There’s a lot to consider as a single mom homebuyer, but that doesn’t mean it’s impossible.
If you’re looking to buy as a single parent, a 2017 report from the National Association of Realtors found that you’re not alone, with 66 percent of recent buyers being single females.
The key here is: you’re not just a single female, but a mom, which means buying a home can be challenging in a number of ways that it may not otherwise. Not only do you have to take on the burden of making all of the tough decisions, but you also have little ones to consider and you may be making this purchase with your income alone.
Yet, the hard part—buying a home as a single mom—is also the good part. Not only do you get to choose the home that you love the most, but there are many programs and options available to make the purchase easier for you.
Keep these tips in mind as start thinking about owning your own home.
Research Home Buying Programs
If you’re looking for financial assistance, see if you qualify for any available federal, state, or local government programs for low-income, single-parent home buyers. The Federal Housing Authority (FHA), for example, offers FHA home loans to those who have moderate or low incomes. FHA mortgage guidelines offer:
- 5 percent down payment with a 580 credit score
- 10 percent down with a 500-579 credit score
What’s more, with an FHA loan, the 3.5 percent down payment can be gifted to you if someone in your life plans to help you buy the home.
FHA loans aren’t your only flexible option. Also research:
- VA loans
- USDA loans
- HUD homes
Consider a Piggyback Loan
Traditionally, experts advise a 20 percent down payment, as lenders see this as a good indication that you’re a strong borrower. As a single parent, however, you might not be able to part with that much cash, seeing as you don’t have dual incomes and are likely working with a tighter budget.
In this case, consider a piggyback loan to reduce the amount of money you need to put down. Also referred to as an 80/10/10 mortgage, a piggyback loan allows you to finance 80 percent of a home through a mortgage, but the difference is, you put just 10 percent down in cash. The other 10 percent comes from a second loan worth 10 percent of the home’s value.
This gives more flexibility in terms of where the down payment is coming from. This may allow you to maintain more of your savings for emergencies or save some cash for future home upgrades.
Write Your Budget
Before stepping foot inside your first open house, write out your budget. While you may have a vague idea of what you can afford, put pen to paper. This will help you clarify so you don’t end up in a position where you’re “house poor,” meaning all you can afford is your mortgage. The best part is, you don’t actually have to put pen to paper.
Use a tool like Redfin’s affordability calculator. Once you input your income, monthly spending, and loan type, you’ll get a “recommended price” and “recommended max price.” Use this calculator to get a range of home prices for varying types of loans and percentage rates. This will give you all your options, which is a great place to start.
If you haven’t done out a regular spending budget lately, now’s a good time to do that as well. Start by considering how much you need to save for a home, based on what the calculator suggested. Then, work backward:
- How much do you need for the down payment based on the options you researched?
- How much do you currently have in savings?
- How much do you need to get you from where you are to have the down payment?
- How much do you need to save each month to get there?
Get Excited to Buy
There’s a lot to consider as a single homebuyer, but that doesn’t mean it’s impossible. Quite the opposite, there are many resources available to make this purchase more affordable and manageable. Consider all available buying programs, get real with your budget, and look into a loan that allows more flexibility, like a piggyback loan. When you find the home of your dreams, you’ll be ready to sign on the dotted line.