Best Low-Income Home Loans For Single Mothers | Single Mom First Time Home Buyer Grants

Being a single mom is very challenging. And it is also obvious that qualifying for a mortgage can also be difficult even under normal conditions. According to the National Association of Retailers, single mother buyers account for 18 percent of all home buyers. In addition, the median buying price for single mother buyers was $189,000, and it is the lowest amount of all median home buyers. 

For single mothers who want to own a house, trying their best to qualify for the mortgage having only one income of hers can feel next to impossible. However, as a parent, you want to provide your children with the best comfortable home life. Fortunately, there are many financial assistance programs and loans that assist you. Let’s discuss some of the loan programs for single mothers who are first-time homebuyers.

Things To Consider First For Low-Income Single Mothers

If you started the loan process, then this is amazing. So here we discuss some facts to help you, so you should remain focussed on these things:

Determine How Many Loans You Should Afford – It is important to estimate what kind of mortgage you can afford. Taking a loan too much will financially cause problems for you and your family. So decides wisely. 

Go For Low Down Payment Loans – When you realize what kind of loan you can afford, spend some time analyzing for affordability and low down payment loans. You have to estimate which home buying program will suit you and for which plan you will need to apply. 

Always Set A Saving Goal – You will have to pay a small down payment. Begin setting some money aside by having a high-interest saving account. So in this way, you will gain extra interest.  

Loan Programs For Single Moms Who Are First Time Home Buyers

Many programs assist single mothers by dividing their financial stress. However, there is no specific loan that targets single mothers to own a home. Many grants are available to assist the buyers with limited sources, and single mothers should benefit from them by meeting all the loan requirements. 

Golden State Financial Authority

The Golden State Financial Authority offers grants as the “Down Payment Assistance Program”. The participants who are eligible for this grant value almost 5% of the home’s purchase price. This grant is confined to first-time single mother buyers who may have a co-owned home when getting married. It requires a FICO score of 640 or higher and a debt-to-income ratio of less than 45%. Borrowers should not exceed the guidelines of income for the area. 

National Homebuyers Fund

It is a national grant program that gives closing cost assistance and down payments grants. It is not considered a loan. This fund also provides more than 5% of the home’s value in grants. Many loan programs are eligible for this grant, with conventional and insured loan programs. 

Good Neighbor Next Door

This grant program is set-aside U.S. Department of Housing and Urban Development. These houses are in designed revitalization areas. These homes are designed for firefighters, teachers, emergency response technicians, and sometimes the police officers; if a single mom is working in any of these fields, she can buy a designated home for 50% of the market value. She still applies for the other grant programs to help with the down payment costs. 

Below Market Rate Program

Eligible participants should make 90% of the area’s median income to purchase a BMR for applying for this grant. Single mothers should be first-time homebuyers without ownership in the past three years. The BMR has some limits on the homes, and then they set a silent loan that gives an equity position for 30 years without any payment or interest.

What Are The Challenges That Single Mothers Faced In Buying A Home?

The biggest challenge that a mother will face is purchasing a home that lacks income. Single mothers are responsible for giving themselves and their children an income. However, single mothers do not always gain support from their children. 

It can be challenging for mortgage companies to want that if you have a specific amount of disposable income before they are ready to loan to you. So you have to prove that you have a low debt-to-income ratio, so your monthly payment for a mortgage will make it easy, and you should have a credit score to back it up. Additionally, some lenders will require a downpayment between 10% and 20%. Most people want this kind of cash, so that it can be a challenging process, particularly for single mothers.

What Are The Basic Requirements To Become Eligible For A Loan As A Single Mother?

According to a survey, around 31% of single mothers owned a home in 2017. That’s down to about 36% in 2010. However, the great news is that less than a third of single mothers own a house. So you can become one of these single mothers who get the ownership of a real home. 

Like any loan, you have to prove that you have the income and assets in your budget and can afford the payments for a home. As a single mother having only one income source, you may feel that you don’t get any benefit. Some factors are discussed below to get approval for a home loan as a single mother. 

Good Credit   

The biggest deciding factor of lending is your credit history and score, considering while approval for a mortgage. Lenders prefer a minimum 620 credit score for conventional loans. A higher credit score will aid you to qualify for the best interest rates and loans.

Low DTI 

Your DTI ratio considers how much your income goes into paying the debt. Add on your already existing debts, like student loans and credit card payments, and it should not be more than 36% of your income. 

High Down Payment 

Another way to approve a loan is to see up to a down payment of more than 20%. It makes you borrow less, ultimately lowering your risk to the lender. 

Bottom Line 

Buying a new home is challenging for single mothers, but it is not impossible. You can get a loan through various methods as a single mother. You have to find the best loan programs for your home.