Friday, November 16, 2001

I regularly receive e-mails from readers who desperately want to buy a house but just seem to be in dire straits financially. Beyond that, they are dismayed at the ever-increasing price of their rent and housing in general.

In addition, they just cannot seem to make more money. They are in industries that will not provide them more opportunity than what they have now.

One writer shared with me that his salary was at $15,000 and that although there are houses priced at about $50,000, his debt-to-salary ratio knocks him out of the buying arena at this time. He cannot see homeownership as a part of his future.

To this person, I say, don’t give up hope. Someone making $15,000 could buy a house in several markets with today’s interest rates.

The traditional percentage of a person’s salary allowed by lenders is 36 percent. Therefore, a person making $15,000 would have $450 for a monthly mortgage payment. This amount could borrow roughly $65,000 to $70,000, depending on the interest rate and taxes.

While that won’t buy a single-family house in most markets, it will buy a property of some sort that provides a lower-income borrower a home of his own. That’s the bottom line. The details may be a little more complex. Those in lower income brackets may have to make some tough decisions to raise the savings and cash flow needed to own a home.

The best advice I can give is to talk with a mortgage or real estate professional to see where you stand financially. Below are some quick directions on heading toward homeownership:

Increase your cash flow. This may mean getting into another line of work, taking on a part-time job or getting the skills (going to school) to prepare yourself for a higher salary. It could be as involved as pursuing a college degree or getting into a trade, such as plumbing, carpentry or electrical work, which takes less training but pays higher than unskilled labor.

Move. If you are in an expensive metropolitan area and the above step isn’t going to work then find a job elsewhere in a cheaper housing market. The minimum wage is the minimum wage whether in expensive New York City or rural Turtletown, Tenn. Obviously, you’ll have more buying power in Turtletown (yes, a real town the hometown of my grandparents).

Get out of debt. I’ve talked about my GOOD principle before. Frankly, being debt free gives you more housing options (and a lot less stress) than anything else you can do.

Look to housing assistance programs. There are various organizations across the country some listed here that can help buyers with down payments, closing costs and debt reduction. These are national groups, but there are plenty of state-based organizations available, as well. Search for them online using your search engine of choice, by plugging in “housing assistance” and your state name.

Housing Assistance Corp. is a Nevada-based nonprofit corporation that operates Home Grants, a special down payment assistance program providing nonrepayable grants and gifts to individuals and families nationwide. Call 702/385-3973; or check out

The Housing Assistance Council helps local organizations build affordable houses in rural America, helps in development in both single- and multifamily houses and helps low-income rural buyers through a self-help “sweat-equity” construction program. It maintains a focus on high-need groups and regions: Indian country, the Mississippi Delta, farmworkers, the Southwest border region and Appalachia. Housing Assistance Council, 1025 Vermont Ave. NW, Suite 606, Washington, D.C. 20005; 202/842-8600;

Community Housing Assistance Program Inc. was founded in 1991 and serves predominantly California, Washington and Oregon. The nonprofit organization is a managing partner for 42 tax credit partnerships with more than 5,500 units of affordable housing. Community Housing Assistance Program, 3803 E. Casselle Ave., Orange, Calif. 92869; 714/744-6252;

USDA Rural Development is the only government agency included in this list because of its unique programs, which support loans to businesses through banks and community-managed lending pools. Rural Housing Service National Office, U.S. Department of Agriculture, Room 5037, South Building, 14th St. and Independence Ave. SW, Washington, D.C. 20250; 202/720-4323;

The Nehemiah Program provides gift funds for down payment and closing costs (of any resale or new property) to qualified buyers using an eligible loan program, such as an FHA loan.

Gift funds of 1 percent to 6 percent of the contract sales price can be requested, depending on the particular needs of the buyer. Home buyers often need as little as 1 percent of the sales price in reserves. Call 877/634-3642, or visit

Housing Action Resource Trust operates a Down Payment Assistance Program to assist with down payment costs for buyers who qualify for a first mortgage loan.

The gift amount is limited to $15,000, which can be used for closing costs, prepaids, rate buydowns and debts or collections (as mandated by the loan underwriter). Call 909/945-1574; or contact

M. Anthony Carr has written about real estate for more than 12 years. Send comments and questions by e-mail (

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