The phrase “low income loan” applies to a variety of financing options for those whose income falls below certain levels, such as the average or median income of their community.
Many low income loans are backed by government-sponsored programs and might be used to help pay for college, buy a home, start a business or refinance existing debt. Two common examples are loans backed by the Federal Housing Administration (FHA) or the Veteran’s Administration (VA) that help low income individuals buy a home or refinance a mortgage.
Government-backed, low income loans are typically restricted to those with low income levels. In determining eligibility, a borrower’s income is compared to that of the median income for their area — often using statistics compiled by the Department of Housing and Urban Development (HUD).
For example, if the median income for an area is $40,000 and borrowers make less than this per year, they could be considered “low income.” Some lenders, states and programs may set the “low income” threshold at levels greater or less than the median income level.
Not only do lenders compare a borrower’s income to that of their community, they also analyze an applicant’s ability to pay back the loan. The debt-to-income (DTI) ratio is often used to make this determination.
Here are some key terms you’ll need to know when considering low income loans:
Although NetCredit does not specifically offer “low income loans,” we understand that our customers are more than just credit scores. We offer a personalized experience and look at your entire financial picture to check eligibility and determine loan offers. Want to see how much you can qualify for? Just check your eligibility to find out in a few short minutes. Have more questions about applying? Check out our FAQ page — or contact us by phone or email.