What is AMI?
AMI, or Area Median Income, is the median salary for households in a specific metropolitan area, meaning that half of the families in that region earn more than that amount, and half earn less.
The U.S. Department of Housing and Urban Development (HUD) defines “low-income households” as ones that earn up to 80% of AMI in their area.
Best mortgages for low-income homebuyers
Best for a low down payment: Rocket Mortgage
Rocket Mortgage
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Mortgage types
Conventional, FHA, VA, HomeReady, Home Possible, Rocket ONE+, jumbo, refinancing, home equity loan
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Terms
10-, 15- and 30-year fixed-term conventional loans, 30-year VA and FHA loans, custom mortgages with fixed-rate terms from 8 to 29 years.
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Minimum credit score
620 for conventional, 500 for FHA
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Minimum down payment
0% for VA, 1% for Rocket ONE+, 3% for conventional, 3.5% for FHA, 10% to 15% for jumbo
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Availability
Rocket Mortgage is available to borrowers nationwide.
Pros
- Offers 1% down mortgage
- High scores for customer satisfaction from J.D. Power
- Average closing time of 22 days.
- Rebate of up to $10,000 for buying with Rocket Homes
Cons
- No USDA mortgages, construction loans or HELOCs
- Hard credit check required for customized rate
- Higher origination fees than the competition
- No physical branches
Who’s this for? ONE+ by Rocket Mortgage is available to borrowers earning 80% or less of the area median income (AMI) with a credit score of 620 or higher. It only requires borrowers to put down between 1% and 2.99%, and will contribute an additional 2%.
Standout features: If you buy your home through the lender’s real estate division, Rocket Homes, you can receive 1.25% of the loan amount as a closing credit. You can also earn Rocket Rewards, which provide closing cost credits for completing qualifying activities.
Best for assistance grants: Bank of America
Bank of America Home Mortgage Loans
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Annual Percentage Rate (APR)
Apply online for personalized rates
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Types of loans
Conventional, FHA, VA, Affordable Loan Solution® mortgage, jumbo, medical professional, refinancing, HELOC
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Terms
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Credit needed
620 for conventional, 580 for FHA, 680 for jumbo
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Minimum down payment
3% with Affordable Loan Solution®
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Offers first-time homebuyer assistance?
Pros
- Affordable Loan Solution® mortgage only requires 3% down
- Up to $10,000 in down payment assistance for eligible borrowers
- Up to $7,500 in closing cost grants in select markets
- No annual fees or closing costs for HELOCs
- Existing BoA customers eligible for discounted rates or fees
Cons
- Lender fees not disclosed
- No USDA loans, home equity loans or reverse mortgages
Who’s this for? s Community Homeownership Commitment program is a 3% down payment mortgage for borrowers earning 80% of AMI or less. It includes up to $17,000 in grants toward a down payment and closing costs.
Standout features: Existing Bank of America customers can receive up to $600 to offset their origination fee, which can be as much as 1.0% of the loan amount.
Best for FHA loans: Guild Mortgage
Guild Mortgage
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Types of mortgage
Conventional, FHA, VA, USDA, Arrive Home, Zero Down, jumbo, renovation, refinancing, reverse mortgages, home equity loans, HELOC
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Terms
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Minimum credit score
540 for FHA, VA and USDA loans; 600 for Zero Down; 620 for conventional loans, 680 for jumbo loans. Nontraditional credit options are available
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Minimum down payment
0% for USDA, VA, Arrive Home™ or Zero Down; 1% for conventional loans, 3.5% for FHA loans
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Availability
Guild Mortgage lends in all U.S. states except New York.
Pros
- Homebuyer Express loan closes in 17 days or borrowers can receive $500 in closing costs
- More than 740 branches in 46 states
- Offers home equity loans and reverse mortgages
- E-closings available
Cons
- Rates are not available online
- Does not issue mortgages in New York
- Mixed customer satisfaction scores from J.D. Power
Who’s this for? Borrowers typically need 3.5% down to qualify for a government-backed FHA mortgage, but Guild Mortgage‘s Zero Down program shrinks that to 0%. It combines a standard FHA loan with a second mortgage to cover the down payment and closing costs. Best of all, there’s no income cap.
Guild also offers income-dependent assistance, including the 1% Down mortgage, which provides up to $5,000 in lender assistance for borrowers making 80% or less of AMI in their region.
Standout features: Guild Gateway to Homeownership Assistance provides up to $5,000 in lender credits toward closing costs for homebuyers in designated census tracts in Dallas, Phoenix, St. Louis and Columbia, South Carolina. The program can be paired with conventional, FHA or VA financing.
