Last Updated on October 20, 2021 by Meghan
Becoming a homeowner or a big-time entrepreneur as a single mother can be very challenging. With lots of expenses and bills to be paid and keeping up to the task of raising a child, buying a home or establishing a business of your dreams seems almost unachievable. But, there are accessible loans and lots of assistance programs to make the dream of homeownership a reality for single mothers. Single moms have a harder time qualifying for some mortgage loans.
The percentage of single female property buyers remains at a steady rate of 18% in all recent home buyers, this figure represents a slight decrease from the 20% percentage figure in 2015 according to the National Association of Realtors (NAR) Profile of Home Buyers and Sellers 2018 Survey https://www.nar.realtor/research-and-statistics/research-reports/highlights-from-the-profile-of-home-buyers-and-sellers. This makes single mothers the second most regular type of homebuyer behind married couples. Single male buyers followed up at third position with just 9 percent.
The average purchase price for female single population, though is the smallest of all household buyer types is $189,000, including single male homebuyers ($215,000) in most of the real estate markets all around the U.S., this means that a lot of single mother in the US are still finding it hard to become a homeowner.
But, there is still some level of hope for single moms who want to secure some form of loan for home acquisition or for business and finance purposes. An excellent place to start is to see what’s accessible through the housing authority (a quick Google search will do) in your location. After a successful check on their website, you will know the various homeownership programs, grants, and loans that are available and suitable for your situation in your city or state.
Single mother down payment assistance programs
According to a survey by NAR in 2019, the average down payment amount for first-time homeowners was 6% and 57% of the current non-owners think it would be at least a bit challenging to become a homeowner.
But, there are many down payment support programs accessible to single mothers across the country. Some examples of the available assistance programs include:
- Baltimore City’s first-time homebuyer program (CDBG) Homeownership http://www.baltimorehousing.org/vtov_incentives offers a $5,000 five-year pardonable loan to first-time homebuyers is kind of loan is expected to assist with down payment and various settlement expenses.
- Maine Housing’s First Home Program http://www.mainehousing.org/programs-services/homebuyer/homebuyerdetail/firsthome this type of support program offers low fixed-rate mortgages with a small or zero down payment. Every one of the First Home mortgages come with payment protection for unemployment.
- Pinellas County, Florida, First-time Homebuyer Program http://www.pinellascounty.org/hfa/pdf/first_mortgage.pdf facilitates down payment and final costs assistance with a $7,500, it also comes with zero percent interest loan that is delayed until you decide to sell, refinance, or pay off the home.
Best Home Loans for Single Moms
Anywhere you decide to live in the US, there are quite a lot of mortgage packages to look into if you’re a single mother. Each of the programs comes with its unique low down payment requirements, very linear credit requirements, and/or diverse mortgage insurance requirements.
FHA loans typically have little interest rates with a down payment of around 3%. (The down payment can come in form of a gift too.) Also, your credit score doesn’t have to be on a superb level either. Depending on the lender’s credit policy, a minimum figure of 600 is accepted in most areas, while 580 are the minimum figure of others.
The mortgage insurance premium (MIP) can be considered as a discouraging factor of an FHA loan https://mymortgageinsider.com/fha-loan-guidelines-for-home-buying/. It’s typically almost two times what a lot of people pay with traditional usual loans called private mortgage insurance (PMI), whereby the down payment is less than 20 percent of the loan.
United States Department of Agriculture (USDA) offers deferent types of loans to assist low- to moderate-income individuals buy homes in rural locations. USDA loan https://mymortgageinsider.com/usda-mortgage-loan/ come with very small interest rates and no down payment obligation.
You are qualified for 100% financing, and its premium is very low compared to that of FHA loans. USDA loans also come with an infinite maximum level of income, this means single moms will be well under the income limits.
With Conventional loans, you may need at least a 5% down payment of your money. But some of the conventional mortgage products like that of HomeReady™ only require 3 percent down payment, and you’re even permitted to use renter or boarder income just so you can get approved.
You will also need a pretty good credit score and a superb credit history, but some lenders are reducing their credit score minimum to catch the attention of more buyers. If you don’t put 20 percent down, you will then have to pay private mortgage insurance up to the date you reach 20% in the principal.