Can Low-Income, Single Moms Purchase a Home?

For many low-income single mothers, the dream of home ownership is smothered by long working hours and too many bills. Having a place to truly call your own can seem like a fantasy. Fortunately, if you’re willing to put in some work, there are programs available to help you attain your goal and buy your own home.

How it works

In the wake of the 2008 recession, nobody is willing to give homes away for free. To qualify for program assistance, you’ll still need to prove that you have respectable credit. The home you purchase also has to be attainable. You won’t receive help for a house that is clearly beyond your means.

The U.S. Department of Housing and Urban Development (HUD), the Federal Housing Administration (FHA) and even the U.S. Department of Agriculture (USDA) all have programs that make it possible for low-income people – including, but not limited to, single mothers – to buy homes.

 

 

Securing the down payment

Traditionally, down payments on home purchases are anywhere from 10-20%. It’s no wonder that low-income families have such a hard time finding homes which they can purchase!

Some flexible programs allow single moms with a low income to obtain loans that require much smaller loan payments. The FHA is very accommodating and can usually get families loans where the down payment requirement is only 3.5%. The California Housing Finance Agency (CALHFA) and other programs like it routinely provide loans with only 1% required. If you’re prepared to live in the country, a USDA Rural Development loan may secure you a home loan without a down payment requirement at all!

Troublesome credit

Unfortunately, even these concessions do not make home ownership available to all single mothers. Credit history can prove to be a huge impediment as well. For single mothers without any established credit or with credit problems (especially those arising from divorce), loans backed by the government may be of some assistance.

If your official credit report is tarnished, you may be able to prove creditworthiness by submitting evidence of regular rent or insurance payments. Loans offered by the FHA and USDA can sometimes make this exception. If you have bad credit, low income and ignore your current financial responsibilities, however, you probably cannot expect to get much help.

 

 

Buying your first home?

First-time homebuyers are usually eligible for lower rates on home loans or decreased down payments. If you are planning to buy your first home, these loans may be of assistance to you as well.

Many programs have loose interpretations of the phrase “first-time homebuyer.” CALHFA, for instance, declares any buyer a “first-time buyer” if they have not owned a home in the last three years. If you’re a single mother who has only owned a home with your spouse in the past, you may also qualify as a first-time homebuyer with the FHA.

Be ready to apply

Anyone lending the type of money it takes to buy a home wants to see that you are creditworthy. If you’ve been blowing off payments to your creditors in the last 2 years, it damages the chances you have of being approved for a loan.

Having large amounts of debt to other creditors is also a bad sign. If you have excessive debt, start working to bring it down. If you can arrange a payment plan with your creditors, do so. Keep track of all your correspondence and payments. You can present them to your potential lender as evidence of the fact that you’re responsible.

Do a little bit of research about the lender with whom you are applying. You should be able to figure out pretty easily the maximum loan you could qualify for, based on income and other factors. Only request a loan for a home that falls within that range.