Buying a Home as a Single Mom: Programs, Grants, and Loans to Help in 2023

Being a single mom is tough. You’re trying to provide for your family on one income. Every dollar counts when you’re budgeting for rent, food, childcare, transportation, and other basic needs. With all those expenses, saving up for a down payment can feel next to impossible.

But owning your own home has huge benefits over renting You build equity as you pay down the loan Your housing costs won’t go up when the landlord raises rent each year. And you can customize your home to perfectly suit your family’s needs.

The idea of taking out a mortgage on a single income might seem crazy But there are programs, grants, and special loans available that make buying a home very doable for single moms

First Time Home Buyer Programs Help Single Moms

First-time buyer programs, offered by state and local governments, are designed specifically for people struggling to come up with a down payment.

These programs issue grants and no-interest or low-interest loans to cover your closing costs and down payment When used as down payment on an FHA, USDA, or VA loan, zero percent down mortgages are possible

Down Payment Assistance for Single Moms

Down payment assistance (DPA) programs exist in every state. Local non-profit groups offer these programs with funding from the federal government, state housing agencies, or private sources.

Down payment grants and loans from these agencies typically range from 2% to 5% of the home’s purchase price. That can equate to $3,000 to $12,000 based on a $150,000 to $300,000 home purchase.

VA and USDA Loans Work for Single Moms

VA and USDA loans allow zero down payment when you use a DPA grant for closing costs. USDA loans do have income limits based on your location. VA loans are limited to veterans, active duty military, and surviving spouses. But neither program requires mortgage insurance.

FHA Loans Help Single Parents

FHA loans are a great option because they only require a 3.5% down payment. You can use gift funds or down payment assistance for that 3.5%. FHA does require mortgage insurance but offers low credit score and debt-to-income requirements.

HomeReady and Home Possible Help with Downpayment

Fannie Mae and Freddie Mac conventional loans allow down payments as low as 3% when you use their HomeReady and Home Possible programs. Reduced mortgage insurance also helps keep payments down.

Grants Help Single Moms Become Homeowners

Several grant programs provide huge discounts and financial assistance:

• Good Neighbor Next Door gives 50% off list price on HUD homes to teachers, EMTs, and law enforcement who commit to live there 36 months.

• The National Homebuyers Fund provides up to 5% of the mortgage amount to cover downpayment and closing costs through grants and loans.

• Habitat for Humanity partners with future homeowners to build new homes. Recipients’ mortgage payments are kept very low through zero-interest loans and subsidies.

Tips for Single Moms Buying a Home

• Get pre-approved – Knowing your budget and credit standing sets expectations.
• Ask the seller to cover closing costs in the offer – Reduces your cash outlay.
• Look for homes priced below your approval amount – To keep payments comfortable.
• Use down payment assistance programs – Grants and loans make it possible.
• Hire a real estate agent – Their expertise helps navigate the process.
• Attend homebuyer education – Get guidance from HUD-certified advisors.

Qualifying for a Mortgage as a Single Mom

Lenders generally look for at least a 620 credit score and a debt-to-income ratio around 45% for approval. Payment history on rent and utilities help demonstrate you can handle the mortgage payment.

Documented child support counts toward your income. Funds gifted from family can pay closing costs and cover the down payment.

Having a co-signer or co-borrower – like a parent, sibling, or friend – makes it easier to qualify if your credit or income fall short. Their income pays the mortgage if you can’t, but they don’t get rights to the home.

Getting Pre-approved Removes Doubt

Talking to a lender helps you understand what you can afford. Pre-approval shows home sellers you’re serious. Get pre-approved as soon as you start looking so you know what price range to focus your home search on.

Be Realistic to Keep Payments Affordable

It’s tempting to want lots of space as your kids grow up. But stay focused on needs vs wants. A modest home with 3 bedrooms costs much less than a luxury home with 5 bedrooms.

When armed with programs, assistance, and the right loan, single moms can absolutely achieve the dream of homeownership for their families. Don’t let your single income discourage you from applying.