5 Home Loans for Single Moms

There’s no doubt that being a single mom is challenging. There’s also no doubt that qualifying for a mortgage can be difficult even under normal circumstances.

mother and child

The National Association of Realtors found that single female buyers account for 9% of all home purchases. This figure is down from 20% in 2010. And the median purchase price for single female buyers was $189,000, which is the lowest of all median home purchases.

For many single mothers, trying to qualify for a mortgage with only one income can feel next to impossible. But as a parent, it’s normal to want to provide a comfortable home for your children.

And thankfully, there are loans and financial assistance programs available that can help you do just that. Let’s look at some of the best mortgage programs available for single moms.

Challenges Single Moms Face in Buying a Home

One of the most difficult challenges that many single mothers face is a lack of income. They are responsible for providing for themselves and their children on one income, and they don’t always receive child support.

It can be challenging because mortgage companies want to see that you have a certain amount of disposable income before they’re willing to lend to you. You need to prove that you can make your monthly mortgage payments, have a low debt-to-income ratio, and a strong credit history.

Plus, most lenders require down payments between 10% and 20%. Most people struggle to come up with this kind of cash, so it can be especially challenging for a single mother.

5 Home Loans for Single Moms

If you’re a single mom looking to purchase a home, there are options available to you. Listed below are the five best mortgage assistance programs for single moms.

1. Down Payment Assistance Programs

Homeownership is a dream for many, but the initial costs can sometimes stand as a formidable barrier. For aspiring homeowners facing this challenge, down payment assistance programs act as a financial bridge, easing the burden of upfront expenses. Offered across various states and localities, these programs are crafted to cater to differing financial situations.

Lifting financial barriers: The highlight of these programs is their primary purpose – reducing the initial costs of buying a home. By either lowering or completely covering the down payment, they create a more accessible route to homeownership for many who might find it out of reach otherwise.

Local solutions for local challenges: Many states and cities have their unique down payment assistance programs designed with their residents in mind. From specific grants to interest-free loans, the types and benefits of these programs can vary widely based on the region.

Multiple options: Some programs might offer flat monetary assistance, like a set grant amount, while others could provide a percentage of the home’s price. Additionally, there might be options that assist not just with the down payment, but also with closing costs.

Criteria and eligibility: Like any financial program, these assistance initiatives come with their sets of requirements. Factors like income levels, property location, and first-time homebuyer status can influence eligibility.

Your next steps: If the prospect of reduced initial costs sounds appealing, dive into research specific to your state or city. Local housing agencies and official state websites often provide comprehensive lists of available down payment assistance programs. By understanding what’s accessible in your region, you can make a more informed decision on your path to homeownership.

2. FHA Loans

FHA loans are a popular option for single parents struggling to come up with a down payment. You can apply for this type of home loan through a bank or online mortgage lender, and the Federal Housing Administration (FHA) and the U.S. Department of Housing and Urban Development (HUD) guarantee the home loan.

Flexible credit requirements: One of the most significant advantages of an FHA loan is its lenient credit criteria. Even if your credit score isn’t perfect, you may still be eligible for this loan, offering a lifeline to many potential homeowners who’ve faced financial hiccups in the past.

Lower down payments: Traditional loans often demand a hefty down payment, but with an FHA loan, you can potentially secure your dream home with as little as 3.5% down. This makes the path to homeownership more feasible for individuals without vast savings.

Debt-to-income leeway: Where many conventional loans are strict about debt-to-income ratios, FHA loans often provide a bit more wiggle room, accommodating borrowers with higher debt levels.

Government assurance: With the Federal Housing Administration backing these loans, lenders often feel a heightened sense of security. As a result, borrowers can often enjoy more favorable loan terms and conditions.

Understanding the criteria: While FHA loans offer flexibility, there are still criteria to meet. This includes ensuring the property meets specific standards and falls within set loan limits. Additionally, borrowers will need to pay a mortgage insurance premium (MIP), which can add to the monthly payment. It is usually more expensive than a conventional loan, and it remains in place until you refinance or sell the property.

Getting started with an FHA loan: If the benefits of an FHA loan resonate with your situation, the next logical step is to consult with an FHA-approved lender. They’ll guide you through the process, ensuring you’re informed, prepared, and ready to make the best decision for your homeownership dreams.

3. USDA Loans

When thinking of affordable homeownership, rural areas might not be the first thing that comes to mind. Yet, the U.S. Department of Agriculture (USDA) has paved a unique path to homeownership, especially in these lesser-populated regions. USDA loans stand as a testament to the government’s commitment to making homeownership accessible to a broader audience, regardless of urban or rural preferences.

Zero down payment: The standout feature of USDA loans is the possibility to finance the entire purchase price of a home. Imagine walking into your new home without the stress of a hefty upfront payment. That’s the magic of the USDA.

