October 21, 2019 Posted By: growth-rapidly Tag: Buying a house
Affording to buy a house can be hard enough even as a couple. And for single mothers, unless they earn a high income, getting home loans is even harder.
Fortunately, there are home loans for single mothers out there. FHA loan, for example, is a good option for a single parent on a low income due to its low down payment and low score requirements.
If you are a single parent looking home loans, click here to get pre-approved.
The Down Payment: the hurdle for single mothers to get home loans
What makes it difficult for single mothers on a low income to get qualified for home loans is the down payment. The down payment for a conventional loan is 20% of the home purchase price.
For example, if you want to buy a house for $450,000, you will need to come up with $90,000. That is simply the down payment. Adding another 5% for closing cost brings you to $112,500.
Coming up with that kind of money is hard, if not impossible, considering the fact that you’re probably have other monthly expenses. Granted, you can get a conventional loan with smaller down payments (as low as 10 percent).
But the problem is you will have to pay much higher interest rates, including private mortgage insurance (PMI), which is an insurance that protects the lender in case you default on your loan.
Get started by comparing FHA loan rates, to find the best rates and terms that suit you.
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Fortunately, the government has created programs to help single mothers get home loans. For instance, FHA loans only require 3.5% down payment of the home purchase price.
To illustrate, suppose you’re looking to purchase a modest house for $100,000. For a 3.5% down payment, you will only need to come up with $3,500. This low down payment is indeed flexible for low income single mothers seeking home loans.
Best Home Loans For Single Mothers
1) FHA loans
Despite having a single source of income, there are home loans for single mothers out there. Indeed, FHA home loans are a popular choice for single mothers first time home buyers.
An FHA loan is a government loan insured by the Federal Housing Administration (hence, the acronym “FHA”).
The FHA down payment can be as low as 3.5% and the credit score can be at least 580 or higher. If your credit score falls between 500 to 579, then you will need to put at least 10% down.
To know if your credit score is at least 580, get a free credit score at CreditSesame.
Program assistance for the down payment
Even if the FHA down payment is this low, single mothers seeking home loans and those who are living paycheck to paycheck can still have a hard time to come up with that money. Fortunately there are solutions.
The Department of Housing and Urban Development (HUD), which manages the FHA loan program, has recently allowed the 3.5% down payment to come from a third party.
They can be a friend, a family member, or a employer. This is good news for a single parent, as it means that they don’t have to use their own money to get a home loan.
2) VA Loans
If you’re convinced that FHA loan is a good idea, then you’d love VA loans. VA loans help homebuyers to buy home with $0 down. In addition, there is no private insurance mortgage (PMI) and has a very low interest rate.
Check to see if you’re eligible with a VA Lender.
So if you’re a veteran or service members, you may be eligible. If you were or are in the army, marine corps, navy, Air force, Coast guard, or you are a spouse of a service member, you may be eligible.
Don’t meet these requirements? You may still be eligible; talk with a home loan specialist now.
The $0 down payment is what makes VA home loans attractive among single mothers. With VA home loans, qualified single mothers can finance 100 percent of the home’s purchase price with absolutely no money down.
The other benefit of a VA loan is that there is no PMI. That is because the government backs the loan and assumes the risk.
Looking for a VA loan quote? Speak with a VA Lender today.
The Bottom line…
Being a single mother on a low income can be tough. But that should not prevent you from buying a home you have always dreamed of. The good new is there are programs that help single mothers buy a home. And those programs are the FHA and VA loans.
Additional tips for single mothers seeking home loans:
- The first step in securing a home loan is to shop and compare multiple mortgage rates to choose the best one.
- The second step is to get pre-approved by a lender. This is known as the pre-qualification process. The loan officer will assess your situation and determine what you qualify for. Once you have an idea of how much you can afford, you can submit your application.
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