Can single moms actually buy a home? This question may sound sexist or biased, but it holds a valid point. Couples looking to buy have double the leverage because they can use both incomes and credit histories to come off as more secure buyers.
For a single mom or dad, that luxury isn’t available. Still, that doesn’t mean you don’t have a shot at owning your own home.
Over 66% of home buyers are married couples, while 17% are single moms and 7% are single men. You’d be in the minority, and it may take some more time and extra effort, but it’s definitely possible. My mom who has been a single mom for at least 13 years now has been asking me to help her get ready to buy a house on her own for the past year now.
Here is some of the advice I’ve given her and would offer any single mom who has dreams of owning a home.
Improve Your Credit
This is advice I’d recommend for anyone looking to buy a house. When applying for a mortgage, your credit score and history plays a crucial role in your being approved for a loan and receiving a favorable interest rate.
The higher your credit score is, the lower your interest rate can be. A single percentage point for your rate could make a huge difference and either save or cost you tens of thousands of dollars over the life of your loan.
Go to AnnualCreditReport.com to obtain a full credit report from all 3 major credit bureaus. Review your reports in detail and make note of any errors or discrepancies. You want to do this before your lender does so you can contact who need to be contacted to clear up any mistakes or issues.
If you have quite a bit of debt, focus on paying it off and your credit score will increase as a result.
Pay Off As Much Debt As Possible
You probably don’t want debt looming over you on top of a house payment. Paying off your debt will make you look like a more attractive borrower to home lenders and it can improve your debt-to-income ratio.
Lenders will weigh how much debt you have compared to your salary in order to determine if you can afford to take on a mortgage payment. If you are a single mom with debt, you don’t have a second income to fall back on to improve your debt-to-income ratio.
Plus, if you do get a mortgage and money gets tight due to debt, you don’t want to risk losing your home if you can’t make payments.
If you’re looking to pay off your debt ASAP so you can improve your chances of getting approved for a mortgage so you can buy a home, here are some blog posts with tips and ideas to help you meet this goal.
- 8 Side Jobs to Help You Pay Off Debt
- How to Pay Off Credit Card Debt
- 3 Ways to Pay off Large Amounts of Debt in a Short Amount of Time
- How a Single Mom of Four Gets Out of Debt
Consider Down Payment Assistance Programs
Couples can generally save money faster if both people have an income and take advantage of strategies like living on one income and saving the other to come up with a down payment fast. This can come in handy if you’re looking to put 20% down on a home. For a $200,000 home, a 20% down payment would be $40,000 and a 10% down payment would be $20,000.
As a single mom, you may not be able to stash away that much money in just a few years so you can consider down payment assistance programs to help provide some financial relief.
Most programs are state-funded and do have location and income requirements. However, they are pretty flexible. In fact, the income requirements in some states are so lenient that many couples qualify to receive assistance as well. In the state of Illinois, I know the maximum income limit to qualify for a specific downpayment assistance program was $96,000 this past year.
If you’re looking for more information or a list of down payment assistance programs that you may qualify for in your state, you can check out HUD.gov.
Look Into an FHA Loan
If you can afford to put 20% down on your home, great. If you can’t look into other options like an FHA loan. FHA loans are insured by the Federal Housing Administration which is a government agency.
With this type of loan, you can put as little as 3.5% of the purchase price down on your home. You can also take advantage of more lenient credit score requirements. You can get approved with a score as low as 580.
Another thing that I like about FHA loans is that there are stricter requirements in regards to the quality of the home. During the home inspection process, the property needs to meet specific requirements as outlined by the FHA.
If they don’t the owner must have any issues fixed at their own expense before moving forward. With a conventional mortgage, you may have to do a lot back and forth of negotiation with the seller to get things fixed before moving forward.
If you’re interested in learning more about FHA loan requirements and how you can apply in your city, visit HUD’s informational website.
You can definitely buy a home as a single mom. You just need to take advantage of all the resources and options made available to you. It’s also important to make sure you make a conscious decision in regards to how much house you need to buy.
Be honest about your budget and aim to purchase something that fits within your means so you can comfortably manage expenses without having to work too hard or too often just to pay the bills.
**You can also check out this post with home buyers programs for single moms.