Flexible location choices: While the term “rural” defines the USDA’s primary target, many suburban areas also fall within their eligibility map. It’s not just about countryside homes; it’s about expanding homeownership in less densely populated areas.

Competitive interest rates: Often, USDA loans come with interest rates that are either at par or even better than conventional loans. This can translate into significant savings over the life of the mortgage.

Government guarantee: With the backing of the U.S. Department of Agriculture, lenders often extend more favorable terms to borrowers. This backing ensures lower risks for lenders and better loan conditions for aspiring homeowners.

Understanding eligibility: To be a part of the USDA’s vision, you’ll need to meet specific criteria. This includes income restrictions based on the median in your area and ensuring the property falls within the USDA’s designated zones.

Starting the USDA adventure: If the prospect of a no-down-payment home in a tranquil setting appeals to you, look into the USDA loan process. Engaging with a lender familiar with USDA loans will offer clarity and set you on a promising path toward a home that aligns with your dreams.

4. VA Loans

For those who have bravely served in our nation’s military, VA loans are the government’s way of saying thanks. Whether you’re a veteran, an active-duty service member, or the widow of someone who served, these loans offer distinct benefits tailored to recognize and support your sacrifices.

No down payment: What sets VA loans apart is the option to finance 100% of a home’s purchase price. That means you can step into homeownership without the heavy upfront cost that often deters potential buyers.

Low-interest rates: Traditionally, VA loans come with interest rates that are more competitive than many conventional loans. Over the lifespan of your mortgage, this could equate to substantial savings.

Skip the PMI: With many mortgages, if you can’t put down a certain percentage, you’re hit with the additional monthly cost of private mortgage insurance (PMI). However, with VA loans, you won’t have to factor in PMI, no matter your down payment amount.

Government assurance: With 100% backing from the government, lenders often offer more favorable terms. It’s a win-win; you get better conditions, and they get added security.

Meeting the criteria: To take advantage of a VA loan, you’ll need to meet specific service stipulations. The criteria vary based on your military service’s nature and duration. Additionally, the property you choose must meet VA standards, which entails an inspection and appraisal by a licensed professional.

If a VA loan sounds like a good fit, your next step is to consult with a VA-approved lender. They’ll walk you through the ins and outs, ensuring that you’re both eligible and fully informed.

5. HomeReady Mortgage by Fannie Mae

If you’re a single mom or a first-time homebuyer searching for a more flexible mortgage option, the HomeReady Mortgage by Fannie Mae might be just what you’re looking for. This program is designed to assist individuals, like you, in accessing affordable home financing.

Low down payment: With HomeReady, the daunting hurdle of a large down payment becomes more manageable. This program allows for down payments as low as 3%, enabling homeownership for those who might be limited by savings.

Inclusive co-borrowing: Understanding that households today come in all forms, HomeReady offers a unique feature. It permits co-borrowers who won’t be residing in the house, like a supportive relative or close friend. This flexibility can significantly enhance borrowing capacity.

Reduced PMI: While many mortgages saddle borrowers with hefty private mortgage insurance (PMI) premiums, the HomeReady program shines with its reduced rates. Over time, this can result in tangible savings.

Government-backed confidence: Fannie Mae’s backing offers lenders the assurance they need, which often translates to more favorable loan terms and conditions for borrowers.

Meeting the guidelines: Like all specialized loan programs, HomeReady comes with its specific criteria. It’s essential to understand these requirements and ensure that both the borrower and the property align with them.

Stepping into HomeReady: If the features of the HomeReady Mortgage align with your situation, the next step is to liaise with a lender experienced with Fannie Mae’s offerings. Their guidance can illuminate the home buying process, ensuring that you make an informed choice, well-suited to your housing aspirations.

Preparing for Homeownership: Key Steps for Single Moms

Taking the first step towards homeownership as a single mom can feel daunting, but with the right preparation, it becomes a more manageable process. To ensure you’re making the right choices for you and your family, consider these foundational steps:

  1. Determine your budget: Before you enter the real estate market, it’s important to fully understand your financial standing. Assess your monthly income, expenses, and potential home-related costs. This will give you a clear picture of the mortgage payment you can afford without straining your finances. Remember, it’s not just the monthly mortgage you have to account for; consider property taxes, utilities, and potential maintenance costs too.
  2. Search for low down payment options: Not all home loans for single moms require a hefty down payment. It’s beneficial to look for home buying programs that offer low down payment options. This can help in making homeownership more attainable without depleting your savings.
  3. Establish a savings plan: Even if you opt for a low down payment loan, you’ll still likely need to pay some upfront costs. Establishing a dedicated savings goal can help. Consider opening a high-interest savings account where your money can grow over time, helping you reach your down payment goal faster.
  4. Stay informed: Securing home loans for single moms can be a challenging process. Stay informed by researching and comparing different home loan options. Consider reaching out to financial advisors or housing counselors who can guide you through the home buying process.

