Affordable housing continues to be a huge concern across the United States. Rising property costs and volatile mortgage interest rates have changed how often families and individuals can find homes within their budget. If this issue resonates with you, exploring various financing options may be your best chance at making homeownership more accessible.

Your Home Financing Options 

Unless you have a ton of cash ready to spend, your journey to homeownership in today’s housing affordability crisis will likely involve financing programs. The good news is there are many options available. That said, qualifying for financing and getting the amount you need for your dream home is a different matter. 

Conventional Mortgages

These home loans have no direct government involvement. Instead, the mortgage is typically backed by private lenders like banks and credit unions. Because there’s no government guarantee, these loans have stricter lending criteria.

Conventional mortgages fall into two categories — conforming and nonconforming. Conforming loans cannot exceed the conforming loan limit (CLL) value set by the Federal Housing Finance Agency (FHFA) for that fiscal year. The FHFA set the CLL for 2024 at $766,550 for single-unit properties not located in high-cost areas. This means you can’t borrow more than this amount under this program.

As the name implies, nonconforming mortgages don’t have to conform to set limits. If you’re looking to finance a luxury home or property in a high-cost area, this is the loan you need. Naturally, this option has more stringent qualification requirements.

Government-Insured Mortgages

These home loan programs have the full backing of the U.S. government, so they typically have laxer requirements. There are different types of government-backed mortgages depending on the federal agency supporting the program:

  • Federal Housing Administration (FHA): You can borrow between $498,257 and $1,149,825 for a single-family house with an FHA loan in 2024.
  • United States Department of Agriculture (USDA): If you’re purchasing a home in a rural area, you might qualify for the USDA home loan program. The loan limit generally depends on your financial circumstances. 
  • U.S. Department of Veterans Affairs (VA): This loan is only available to military service personnel, veterans and their eligible surviving spouses. The standout feature of this program is the lack of down payment and minimum credit score requirement. 

Specialty Programs 

Federal-sponsored enterprises like Fannie Mae and Freddie Mac offer affordable mortgage schemes that can make home-buying more accessible. For instance, the Fannie Mae HomePath Ready Buyer program lets you purchase foreclosed properties with only a 3% down payment required. Another example is the National Homebuyers Fund, which provides up to 5% of the mortgage loan amount to cover the down payment or closing costs.

Unsecured Loans

If you don’t qualify for conventional and government-supported mortgages, you may be able to obtain a personal loan or cash advance to finance your home purchase. However, these loans typically come with higher interest rates and shorter payment terms because they’re unsecured.

How Do Lenders Determine How Much You Can Borrow?

Generally speaking, lenders will establish your eligibility through the following criteria:

  • Gross income: Without a steady income, lenders are not likely to even consider your financing application. Also, the higher you earn, the higher the loan amount you may access.
  • DTI ratio: Your debt-to-income ratio is a measure of your current obligations against your current earnings. You might not qualify for a home loan if you have too much debt.
  • Credit score: The minimum credit score requirement depends on the type of financing you want to obtain. A score of 500 might qualify you for an FHA loan, while you need at least a 701 credit score for a nonconforming jumbo mortgage.
  • Down payment: The higher the down payment, the lower the financing amount required.

Improving Housing Affordability

According to a study involving 100 U.S. metropolitan areas, only 1 in 5 property listings was affordable for the typical household in 2022. The underlying factor driving the housing affordability crisis is imbalanced demand and supply. Global populations are growing faster than houses are being built to accommodate them. Simple economics says when supply is short, prices go up. 

The Department of Housing and Urban Development has made considerable efforts to address this disparity. For example, the Self-Help Homeownership Opportunity Program funds affordable housing development projects for low-income Americans. 

The current administration’s recent proposal to provide a $10,000 tax credit for first-time homebuyers and people selling their starter homes can also help ease affordability issues. As part of the measures to address the housing supply disparity, the president also announced a plan to build and renovate over two million homes. According to the White House, these efforts are already showing promising results, with more houses being built now than in the last 50 years.

State and local governments also play a key role in addressing the shortage of affordable housing. For instance, they can revise zoning laws related to minimum lot size requirements and building height limits. These changes can encourage higher-density housing developments and increase the number of homes for sale.

Achieving Homeownership in an Unaffordable Housing Market 

On your end, you can do several things to improve your chances of getting an affordable home.

Get the Timing Right 

Time the market and make your offer when there’s less competition. House prices tend to soar between April and September, which is when 80% of real estate moves occur in the U.S.

Relocate to a More Affordable Area

If your dream house in your current location is beyond your financial capabilities, try finding it in a different city. For example, Waco, Athens, Lakeland and Dover have median home prices ranging from $252,000 to $314,000, making them excellent choices for affordable housing.

Prioritize Debt Repayment

Clearing outstanding debts like credit card balances or vehicle repayments frees up valuable resources for your homeownership goals. Additionally, reducing your debt obligations improves your DTI ratio, which improves your chances of obtaining financing.

Plan Your Down Payment 

While some financing options don’t require a down payment, putting something down is generally better so you have a lower loan amount and more favorable terms. The prevailing expectation among lenders is you should be able to make a down payment of 20% of the property cost. Options like conventional mortgages let you pay as little as a 3% down payment. However, anything less than 20% will incur private mortgage insurance charges.

Consider Manufactured Homes 

Factory-assembled homes can be an affordable option for lower-income homebuyers. These structures cost around $127,250 on average, so it might be easier to obtain a mortgage loan or other financing.

Navigate Financing and Affordability in the Housing Market

House prices and related costs continue to rise despite so many financing options being made available every year. It’s easy to feel hopeless when you look at how expensive homes have become, but you can still afford a house with different mortgages and programs. By understanding the nuances of home funding, you can make informed decisions that align with your goals.


Evelyn Long is an expert real estate writer that has over five years of experience in the field. She regularly contributes to sites like NAR and Jason Fox to share her real estate insights. She is currently the Editor-in-Chief of Renovated Magazine, where you can subscribe to their newsletter to get more content from Evelyn.