Making sure their children grow up in a safe and healthy environment is a priority for many people â including single parents. If youâre a single parent looking to buy a home for your family, considerations like finding the best home loan option are well worth your time and attention.
While there are no âsingle parent home loansâ designed specifically for single parents, plenty of resources are available to help you overcome common barriers like low income or poor credit. If youâre a single parent looking to make your dream of homeownership a reality, you can do it!
Letâs take a look at some ways to approach getting a home loan as a single parent â from how to get started to the types of loans that might work best.
Buying a home as a single mother can seem daunting. With just one income, limited savings, and the many expenses that come with raising kids solo, getting approved for a mortgage may feel impossible. But there are programs and loans tailored to the unique needs of single moms that make homeownership very achievable. One option is an FHA loan.
FHA loans are backed by the Federal Housing Administration and designed for borrowers who may not qualify for conventional loans. Thanks to low down payments and flexible credit requirements, FHA loans are ideal mortgages for single moms. Here’s what you need to know about using FHA financing to buy a house as a single parent.
What Are FHA Loans?
FHA loans are government-insured mortgages issued by private lenders but insured by the FHA. This reduces risks to the lender allowing them to offer more flexible terms. Some key features of FHA loans include
- Low down payments, starting at just 3.5%
- Lenient credit requirements – minimum 580 FICO score
- Low mortgage insurance rates
- Gift funds can be used for the down payment
- No required reserves
- Assumable financing – the loan can transfer to a new owner if you sell
These features make FHA mortgages ideal for borrowers with lower incomes, limited savings, or less-than-perfect credit – common hurdles for single moms. FHA financing helps qualified borrowers overcome these challenges and become homeowners.
FHA Loan Requirements for Single Moms
To qualify for an FHA loan as a single mother, here are the main requirements:
Income – You must have a reliable source of income. Whether you earn a salary or hourly wage from a job, receive child support, alimony, government assistance, or other recurring income, lenders want to see you have steady funds to make mortgage payments.
Credit – FHA loans require a minimum credit score of 580 for 3.5% down and 500 for 10% down. The higher your credit score, the better your interest rate and approval odds. Scores of 620+ get the best terms. If you have bad credit, take time to improve it before applying.
Debt-to-Income Ratio – Your total monthly debt payments, including the new mortgage, cannot exceed 43% of your gross monthly income. Shoot for a ratio below 36% for best approval chances.
Down Payment – You’ll need at least 3.5% down for an FHA loan. This down payment can be funded via savings, gifts, grants, loans, or down payment assistance programs.
Stable Income – As a single mom, you’ll need to show at least two years of stable income sources. Provide recent paystubs, tax returns, and documents to verify all recurring income.
Homebuying Education – Completing a homebuyer education course makes you eligible for reduced FHA mortgage insurance rates. Do an 8-hour online course.
If you meet these requirements, you should qualify for an FHA loan even as a single mother The rest of this guide offers tips for getting approved and buying your dream home with FHA financing
Gather Documents to Apply
Before applying for an FHA mortgage, collect financial documents that lenders will need to verify. This includes:
- Pay stubs going back 30+ days
- W-2s for the past 2 years
- Federal tax returns for 2 years
- Bank statements showing assets and recurring deposits
- Statements showing recurring income like child support
- Credit report
- Debt information (student loans, car loans, credit cards, etc)
- List of assets like retirement and investment accounts
- Certificate of completion for homebuyer education course
Have these ready when you apply for a quicker underwriting process
Shop Multiple Lenders
Don’t just apply with one lender. FHA terms are the same with every lender, but requirements beyond FHA minimums vary. One lender may deny you while another approves you. Shopping around increases your chances.
Get rate quotes and see who offers the lowest interest rate and fees. Compare lender requirements. Apply with 3-5 lenders for best results.
Some top FHA lenders include Guaranteed Rate, loanDepot, and Veterans United. Search online for “FHA lenders near me” to find more options.
Leverage Down Payment Assistance
One common challenge single moms face is coming up with the down payment. Even 3.5% of the purchase price can be hard to save when you’re raising kids on one income. Here are some ways to get down payment help:
- Gift funds – Ask a relative for a gift. Get a gift letter confirming it’s not a loan.
- Grants – Check for federal, state, or local down payment grants for single moms.
- Down payment assistance programs – Non-profits like Habitat for Humanity offer DPAs for qualifying buyers.
- Sellers – Ask the seller to cover 3% or more of your closing costs.
- Lenders – Some lenders offer down payment assistance loans.
Every little bit helps when buying a home as a single mom. The right down payment assistance program can make or break your chances of getting approved.
Improve Your Credit Score
Since FHA loans require only a 580 FICO score, you don’t need perfect credit to qualify. But the higher your score, the better. Taking steps to boost your credit score before applying gives you the best shot at approval on the most favorable terms.
Here are some tips for quickly raising your credit score:
- Pay all bills on time – this has the biggest impact on your scores.
