It is backbreaking for a single mother to raise a child, work, and manage all the responsibilities of daily life. Due to this type of stress, the dream for many single moms of owning their own home will stay a dream unless they take realistic steps towards achieving their goal of homeownership. As a single mom, you don’t need to worry-there are many home loan options and other assistance that can lead you to your goal of owning your own home. There is a slew of loan options that are easier to get or are more cost-effective than conventional loans. There are also grants and incentive programs that can simplify the process of purchasing. In many cases, you can combine offers for even more savings. For example, they may help you secure a low down payment loan via an FHA loan, and then get even more incentives through a tax credit at the year’s end.
Best Home Buying Programs for Single Moms
If you are a single mother, there are many programs available that can make the home buying process quite easy. Of course, not every program applies to everyone, so it’s imperative to read and understand your eligibility.
Below are some of the most popular programs for single moms.
FHA Loans (First-time homebuyers)
As a first time home buyer, you may have a tough time getting a traditional mortgage. In this situation, you can consider an FHA loan. FHA insures the loan or guarantees a certain portion of the loan in the case of delinquency. This reduces the risk for the lender, which is then passed on to the borrower, with some basic requirements for both down payments and credit scores.
The loans that are supported by the FHA require a down payment, which is substantially lower than a traditional mortgage loan. This helps to save your down payment, which is especially important for a single mom with a sole source of income. You can put down more or secure a lower interest rate. Next, the credit score requirements are not as severe with these loans. Usually, lenders look for scores, but you may be able to secure a lower rate with a larger down payment. This provides an opportunity for even low credit score home buyers to secure a loan.
However, a major drawback of an FHA loan is the mortgage insurance premium. It’s almost twice what homebuyers pay with conventional loans and is known as private mortgage insurance (PMI). This goes into effect when the down payment is below 20 percent of the total loan.
Apart from this there are no other requirements for who can secure an FHA loan. Look for a lender who is licensed to work with these types of loans. Remember that the property itself will have to be inspected by a licensed FHA inspector. Some inspection issues can stop a home sale from going through under this type of loan unless the issues are resolved.
Veterans Administration (VA) Loan
For single mothers who are veterans, the VA loan program is a good choice for cost effective housing. VA loans are loans supported by the VA for veterans and their families. No down payment and low interest rates are a couple of major benefits of a VA loan. Also, VA backed loans also offer the best interest rates available. The VA loan program is open to veterans and their spouses. The requirements are strict. VA backed loans also require that the home is inspected by a licensed inspector. They look for major health or safety issues that have to be resolved before the home can be sold.
The USDA Loan program is suitable for those looking to buy a home in certain rural areas of the country. For those that qualify, they’ll get a loan without having to put any money down. Moreover, USDA loans are typically cheaper than other loans. These types of loans are backed by the government. A major requirement for this type of loan is the credit score. Borrowers may need to have a very good credit score. A lousy credit score will make things harder and may require a comprehensive review of your ability to repay the loan.
For this type of loan you will need a down payment of 10-20%. Some conventional mortgage products enable you to use rental income to help you get approved. You may also need to show a good credit score and history, but recently, some lenders are approving buyers with lower credit scores.
As a single mom buying a home, you can make this dream a reality if you can find the right help choosing the correct loan program. Do your homework and you’ll soon see how affordable buying a home can be!