If you’re a single mother in the market for a new home, chances are your income is limited. Government statistics say that around 80% of single-parent households are managed by females, and the fact that this is by definition a single-parent home means that money is probably tight.
But this is no reason to put off buying a home; in fact, this is probably one of the better times to invest in property, whether it’s a cute little bungalow just for your and your kids, or a larger property where you hope to entice renters in an income-generating venture.
Neither of these options is out of the realm of possibility for you, as long as you’re a responsible adult able to manage money in a reasonable way.
The only requirement is that you are able to fulfill the terms of the home loan. If you’ve managed to pay your rent for a decent interval—say five years of a good rental history—then you’re well on your way to qualifying for homeownership. If you’ve owned a home before and been a participant in meeting the mortgage, then you probably already have a good idea of what it means to own, and a step up in the loan-approval process.
The important point is that you have to be able to prove to lenders that you know enough about managing your money to handle a long-term (15 to 30 years) loan. The good news is that there are many ways to do that:
- If you have a long and successful rental history, prepare this beforehand, giving contact information for addresses, landlords or management agencies.
- If you’ve owned a home previously, even with a spouse or partner, list the mortgage company, payments, and outcome (date sold, sale price, etc).
- If you have either of these, but do not currently have an income that you think will support a home purchase, opt to buy a rental property. Highlight your good payment history, and outline how rental income will support your ability to fulfill the mortgage payments. Alternatively, look at some of the links to programs at the end of this article to find one that will help you make your mortgage payment, either by reducing your down payment (thus lowering your monthly payment), or actually providing some mortgage payment assistance.
If you do not have a good history of payments in the past, either for rentals or home loans, there are still options to explore. If your income is currently at a level that will support a mortgage, or if you can swing the mortgage based on rental income, you will have to do more work convincing loan agents that you are a good risk. It’s by no means impossible that you can buy a home without a record of good past payments—it just requires that you have honestly assessed your ability to meet the obligation going forward, and are able to convince the appropriate loan officers of this.
One good way to do this is to over-prepare. Imagine that a friend comes to you for a substantial loan of money. What would you want your friend to “prove” about being able to repay the loan? This is basically what a loan officer wants to see—that you have either already proved yourself reliable about meeting obligations, or that you have made changes in your life that make it likely you will meet obligations. This is no time to “hope and pray”—make sure that the information you provide is solid and provable:
Keep a file folder (or several) with important information organized, such as birth certificates for you and your children, social security number, work history and resume, past addresses for 5 or more years, etc. If you’ve owned a home in the past, include information like the mortgage company you made payments to, a record of payments, and the date of sale. If you’ve rented, include similar data. Having information like this on hand makes a good impression and tells people that you pay attention to the business of maintaining and keeping a home. Much of this information can be generated from the source itself, without your having to piece it together from bank statements or cancelled checks—just get in touch with the companies or rental agencies you did business with and request a copy of your account history.
Gather as much information as you can, and try to account for missing dates. If you can do so sincerely, try to explain in writing why you had a problem in the past, and what has changed in your life that makes you think you will be more successful in the future.
Showing an agency or government organization that you have a handle on your finances (even if they’re strained) will go a long way toward strengthening your case and chances for success. Create a budget (it doesn’t have to be fancy, computerized, or anything else—simple income and outflow will do) and stick to it. It’s much better to deal realistically with what your needs are than to fudge numbers and find in the future that you can’t make it work.
If you feel like your budget is too tight, or won’t work at all, what are your plans for improving your situation? Are you thinking about extra education or training to get a better job? Do you feel that if you can obtain housing for a certain cost, your budget situation will improve? Write out how you are planning your future so you can respond to any program or agency requests that probe how you expect to maintain your family AND pay your mortgage on a given income. You might find that ancillary programs can help, if staff are made aware of how you intend to proceed (grants for education or childcare might be available from the same agencies you’re contacting for housing assistance).
Wherever possible, eliminate distractions from your quest for a home of your own. If you’re having problems that seem to keep drawing you away from your primary goals, do whatever you can to rid yourself of them. Substance abuse, unpaid bills, ex-husbands or boyfriends who are problematic—any of these things can derail your efforts simply because they are taking energy away from the important task of finding or keeping quality, safe housing for yourself and your children.
