at least $200,000 per year to afford a home in Los Angeles. In contrast, a person in Sacramento should probably make around $100,000 per year.

What Qualifies for Low-Income Housing in California?

In California, what qualifies an individual as low income depends on the median income of an area. People with less than 80% of an area’s stated median income will likely qualify as low income. 

How to Buy a House for the First Time in California?

Search for government programs and grants provided to first-time state homebuyers. It’s possible to qualify as a first-time homebuyer if you have not owned a home within three years. Examine the first-time mortgage loan opportunities and speak with lenders such as New American Funding to expedite the process. 


*Due to maximum seller concession rules, discount can be less than $25,000 in some cases where other concessions have been made to the consumer.

** NAF Homes, Inc. is an affiliate of New American Funding and does not originate mortgage loans or issue loan commitments.  NAF Homes, Inc. is a MI Real Estate Broker #6505431109, Tel. 844-626-1300.

NMLS #6606. Terms and Conditions Apply.  This is not a loan commitment or guarantee of any kind. Loan approval and rate are dependent upon borrower credit, collateral, financial history, and program availability at time of origination. Rates and terms are subject to change without notice.  All mortgage loan products are subject to credit and property approval.  © New American Funding, LLC. New American and New American Funding are registered trademarks of New American Funding, LLC. All Rights Reserved. Corp Office 14511 Myford Rd, Ste 100, Tustin, CA 92780. Ph 800-450-2010.  

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