How Single Mothers Can Get Help Buying Their First Home

Buying a home is a major milestone in anyone’s life. But for single mothers, it can seem downright impossible. With just one income to rely on, saving up a down payment is tough. And proving you can afford the monthly mortgage payments on your own may seem unlikely.

Luckily, there are special programs and financial tools aimed at helping single moms become homeowners With the right home loan, down payment assistance, grants, and budgeting strategies, your dream of owning a home while raising kids solo can become a reality

In this comprehensive guide we’ll explore all the ways single mothers can overcome the obstacles to homeownership. We’ll look at

• Special home loans for single moms
• Down payment assistance programs
• Grants and other help for single parents
• Tips for budgeting and saving on one income
• Strategies for improving your credit score
• How to calculate mortgage affordability

Home Loans Designed for Single Parents

The first hurdle for unmarried moms is qualifying for a mortgage. With just one income, it can be hard to meet the debt-to-income ratio requirements most lenders have.

Luckily, certain home loans come with more flexible standards that make it possible for single parents to buy. Here are some top options:

FHA Loans

Backed by the Federal Housing Administration, FHA loans only require a 3.5% down payment. Credit score requirements start at just 500. Monthly mortgage insurance is required. But overall, FHA loans offer one of the most accessible paths to homeownership for single moms.

VA Loans

For single moms who are military veterans, VA loans are a great choice. No down payment or monthly mortgage insurance is required. Credit score and income requirements are also relatively low. VA loans are administered through private lenders but guaranteed by the Department of Veterans Affairs.

USDA Loans

In designated rural areas, USDA loans are available with no down payment required. Income limits do apply. But for low-income single moms in rural communities, USDA loans can make buying a home achievable.

Down Payment Assistance Programs

Hundreds of state, local, and nonprofit programs around the country offer down payment assistance to qualifying home buyers. First-time buyer grants that don’t have to be repaid and subsidized second mortgages can help single moms come up with the cash needed to buy.

Family Assistance

If approved by the mortgage lender, family members can gift money to be used for a single mom’s down payment. Money received via gifts or loans from relatives doesn’t have to be repaid and can help cover the cost of buying a home.

Grants and Assistance for Single Moms

Beyond specialized mortgage products, many other programs provide financial help and services aimed at helping single parents achieve homeownership.

Homebuyer Education Classes

Required by many down payment assistance programs, homebuyer education teaches the financial planning, budgeting, and other skills needed for sustainable homeownership. Local housing nonprofits often offer free classes.

Down Payment Assistance Grants

As mentioned above, down payment assistance in the form of grants and forgivable loans is available through hundreds of state, local, and nonprofit organizations. These programs help cover the biggest obstacle that holds single parents back from buying – the down payment.

Habitat for Humanity

With volunteer labor and corporate sponsorships, Habitat builds affordable homes for lower-income buyers. Single mothers who apply and qualify can benefit from a Habitat home with an affordable mortgage.

Mortgage Credit Certificates

Available in some areas, MCCs give first-time buyers a federal tax credit each year, reducing the cost of homeownership. Parents who qualify can get thousands in annual savings through MCC programs.

Section 8 Homeownership Vouchers

For single moms already using Section 8 rental assistance vouchers, HUD’s homeownership voucher program can provide funds to subsidize a mortgage payment. This makes buying possible for some very low-income households.

Budgeting Tips for Single Moms

Coming up with the money needed to buy a house when you’re on one income isn’t easy. It requires careful budgeting and saving. Here are some tips:

• Reduce housing costs – Finding very low-cost housing, getting roommate(s), or moving in with family temporarily can radically reduce expenses and allow faster saving.

• Lower utility bills – Unplug devices, turn off lights, adjust the thermostat to save on electric, gas, water, etc. Every dollar counts when saving up to buy a home.

• Cut back discretionary spending – Limit shopping, entertainment, vacations, dining out, and subscription services to the necessities while saving for a home.

• Drive an older vehicle – Owning a paid-off, used car allows allocating more to home savings rather than a vehicle loan/lease payment.

• Use coupons and loyalty programs – When grocery shopping and making other essential purchases, take advantage of all possible discounts and savings.

• Shop second-hand – Buying kids’ clothing and home goods at thrift stores is an easy way to spend less.

• DIY everything possible – Doing your own hair, nails, home/car repairs, yardwork cuts down on hiring others for these services.

• Meal plan – Plan ahead, cook at home, bring lunch to work, and limit takeout to save big on food costs.

How to Improve Your Credit Score

For the best mortgage rates and options, a good credit score is key. Here are some tips for single moms to improve credit:

• Pay all bills on time – Set up autopay, reminders, whatever you need to never miss payments. Payment history is the biggest factor in your score.

• Use credit cards lightly – Charge no more than 30% of the card’s limit and pay in full each month. High balances hurt your score.

• Limit new credit – Apply for new credit cards or loans sparingly, if at all, while working on improving your score. New credit dings the score temporarily.

• Correct reporting errors – Dispute any incorrect information on your credit reports by contacting the agencies. Mistakes can drag down an otherwise good score.

• Build credit history – If you have no credit cards, get one, use lightly, and make on-time payments to establish positive history.

• Pay down balances – Ideally, keep credit card and revolving account balances below 10% of the limit. High balances hurt scores.

• Consolidate debt – If you have multiple high-rate debts, rolling them into a single lower rate loan can help pay them down faster.

Figuring Out How Much House You Can Afford

Mortgage lenders use two key ratios to determine if borrowers qualify for a given loan amount. Single moms should understand these:

Debt-to-Income Ratio (DTI) – This compares your monthly debts to your monthly income. Most lenders allow DTIs up to 50%. So if your gross monthly income is $4,000, your max monthly debt payments (mortgage, credit cards, loans, child support, etc) could be around $2,000. Lower DTIs may allow bigger loan amounts or better rates.

Housing Expense Ratio (HER) – Also called the “front-end ratio,” this compares the proposed mortgage payment specifically to your income. Most lenders allow HERs up to 28-33%. So on that $4,000 monthly income, your mortgage payment could be around $1,200 at the high end.

These two ratios give you a starting point for calculating a realistic affordable home price range and mortgage amount as a single mom. Online mortgage calculators can help you experiment with different down payments, rates, loan terms, and home prices to arrive at monthly payments that should fall within the ratios above.

It can take some tinkering to find a combination that works with your income, savings, and credit. But knowing your ratios will ensure you only look at homes really within your budget.

Final Thoughts

Owning a home as a single mother is an admirable goal. And with the right financing, assistance, budgeting, and planning, it’s absolutely achievable. Funding and programs exist to help single moms specifically overcome the biggest hurdles to buying a first home. Don’t let your marital or parental status discourage you. Homeownership is within your reach!

Put in the work to save, limit expenses, boost your credit, and explore mortgage/grant options. You’ll be amazed at how options open up. Before you know it, you and your kids will be moving into a home of your very own!

Frequency of Entities:
single moms/mothers: 23
home loans: 7
down payment: 10
grants: 5
credit score: 5
budgeting: 4
mortgage: 9
income: 8
debt-to-income ratio: 3
housing expense ratio: 2