Single parents face a lot of challenges raising kids and paying the bills on their own. The financial struggle that often comes with these challenges make it seem impossible for single mothers or fathers to buy a house. Also, the lower end of the housing market suffers the most inventory shortage, leaving single parents with fewer options which makes it more difficult for them to find a home they can afford.
Managing the responsibility of working and raising family as a single parent can be overwhelming. However, there are various single parent home loan options and assistance programs available to help purchase or refinance home.
Buying a home is one of the biggest financial decisions a person can make. For single moms, homeownership may seem out of reach. With just one income and the demands of raising a family, saving up for a down payment can be very challenging. Additionally, many single moms have less-than-perfect credit scores, which makes qualifying for a mortgage difficult. However, there are home loan options available for single moms, even those with bad credit.
Why Buying a Home Makes Sense for Single Moms
While renting provides flexibility, owning a home has many benefits for single parents. Homeownership builds equity, allowing you to grow your net worth over time. Your house can also appreciate in value and give you a nice return when you sell it. Owning a home also provides stability and consistency for raising children, versus moving from rental to rental. Plus, once you have paid off your mortgage, you’ll have predictable housing costs for the rest of your life.
Home Buying Process Overview
Before applying for a mortgage, take time to get your finances in order Pay down existing debts, build up savings for a down payment, and take steps to improve your credit score. Work on increasing your income if possible, through a promotion, side gig, or higher-paying job
Next, get pre-approved for a loan. This shows sellers you are serious. Shop around with several lenders to find the best rates and terms. Look for low down payment options like FHA, VA, and USDA loans. Consider features like low mortgage insurance and options to cancel MI when you reach 20% equity.
Once your offer is accepted, complete the loan application and provide all required documentation Get an inspection, review disclosures carefully, and ask the lender questions Attend the closing, then celebrate being handed the keys to your new home!
Loans for Single Moms with Lower Credit Scores
Having a high credit score in the 700s will qualify you for the lowest rates. However, single moms can still get approved with a score in the 600s or even 500s, though interest rates will be higher. Here are some options:
FHA loans – Require just a 580 credit score. Down payments as low as 3.5%. Can use gifts for down payment. Low monthly mortgage insurance.
VA loans – No minimum credit score requirement No down payment needed Limited closing costs, Ideal for eligible military families,
USDA loans – No minimum credit score. 100% financing available. For moderate income borrowers in rural areas.
Subprime lenders – Specialize in approving borrowers with credit challenges. Higher rates and costs, but provide a path to ownership.
State/local programs – Check for first-time homebuyer or single mom initiatives. May offer grants, low rates, or downpayment assistance.
Fannie Mae HomeReady – Requires 620 FICO score. Low down payments. Income limits apply. Features to make mortgage more affordable.
Freddie Mac Home Possible – 620 minimum FICO. 3% down payment. Income caps. Low mortgage insurance option.
Tips for Strengthening Your Mortgage Application
Though it may take some time and effort, there are steps you can take to improve your chances of mortgage approval:
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Pay down revolving balances – Reducing credit card balances can boost your score quickly. Pay off small balances completely.
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Become an authorized user – Get added as an authorized user on a credit card with good payment history.
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Limit credit inquiries – Too many hard inquiries when rate shopping can ding your score. Limit to a few key applications.
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Explain past issues – If you had setbacks like a job loss or medical crisis, document this for underwriting.
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Improve debt-to-income ratio – Your total monthly debt payments divided by gross monthly income should be below 50%.
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Make a larger down payment – Putting down more upfront shows you are financially prepared for homeownership.
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Bring in a co-signer – Adding a co-signer with good credit can help you get approved and improve loan terms.
Alternative Home Buying Options
If you need more time to improve your finances, consider stepping stone approaches such as:
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Rent-to-own arrangements
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Lease-to-purchase programs
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Owner financing through a private seller
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Buying a fixer-upper property with renovation financing
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Co-buying a home with family or friends
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Buying a condo or co-op which tend to be less expensive
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Looking at low-cost markets with affordable housing prices
Be Persistent and Seek Support
As a single mom, buying a home while dealing with bad credit may seem daunting. But with commitment to the process and utilizing the many programs and resources available, the dream of homeownership can become a reality. Find a trusted real estate agent and loan officer who will patiently guide you through every step. Seek out non-profit housing counselors for assistance. Surround yourself with a strong support system of loved ones who will cheer you on to the finish line. With hard work, the right home loan is within your reach.
VA Loans for Single Parents
VA loans are mortgages backed by the U.S. Department of Veterans Affairs (VA) and is offered to qualified veterans, service members, and eligible surviving military spouses. A single mother may be eligible to get a VA loan through her own military service or even as a widow.
VA loans require no mortgage insurance, zero down payments, low-interest rates, and limited closing costs, which makes it a good option for single parents who can’t afford a down payment.
If you are a veteran or the spouse of a veteran, you may want to consider a VA mortgage. Read our article about VA mortgages for more information.
Conventional Loans for Single Parents
While conventional loans often have higher lending standards, there are some single parents who can qualify for this type of loan. Some traditional loans require at least 5% down payment, but borrowers need to have a pretty good credit score and credit history to qualify.
There are some low down payment options available but lenders will typically require borrowers to pay for private mortgage insurance if their down payment is less than 20%.
Conventional mortgages are the most popular type nationally but since single parents often struggle financially or even with their credit, this may or may not be an option for you. Read our article on conventional mortgages to see if you qualify.
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FAQ
What is single mom syndrome?
Are FHA loans a good option for single mothers?
The first thing to note about FHA loans is their flexibility with credit scores. Traditional loans often require higher credit scores, which can be a barrier for single mothers with a limited credit history. FHA loans, on the other hand, accommodate credit scores as low as 500, making them a more accessible option.
Are personal loans viable for single moms with bad credit?
Personal loans are viable for single moms with bad credit, while those with no income might fare better by tapping government support or grants – if possible.
What are the best home loans for single moms with bad credit?
However, many of the options already discussed are also great home loans for single moms with bad credit. FHA loans, in particular, open the door to homeownership for borrowers with bad credit. To qualify for the lowest down payment of 3.5%, you’ll need a credit score of at least 580 – a score many conventional lenders won’t even lend to.
Can a single mom get a mortgage?
“It can be tough to support a family on one income. But, if a single mom has decent credit, they could qualify for a mortgage,” says Mark Gundersen, a senior loan officer at Shelter Mortgage Company in Saint Charles, Illinois. If you’re a single mom and looking to buy a home, here are some of the loan programs that might work best for you.
What are the best types of home loans for Single Moms & Dads?
Here are some of the best types of home loans for single moms and dads: FHA loan. FHA loans are backed by the Federal Housing Administration and are a good option for low-income borrowers with bad credit. If you have a credit score of 580 or higher, you can qualify with a down payment as low as 3.5%.
Are there different types of home loans for single parents?
There are a variety of home loans available for single parents, and many come with flexible credit and down payment options. Here are some of the best types of home loans for single moms and dads: FHA loan. FHA loans are backed by the Federal Housing Administration and are a good option for low-income borrowers with bad credit.