While there may have once been a negative stigma associated with single parent home buying, according to the 2021 profile of home buyers and sellers from the National Association of Realtors, 19% of buyers were single women, and 9% were single men.
For single parents, just like couples, securing a successful, happy and healthy future for their children means everything. Owning a home is a reliable means of building wealth in the U.S. – moreover, children of homeowners will likely become homeowners. Nevertheless, home buying can be a tricky experience, especially in today’s uncertain economy.
Here are some home buying tips for single parents to help navigate the complex housing market.
Budgetary Considerations for Home Buying
As with any major purchase, it’s paramount to begin by arranging a budget. Consider that most first-time home buyers admit to having to make financial sacrifices, including reduced spending on luxury goods, entertainment, and clothes. Another helpful tip when creating a budget is to include one’s monthly expenses with and without the mortgage expenses; child support payments also count as income toward a mortgage.
Various Government Programs and Financial Assistance
Consider utilizing the various government programs available for single parents. When deciding on a program, it is best to look for one that doesn’t require a large down payment. Single parents with low to moderate income shouldn’t feel obligated to use a program if it’s outside their means – there are other governmental plans and assistance.
First-time home buyers (or those who have not owned for three years) might be eligible for Federal Housing Authority (FHA) home loans – there are no income-eligibility requirements, and the down payment is only 3.5%. Another helpful program for first-time homebuyers is Mortgage Credit Certificates which reduce a mortgage's cost, allowing participants to qualify for a larger one.
For single partners who are also veterans, VA loans allow one to buy a home without a down payment, mortgage insurance and even with poor credit. Likewise, it's wise to research the various financial assistance, tax credits or interest rates offered in one's state. These vary depending on the state – for example, California has 380 programs while Texas has 181.
How Credit Score Affects Home Buying
Additionally, be sure to factor in one’s credit score, as it is very influential in getting a home loan. Although a single parent could get a loan with bad credit, it is not guaranteed. People with poor credit scores often accept unfavorable loan terms, so it’s best to try and find more forgiving programs.
For those in the process of exiting a relationship, it’s crucial to discontinue any joint accounts and to begin developing one’s credit. And while some lenders might be apprehensive of single parents, the 1974 Equal Credit Opportunity Act forbids “discrimination based on sex and marital status when applying for credit.”
You’re Never Alone – Contact Your NMC Agent
Home buying is time-consuming for any parent – single parents are no exception. On top of leveraging home-counseling services, single parents should also reach out to their trusted agents for guidance and clarity. You are never alone in this process, and the NMC team is here to help.