Single mothers face unique challenges when it comes to homeownership. Whether they stay home to handle the kids or they balance work and family life while doing it all alone, owning a home can seem impossible.
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Luckily, with today’s programs, it may be more possible than you think to own a home on your own. The programs available aren’t necessarily just for single mothers – they are for anyone that doesn’t have ‘perfect credit’ or doesn’t have 20% to put down on a home.
Keep reading to see what assistance is available for single mothers.
Find Down Payment Assistance Programs
First, we recommend exhausting all of your options for down payment assistance. While there is a loan program that you won’t’ need a down payment, a majority of programs do require at least a little money down on a home. The following resources may help you find down payment assistance.
- What does your state offer? Each state has its own programs for those facing financial distress but that want to own a home. If you are a low-income family, you have high chances of being able to get assistance. Each state has their own requirements regarding who qualifies as well as the amount of money they provide. On average, if you make less than 80% of the average income for your county and you are a first-time homebuyer, though, you’ll find a program in your state that may help.
- Get national help. You may even be able to take your request for down payment assistance to a national level. The National Homebuyer’s Fund may have a program that you fit into that can help you get your hands on money for a down payment. Typically, these funds are a grant; they are not a loan and no repayment is expected.
- Accept gift funds from family members or your employer. Many loan programs, including FHA and USDA loans allow you to use gift funds for your down payment. If you are able to secure the entire down payment as a gift, it may be acceptable as long as you have the credit score to support the program. This can alleviate the stress of saving money and help you become a homeowner sooner.
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Find the Right Loan Program
Even if you have down payment assistance, you’ll still need a mortgage program. While the below programs are not for single mother’s in particular, they can definitely apply and qualify for the program.
- FHA Loans – The FHA offers flexible guidelines and low down payment requirements, which may make it easier for single mothers to qualify for the loan. You’ll need a down payment of 3.5%. You’ll also need at least a 580 credit score and a maximum 41% total debt ratio. The good news is that 100% of the down payment can be a gift from a relative or a down payment assistance program.
- Good Neighbor Next Door – If you work as a community provider, such as a teacher, firefighter, police officer, or EMT, you may qualify for this discount mortgage program. With this program, you can buy a home that was previously foreclosed on for 50% of the list price. You secure funding from HUD (FHA financing) for 50% of the home’s price. If you live in the home for at least 3 years as your primary residence, the silent second mortgage for the remaining 50% will get written off, giving you ownership of a home for half of what it would have cost.
- USDA loans – If you don’t mind living in rural areas, you may qualify for 100% financing with a USDA loan. The USDA program caters to families with low to moderate income. You can see if you qualify by looking at the income requirements If you are eligible, you can then qualify for the program with at least a 640 credit score and a maximum 41% total debt ratio.
These are the basic guidelines lenders follow for these loan programs, but just like any loan, the guidelines can vary by lender. Each lender can add what they call ‘lender overlays.’ These are additional requirements on top of what the government-entity providing the program requires. For example, the FHA requires just a 580 credit score. With a 97.5% LTV, that is a low credit score to accept. This prompts some lenders to increase the requirements to something like 620 or 640 just to decrease the risk of default. While these programs aren’t specifically for single mothers, they are great programs for women in this situation. Each program provides some type of help to make homeownership reality even for those that have lower credit scores, higher debt ratios, and possibly lower income, as many single mothers often have.
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