Best for borrowers in big cities: Chase Bank
Chase Bank
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Mortgage types
Conventional loans, FHA loans, VA loans, jumbo loans and proprietary low-down-payment DreaMaker℠ and Standard Agency mortgages, refinancing, home equity loans
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Terms
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Minimum credit score
620 for conventional, 500 for FHA
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Minimum down payment
0% for VA, 3% for DreaMaker or Standard Agency loan, 3.5% for FHA
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Availability
Chase lends in all 50 states and Washington, D.C.
Pros
- Chase DreaMaker℠ loan only requires 3% down payment
- Existing customers eligible for rate reduction
- Above-average customer satisfaction scores
- Closing timeline guarantee
- Homebuyer grants of up to $7,500
Cons
- No USDA loans or HELOCs
- No closing guarantee for refinancing
- Chase homebuyer grant only available in select areas.
Who’s this for? Chase Bank‘s DreaMaker loan is a conventional 3% mortgage for borrowers who make 80% AMI or live in one of 15 markets, including Atlanta, Dallas, Los Angeles, Miami, New York City and Washington D.C.
Standout features: Chase provides eligible homebuyers with $5,000 if it misses the scheduled closing deadline.
Best for borrowers with moderate income: New American Funding
New American Funding
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Types of mortgages
Conventional, FHA, USDA, VA, jumbo, refinancing, home equity loan, reverse mortgage
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Terms
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Minimum credit score
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Minimum down payment
0% for VA or USDA loans, 3% for conventional, 3.5% for FHA
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Availability
New American Funding lends in all 50 states and Washington, D.C.
Pros
- Flexible credit requirements
- Helps buyers make all-cash offers
- Programs to increase minority homeownership
- Nationwide availability
Cons
- High fees
- Customized rates not available online
- No home equity loans
Who’s this for? While most income-restricted mortgages are for borrowers earning 80% of AMI, New American Funding approves those who earn up to 100% for its Pathway to Homeownership program, which pairs a conventional 3% down mortgage and $6,000 in down payment assistance.
Standout features: NFT offers an all-cash purchase option, which can give buyers an edge in a competitive housing market.
Online mortgage lenders can often help homebuyers with lower interest rates and faster closing times
Offers in this section are from affiliate partners and selected based on a combination of engagement, product relevance, compensation, and consistent availability.
Who is a low-income homebuyer?
HUD defines a low-income household as earning 80% or less of the AMI in their metropolitan area.
AMI varies based on family size and location: A family of four in Yazoo City, Mississippi, can earn up to $37,600 (80% of Yazoo City’s AMI) and still be considered low income. In New York City, however, a family of four could earn as much as $129,600 and still be at 80% of AMI.
Read more: What is down payment assistance?
Mortgage lenders typically base income-based loans on HUD’s definition. You can find the AMI in your area by typing your ZIP code into Fannie Mae’s AMI lookup tool.
Some lenders reserve certain products for people with “very low” (up to 50% of AMI) or “extremely low” (up to 30%) income, while others accept applicants making up to 100% of AMI, which HUD considers “moderate income.”
| Extremely low income | Very low income | Low income | Moderate income |
|---|---|---|---|
| up to 30% of AMI | 31% to 50% of AMI | 51% to 80% of AMI | Typically 80% to 120% |
Some financing isn’t based on income at all. Lenders may consider census tract information to target historically underserved communities.
How much house can I afford?
You can determine how much you can spend on a house by looking at your monthly housing budget, which HUD says should be no more than 30% of your gross monthly income. (That includes mortgage or rent payments, property taxes, home insurance and utilities.)
Someone earning $100,000 a year — or roughly $8,333 a month — should spend no more than about $2,500 a month on housing.
To see if a house is within your budget, plug the list price into our mortgage calculator below. If the monthly payments on it are less than 30% of your income, it’s probably affordable. If they’re more, it’s likely beyond your budget.
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Why trust CNBC Select?
At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every mortgage review is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of mortgage products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.
Our methodology
CNBC Select analyzed dozens of banks, credit unions and online lenders to determine which are the best for low-income homebuyers. We focused on the following features:
Low-income homebuyer programs: We analyzed lenders’ income- and census tract-restricted products designed for individuals with low incomes or those residing in historically underserved communities.
Loan availability: The lenders we chose offered mortgages in all or most states.
Closing timeline: We gave more weight to lenders with shorter-than-average closing times or that guaranteed on-time closing.
Fees: The mortgage process includes origination, application and underwriting fees, as well as charges for appraisals, title insurance, attorneys and other closing costs. When possible, we noted if a lender had lower fees, discounts or waived certain fees.
Customer service: We gave more weight to lenders that scored highly on J.D. Power’s mortgage origination and servicing surveys. We also noted if they had robust customer service phone hours and a website with an online chat feature and educational resources.
We also considered CNBC Select audience data when available, such as general demographics and engagement with our content and tools.
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Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.