- Pay down credit card balances – aim for less than 30% of the limit.
- Dispute and fix errors on your credit reports.
- Become an authorized user on someone else’s old credit card.
- Don’t open new credit cards right before applying for a mortgage.
With diligent credit management, you may be able to raise your scores 50-100 points within a few months. Monitor your credit reports and scores using a free site like Credit Karma.
Know Your Budget and the Right Loan Amount
As a single mom, it’s important to know how much home you can realistically afford. Consider your total monthly house payment, including:
- Principal & interest
- Property taxes
- Homeowners insurance
- Mortgage insurance
- HOA dues (if applicable)
Your total payment should be no more than 28% of your gross monthly income to stay under the 43% total debt ratio that FHA requires. Use mortgage calculators to estimate payments for various loan amounts. Get pre-approved for a loan you know you can afford.
Buying too much house is a common mistake for excited first-time homebuyers. Be conservative with your budget to make homeownership more manageable.
Understand the Mortgage Process
If you’ve never purchased a home before, educate yourself on the mortgage process so you know what to expect. Key steps include:
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Getting pre-approved – Meet with lenders to get pre-approved before making an offer. This shows sellers you’re serious.
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Finding a home – Once pre-approved, start shopping for homes in your target price range. Lean on your real estate agent to help.
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Making an offer – When you find the perfect home, submit an offer with your agent’s help. Negotiate a good deal.
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Inspections & appraisal – Order a home inspection to uncover issues. Get an appraisal to ensure the home value supports your offer price.
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Loan processing & underwriting – Provide all required documents so your lender can verify your eligibility and approve your loan.
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Closing – Once approved, you’ll sign your final loan documents. Bring your down payment and closing costs. Get the keys!
Knowing what to expect takes the stress out of the process. And working with a great real estate agent and loan officer guides you smoothly through each milestone.
Be Prepared for Closing Costs
In addition to your down payment, closing costs for mortgage fees and prepaids average 3-6% of the loan amount. Closing costs for an FHA loan typically fall on the higher side.
As a single mom with limited funds, you’ll want to account for these extra costs. Here are some top closing costs:
- Origination fees – 1% of the loan amount goes to the lender
- Appraisal fee – $500+ for home appraisal
- Credit report fee – $25+ per person
- Title fees – $700+ for title search, insurance, etc.
- Recording fees – $50+ to record your home purchase
- Prepaids – 1-2 months of property taxes and homeowners insurance
Save up over time so you’re ready. Ask the seller to cover some costs. See if your lender offers lender credits or lower rates for higher closing costs. Know your options to offset these fees.
You Can Do It!
While getting approved for a
Single Parent First-Time Home Buyer Grants
Every year, the government sets aside funding through the U.S. Department of Housing and Urban Development (HUD) to support housing initiatives for citizens. HUD offers over 20 grants related to housing and homeownership. Apart from national programs, grants can also be available at the state and local government levels.
Although there are no grants specifically for single parents, there are several grants available for first-time home buyers or low-income buyers that may be useful.
Are There Home Loans For Single Mothers?
The short answer is yes, there are loans for single moms to obtain â but not a specific loan for single moms only. The home loans for single moms are also available to any single parent. Itâs no surprise, though, that this question is often asked by women. More than 1/3 of home buyers â repeat or first-time, mother or not â are single women.
According to data from the National Association of REALTORS® (NAR) 2021 report, about 20% of first-time buyers and 18% of repeat buyers were single women, making them the second most common demographic behind married couples. Single women were almost twice as likely as single men to be first-time home buyers and over twice as likely to be repeat buyers.
Still, getting a home loan while single can potentially present a few challenges, whether youâre a father or a mother. Living on a single income can make saving for a home more difficult. This can make down payment and closing costs problematic, but down payment assistance programs can help. Finding the right programs and preparing your finances can help you buy the home youâve been dreaming of.
Single Parent Home Loans
What are the different types of single mother home loans?
There are four main types of single mother home loans. FHA home loans, which are backed by the Federal Housing Administration, are an excellent resource for single mothers seeking homeownership. Here’s a break down of how they work and why they’re beneficial. The first thing to note about FHA loans is their flexibility with credit scores.
Are there first-time home buyer loans available for single moms?
Yes, there are first-time home buyer loans specifically for single moms. These loans often come with benefits such as lower down payments, reduced interest rates, and easier qualification criteria. Examples include FHA loans and certain state-specific first-time homebuyer programs.
Can single mothers qualify for a home loan?
Single mothers can qualify for loans and home buying assistance programs that can help make the dream of homeownership a reality. ‘It can be tough to support a family on one income.’ (The passage implies that these programs exist to help single mothers overcome this challenge)
Where can I get a home loan for a single mother?
The USDA also has loans for homes in rural areas. State and local government programs: Many states and local governments offer down payment assistance programs, some specifically for single mothers. These programs may offer grants, forgivable loans, or low-interest loans to help with down payment and closing costs.