Single Mom First Time Home Buyer Grants and Loans

Last Updated on May 7, 2022 by Anne-Sophie Reinhardt

Single moms don’t have special mortgages, but many mortgage programs can meet the needs of single parents. Single mom first-time home buyer grants can help them overcome the issue of a lower income when purchasing a home.

You can also get assistance through programs that offer money towards your down payment. There are also home buyer education programs and counseling to help you navigate the home-buying process. Overall, it may not be as difficult to buy a home with one parent than you think.

Is It Possible To Buy A Home as a Single Parent?

Single Mom First Time Home Buyer Grants and Loans

There is no “typical” single parent. While some are financially successful, others struggle to manage their finances and child care. If you don’t have any debt and have enough money to pay 20% down on the house you want, you can get a conventional mortgage. This is not guaranteed by the government.

Next, find a lender that you like and get preapproved for your loan. This article doesn’t have to be finished. However, life is not easy for single parents. It’s possible to find yourself in a situation where money is scarce and your credit score suffers. You could still be a homeowner.

Home Buying Requirements

Be aware that lenders will want to make sure that you are able to afford your mortgage payments as well as the financial burdens associated with homeownership. Lenders use debt to income ratio (DTI) to determine affordability.

DTI measures your monthly income before taxes and your ongoing debts, including future home loans. This helps you to determine if you have sufficient cash flow to pay your mortgage payments. Importantly, you will need to have an acceptable credit score. This could range from 580 to 625 depending on the minimum credit score you select for the loan program.

Credit score requirements to buy a house

The type of loan you are applying for will determine the credit score required to purchase a home. The minimum credit score required for five of the major loan options is 580-680.

  • Conventional loan: 620 minimum FICO score
  • FHA loan: 580 minimum FICO score
  • VA loan: 620 minimum score is typical (varies by lender)
  • USDA loan: 640 minimum FICO score
  • Jumbo loan: 680 minimum FICO score

FHA loans are available for credit scores as low as 500. To qualify, however, if your credit score is below 580, a 10% downpayment is needed. Only 3.5% down is required for those with credit scores greater than 580. A lower credit score means you will pay a higher interest. Many buyers with lower credit scores purchase now and then refinance later to lower rates.

The Good Credit Score to Buy a House?

It is possible to purchase a house even if you have poor credit. However, you will get a better mortgage rate and terms for your loan if your score is higher. A mortgage lender will consider FICO scores above 670 as ‘good’. 

However, borrowers with credit scores greater than 720 are eligible for the highest interest rates. FICO’s credit score levels will show you how your credit score ranks. This is the FICO standard scoring system used by major mortgage lenders:

  • Excellent credit: 800-850
  • Very good credit: 740-799
  • Good credit: 670-739
  • Fair credit: 580-669
  • Poor credit: 300-579

To get a prime rate mortgage, you don’t have to have a score of 800 to 850. Many home buyers don’t have credit scores that are even close to this. In fact, the average FICO score for closed-loan mortgages in 2021 was just below 740. 

It is possible to purchase a house with a score below 620, or even lower in certain cases. Lenders of mortgages understand that perfect credit isn’t the norm and don’t expect to have a lot of money.

The Best Mortgage Programs For Single Parents

Best Mortgage Program for First Time Home Buyer

You might consider a mortgage program with lower eligibility requirements if your income is lower. Many common loan programs allow for flexibility in this area. There are many home buyers who can choose from low- or even no-down-payment loans, depending on their financial needs. These are some of the top programs that can help single parents afford a home.

Conforming loans 

This type of conventional loan conforms to the rules set forth by Fannie Mae or Freddie Mac. A down payment of 3% and credit scores of 620 or higher are required. You will need to have mortgage insurance until the mortgage balance drops to 80%.

FHA loans

The Federal Housing Administration (FHA) requires a 580 credit score, which is lower than conforming loans is lower at 580 than it is for conventional loans. However, you will need to make a 3.5% downpayment. You’ll also need to pay mortgage insurance until your loan is paid off. Conforming loans are popular for buyers with a credit score of 620 or better.

USDA loans 

The U.S. Department of Agriculture (USDA) backs the purchase. There is no down payment. You must live in a rural area (97% of America’s total landmass), and you must have an income that is at least the average for the area where you are buying. Mortgage insurance is still required, but it will be at a lower interest rate than other types. A credit score of at least 640 is required. If you and your home are eligible, this is a great choice.

VA loans 

The U.S. Department of Veterans Affairs (VA), backs veterans and service members. You will not need to make a down payment and you can get the lowest mortgage interest rates. Lender requirements for credit score vary and can range from 580 to 660. These loans are almost always the best for those who meet the requirements.

Section 8 Housing 

Also known as the Housing Choice Voucher Program, this program provides rental assistance for low-income residents. You can receive a voucher up to $2,000 per month to either rent or purchase property. To apply, contact your local public housing agency (PHA). For more information, visit their website.

The Operation HOPE Home Buyers Program  

Low-income home buyers can benefit from a program. FDIC-approved loans, first-time buyer assistance, and down payment assistance are the main benefits. Contact the HOPE office nearest you to apply. Call the center at (888-388-4673 for any questions or visit the website for more information.

Shelter Plus Care Program 

They have a rental assistance for the homeless and disabled. There are four types: Section 8, moderate rehabilitation for single-room occupancy (SRO), sponsor-based, tenant-based, project based and sponsor-based. For more information, contact the HUD nearest field office and you can also visit their website

Habitat for Humanity Housing Solution

Habitat for Humanity offers a program that will help you build or fix affordable homes. Participation in the program requires a down payment of only $2,000 and sweat equity. If you are interested, contact a Habitat office near you. For more information, visit their website or call 1-800-422-4828.

