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. One common example is a Federal Housing Administration (FHA) loan, which helps low income individuals buy a home or refinance a mortgage. However, some private lenders also offer low income loans.
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 arrange “low income loans,” we understand that customers are more than just credit scores. When you apply for a loan through NetCredit, your eligibility will be determined by your broader financial picture - not just your credit score. 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 our online loan process? Check out our FAQ page — or contact us by phone or email.