In addition to these steps, it’s also beneficial to look into loan programs tailored for low-income borrowers. Such programs can offer favorable loan terms, grants, or even down payment assistance, making homeownership even more achievable.

See also: Best Home Loans for Low-Income Borrowers

Bottom Line

None of the home buying programs outlined above are specific to single mothers. However, hopefully, you can see that it’s possible to find an affordable mortgage with a low down payment. Purchasing a home as a single mother can be challenging, but it’s also very doable. Make sure you compare your options and find the program that works best for your family.

Frequently Asked Questions

Can I buy a home as a single mom?

Yes, you can purchase a home as a single mom. However, it can be more difficult to qualify for traditional home loans when you are a single parent.

You may need to look into government-backed loans such as FHA loans or USDA loans, which may have more flexible qualification requirements. Alternatively, you could look into owner-financing or rent-to-own options.

What types of home loans are available for single moms?

Single moms may be eligible for several types of home loans, including FHA loans, USDA loans, VA loans, and conventional loans.

How much money can single mothers borrow when applying for a home loan?

The amount of money that single mothers can borrow when applying for a home loan depends on several factors. These include income, credit score, debt-to-income ratio, and down payment.

Lenders will look at your income to determine how much they are willing to lend, and your credit score will determine the interest rate you receive. It is also important to have a sufficient down payment, typically at least 3-5% of the home’s value.

Additionally, lenders will want to see that your debt-to-income ratio is less than 43%, meaning that your monthly debt payments are less than 43% of your monthly income. With good credit and a sufficient down payment, single mothers may be able to borrow up to 97% of the home’s value.

What is the minimum credit score required to get a home loan for single mothers?

The minimum credit score required to get a home loan for single mothers can vary depending on the type of loan and the mortgage lender.

Generally speaking, FHA loans tend to have the lowest credit score requirements, with a minimum score of 500. This can be helpful for single mothers who may not have the best credit.

Other types of loans, such as a conventional loan, may have a minimum credit score requirement of 620 or higher. It is important to check with the lender to find out the exact credit score requirements for the type of loan you are applying for.

Are there any special programs available for single mothers looking to purchase a home?

Yes, there are several programs available across the U.S. designed to assist single mothers and low-income families in their quest for homeownership. These programs can make the home-buying process more affordable through a combination of grants, low-interest loans, down payment assistance, and more. Aside from the ones we mentioned above, here are some other notable ones:

  1. State-specific programs: Various states offer specific programs to assist single parents or low-income individuals. For instance, states might have special housing grants for single mothers, or they may offer seminars and classes on home buying that come with financial incentives upon completion.
  2. Habitat for Humanity: This non-profit organization helps families build and rehabilitate their homes. Single mothers can offer volunteer hours to the organization as a form of ‘down payment,’ assisting in constructing their own homes or others.
  3. Individual Development Account (IDA): IDAs are matched savings accounts, where for every dollar saved, it gets matched by federal and non-federal funds. This can be a boon for single mothers looking to accumulate a down payment.
  4. Section 8 Homeownership Voucher: While Section 8 is often associated with rental assistance, there’s a homeownership option that allows eligible participants to use voucher payments to make mortgage payments.

Are there any special tax benefits for single mothers who purchase a home?

Yes, there are several tax benefits available to single mothers who purchase a home, such as the mortgage interest deduction and the homeowner’s tax credit.

How can a single parent save for a house?

  • Set a budget and stick to it: Make sure to create a budget and stick to it. Track your income and expenses and cut out unnecessary costs.
  • Set realistic goals: Set realistic goals for what you can afford and how much you will need to save each month.
  • Automate your savings: Set up an automatic transfer from your checking account to savings each month.
  • Reduce interest-bearing debt: Pay off as much debt as possible.
  • Use tax-advantaged savings accounts: Consider using tax-advantaged savings accounts, such as an IRA or 401k, to save for a house.
  • Take advantage of grants and assistance programs: Research grants and assistance programs available to single parents and take advantage of any that you may qualify for.
  • Make extra money: Look for ways to make extra money, such as a part-time job, side hustle, freelance work, or selling items online.
  • Live below your means: Live below your means and make sacrifices if necessary.
  • Talk to a financial advisor: Speak to a financial advisor or real estate agent to get advice on the best way to save for a house.

Does child support count as income for a mortgage?

Yes, child support may be counted as income when applying for a mortgage. Lenders will usually require proof of the payments, such as a tax return or court order.

Jamie Johnson
Meet the author

Jamie Johnson is a freelance writer who has been featured in publications like InvestorPlace and GOBankingRates. She writes about various personal finance topics including student loans, credit cards, investing, building credit, and more.