Are you wondering if you could ever qualify to buy a home as a single parent? Homeownership does offer multiple advantages, not the least of which is one day kissing your biggest monthly bill goodbye when you pay off your mortgage. It also provides more stability for your children, as your landlord can’t decide to sell or raise rent to prohibitive levels.
However, you do face additional roadblocks. That doesn’t make the path impossible, only a bit rockier. Here’s what to do and what hurdles to expect.
Steps to Buying a Home as a Single Parent
Buying a home isn’t an overnight process. It requires months, sometimes years of preparation. Here’s what you should do.
Pay Down Debt
One of the most critical aspects mortgage lenders look for when you go to buy is your debt-to-income ratio. This figure tells the bank that you have adequate disposable income to have wiggle room. That way, if something goes awry, you can still pay your home loan.
Lenders prefer to see a debt-to-income ratio of no more than 36%, with 28% going toward your rent or your mortgage. This low figure does represent a significant hurdle in today’s society, as many people’s rent payments make up as much as 50% of their household bills. However, by paying down other debt, you have a much better shot at qualifying. Start by chipping away at the debt with the highest interest rate first, then work your way down the line.
Improve Your Credit Score
The good news is, as you pay down debt, your credit score will improve. Still, you might face additional considerations. For example, if you are in the process of a divorce, you must analyze your joint debt and decide who is responsible for what. You also need to contact each creditor and find out how to convert these to single accounts.
Don’t delay this action, especially if your partner is hostile. Creditors typically don’t report missed payments until 30 days past the due date, but if they do, the impact can devastate your rating. If your soon-to-be-ex doesn’t pay a debt they agreed to, and it remains in your name, it could impact your chances.
Save a Down Payment
If you have not enough month and too many bills, you are not alone. The U.S. is staggering under decades of wage stagnation, meaning that it is more challenging than ever to amass a downpayment. You might have to get a little creative.
- Make your car an advert: A quick Google search reveals companies ready to pay you to put a window sticker on your car or wrap the entire thing in advertisements. Hey, it might raise eyebrows, but it’s free money.
- Sell things online: If you have a bit of downtime right now, start cleaning out your closets. You could find valuable collectibles that you can sell on eBay.
- Take on a side hustle: As a busy mom, you probably have very little spare time. However, could you do a once-weekly podcast? Maybe type papers or manage books as an executive assistant from home while your children nap?
Determine a Reasonable Price Range
You’d love a home where each child could have a separate bedroom while you enjoy a dedicated home office. However, you have to be realistic. Remember, you want to keep your housing payment at approximately 28% of your monthly income. You can find online calculators that help you to determine your ideal range.
Locate Your Home and Make an Offer
If this is your first home purchase, do work with a real estate agent. They can help you to determine the correct offer to submit, and they will work with you to represent your interests. Otherwise, in your race to secure the perfect property, you could find yourself settling for less than you deserve. Sellers often make certain concessions to seal the deal, and your agent can help you take advantage of these.
As you approach closing, it is critical that you not amass new debt. Far too many homebuyers found their dreams shattered after going out and maxing a credit card on new furnishings. Wait until you sign everything — there will be oodles of pages to initial — and have the keys in your hand before you spend a dime on new credit.
Can You Buy a Home If You’re Pregnant?
Yes, by law, a mortgage lender cannot refuse to grant you a home loan if you are visibly pregnant or on maternity leave. However, they may express concerns about your ability to pay if you don’t return to work. Many will require you to obtain a letter from your employer specifying your return date and that you have the right to return to a previous or equivalent position when your leave ends.
Yes, You Can Become a Homeowner as a Single Parent
If you are a single parent, becoming a homeowner can seem like a daunting task. However, if you follow these tips, you can achieve your dream of welcoming your family to home, sweet home.