In addition, they can sabotage your efforts by becoming known to agencies or organizations that were prepared to work with you. A typical example is major credit card debt—if you don’t disclose it to an agency considering you as a client, it’s possible they will begin to question other information you supplied. It’s better to confront these issues and have an explanation of how you’re dealing with them, in case they should come up during routine interviews or questionnaires. And again, as with making your plans for the future known, the agency you’re consulting may have other coordinating resources right at their fingertips that can help.
Note, if you are seeking a mortgage, you should look at our comprehensive mortgage guide.
Check Out Programs That Could Help
For all of the above cases, there is additional assistance provided mainly through the federal government (see links below). From down payment loans and grants, to ongoing mortgage relief assistance (and even help for refinancing existing mortgages), the federal government has a vested interest in promoting and assisting homeownership. It makes for better neighborhoods, stronger communities, healthier environments for kids, and inspires people to keep investing in the areas that make a difference nationwide. The agencies providing this assistance can be a spider web of information, but they are basically arranged as follows:
- HUD: Housing and Urban Development is provisioned by the Congress with a budget, which it distributes to its own programs (such as HUD Homes), and also to regional or state-based Housing Finance Agencies (HFA’s), which in turn create their own state-based programs. The states then fund programs submitted by regions, cities, or even more focused neighborhood initiatives. Navigating through these various programs and agencies can be quite confusing, so the links below are all listed under the general HUD heading. HUD has the most wide-ranging and accommodating programs to spend time researching, as their programs (or the programs they fund in each state), reach out to needs expressed by community activists, urban planners, revitalization experts, and many other groups invested in healthy communities. These are your tax dollars at work–make them work for you!
- USDA funds rural housing development initiatives. These are meant for people living outside the high-density, high-demand housing needs of city dwellers. They also distribute funds on a state-by-state basis, to be used for programs developed as appropriate for the population served.
- Private Resources such as Habitat For Humanity, a well-known organization devoted to developing affordable homeownership opportunities for clients willing to physically work for their homes.
While U.S. Housing and Urban Development (HUD) does not lend money directly to buyers to purchase a home, Federal Housing Administration (FHA) approved lenders make loans through a number of FHA-insurance programs.
HUD Adjustable Rate Mortgage Insurance
Basic FHA Insured Home Mortgage
HUD Homes for sale
A U.S. Department of Housing and Urban Development (HUD) home is a 1-to-4 unit residential property acquired by HUD as a result of a foreclosure action on a Federal Housing Administration (FHA)-insured mortgage. HUD becomes the property owner and offers the HUD Home for sale to recover the loss on the foreclosure claim.
Hope For Homeowners
This is a program for people at risk of losing their home due to default and foreclosure. If you are having difficulty paying your mortgage, you may be eligible to refinance into a mortgage that you can afford.
Rehabilitation Mortgage Insurance
This program may help individuals finance the cost of purchasing and rehabilitating their new or existing home.
Home Investment Partnerships Program
Includes Homeownership Vouchers
HOME is the largest Federal block grant to State and local governments designed exclusively to create affordable housing for low-income households. Each year it allocates approximately $2 billion among the States and hundreds of localities nationwide.
Click on the link below and select “Learn About Homeownership” to learn about how HOME can help you in your state:
USDA – Rural Development / Housing & Community Facilities Programs (HCFP)
The Housing and Community Facilities Programs provides a number of homeownership opportunities to rural Americans, as well as programs for home renovation and repair. HCFP also makes financing available to elderly, disabled, or low-income rural residents of multi-unit housing buildings to ensure they are able to make rent payments.
Habitat For Humanity
In general, prospective homeowners must:
- Be citizens or legal residents
- Prove steady income
- Have good credit
- Earn a monthly income that falls within minimum and maximum limits
- Sustain a savings account over a specified period of time
Habitat for Humanity is one way to buy a home on a single parent’s income. It uses volunteer labor and donations of community time and material to build or rehab homes for families in need. It does not, however, give away homes—if you become one of their partner families/homeowners, you will be expected to put hundreds of hours of work into helping with the construction. This is a great way to learn what it takes to do many homeowner repairs, because you’ll learn how to handle common tools, and you’ll see construction from the ground up—no better way to learn how to take care of your home. Houses are sold with no profit, which is why costs are low, and are financed affordably. The homeowners’ mortgage payments then go on to fund more Habitat houses for other deserving families.
National Association of Exclusive Buyer Agents
Buyer Agents are committed to the needs and education of the home buyer. Using a certified Buyer Agent, you can be confident that your best interests are being served during all phases of the home buying process.