USDA Loan

The United States Department of Agriculture (USDA), has a Rural Development department, which offers over 50 financial assistance programs for rural living. Lenders can use the Single Family Housing Guaranteed Loan program to help them provide affordable properties for rural communities. Subsidies for rural homeowners are Single Family Housing Direct Loans. For more information, visit the website.

USDA Rural Development Housing Assistance 

Lenders can help rural homeowners and renters with low incomes through the Single-Family Housing Guaranteed loan program. You can apply by selecting a lender from the list and then contacting them directly. USDA Rural Development offers many other assistance programs to lenders and borrowers.

HUD Homes for Sale

The U.S. Department of Housing and Urban Development has a list of affordable homes for sale. You can search for your property by state, city, and type of HUD Special program.

Bridge of Hope Housing Assistance

Bridge of Hope offers housing assistance for single mothers and their children. They help single mothers with low income or homeless to find permanent or transitional housing. For more information, visit the website to find out if there’s a Bridge of Hope center near you.

Single Mom First Time Home Buyer Tax Credit

Tax credits are available to first-time homebuyers. You may be eligible for a lower tax bill or a higher tax refund if you purchased your house between 2008 and 2010. To claim the credit, you will need to file the correct tax return form. Visit the website for more information.

Are There Grants to Help Single Parents Buy a House First Time?

Single parents can become homeowners by using assistance programs for closing costs and down payments. These programs do not only benefit single parents. They are often meant to assist buyers with low or moderate incomes, so many single parents can benefit from them. These programs should be compared to find the best fit for you, just like you would with mortgage lenders.

Each DPA has the freedom to determine eligibility and how much it will lend or give to applicants. We can’t tell you if you will be eligible for assistance in your area or how much you might get. You can do some research online (Google “down payment assistance in [your region]”) or ask your mortgage lender about what’s available locally.

Types Of Down Payment Assistance For Single Parents

Every down payment assistance program (DPA), is unique. They usually cover up to three percent of the home’s price or several thousand dollars. Even if you have very little savings, you might be able to buy a house. This type of assistance is generally available in one or more of the following forms:

  1. A grant that is not repaid
  2. Forgivable loans with no interest or repayment that are forgiven in x years (often five). You don’t owe anything after that period, provided you haven’t sold your home, refinanced the property, transferred ownership or paid off your principal mortgage.
  3. Deferred loans are also available, but with no interest or payments. You must repay the entire amount when you sell your home, refinance, move, or pay off your principal mortgage.
  4. A loan (second mortgage) you repay in equal installments over a specified term. Often, this is 10 years. You will have two monthly payments if you pay this back simultaneously with your principal mortgage.

These are the most popular forms of assistance. DPA programs, however, have the ability to create their own rules. It’s possible that yours might have a different set of rules.

Down Payment Assistance Requirements

The following conditions are usually included in home buyer assistance. These conditions must be met:

  1. Be a first-time homeowner. Some DPA programs may not be available to everyone.
  2. Learn how to become a homebuyer educator
  3. Select a mortgage lender from the DPA list. You should still compare them.
  4. A household income that is at or below the average for the area in which you are buying
  5. Do not have any significant savings or assets
  6. A credit score above a certain threshold, such as 580, 625, or 640 depending on the type and amount of mortgage you are applying for.
  7. Your DPA covers the purchase of a home within the area. Some are state-wide, while others are specific to a particular county or city.

There are many programs that offer higher amounts or easier eligibility for those who want to purchase in areas designated for regeneration. If you are willing to buy your first home in an area that is less desirable but has potential, you might be able to move faster.

How To Buy a House With A Low-Income as a Single Parent

We’ve already mentioned a common issue with single parents when it comes to home loans: the debt-to-income ratio, or DTI. Two reasons could be the reason:

  1. DTI includes income from household income. You only have one income to add to the calculation.
  2. Single moms and fathers often have more debt than two-parent families and are less able to manage their finances.

But don’t panic if your debt burden is high. It may not be as bad after all. Calculating your DTI involves adding all of your monthly ineligible debt payments to your household income. Those debt payments include:

  • Your new home ownership expenses (mortgage and property taxes, homeowners insurance, homeowners insurance, and occasionally homeowners association dues).
  • Credit cards require minimum payments
  • Installments on loans such as auto loans, student loans and personal loans

It is not possible to count items that you can save on, like food, gas, utilities and phone bills. A 36% DTI is considered “good” by most lenders. However, many people are satisfied with 43%. Some mortgages will allow you to borrow up to 50% if you are a good borrower in all other respects. This usually means that you must have a high credit score.

Where to find first time home buying grants as a single parent

Many single parents are surprised at how easy it is to qualify for home loans. Others will need to take time to get their credit scores straight and DTIs right before applying. It shouldn’t be difficult to find the right advice and help you need.

The U.S. Department of Housing and Urban Development is an excellent place to begin. It offers state-by-state lists of homebuyer education and down payment assistance programs. Click on the name to find out more about the state you wish to purchase. Continue clicking on links until you find the information you are looking for. Oh, and that website says that HUD funds housing counseling agencies to offer free or low-cost advice. You can search online for a Housing Counseling Agency nearby or call the interactive voice system at (800) 569 4287. A great housing counselor will do the hard work for you. They’ll advise you on your eligibility for a mortgage and help you choose the right loan type.

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