Single Mom First Time Home Buyer Programs
There are single mom first time home buyer programs available in every state. Single mothers who want to buy a house for the first time often wonder if they will ever qualify for one but these programs can make home buying a reality.
In most cases, single moms are treated just like any other homebuyer and mortgage borrower. As long as their credit scores and monthly income meet the lender’s requirements, solo parents can absolutely qualify for a home loan.
In addition, there are a variety of programs that can help single mothers buy their first homes. These programs, which include down payment assistance programs, grants, and first-time home buyer loans through a local housing authority, are actually designed for anyone (not just single parents) who face financial challenges to becoming a homeowner.
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Single Mother Statistics
Most people are aware that the number of single mothers has increased over the past few decades. Here are some statistics which help put it all into perspective:
- 27% of all parents in the US are single
- There are 8,760,000 single mothers in the US
- 80% of all single parents are single mothers
- 22% of all children in the US are living with a single mother
- Single mother income is 35% lower than single father income
- 21% of all single mothers are unemployed
These are some eye opening single mother statistics and it is not surprising that we need more programs to help single mothers to purchase a home.
Down Payment Assistance Programs For Single Moms
Raising kids and supporting a family with only one income can be taxing. This is one of the reasons why single parents often put off buying a home. Putting a down payment for a home, in particular, usually requires a huge sum of money. Fortunately, with the down payment assistance programs available to single parents (and anyone who needs it), home ownership becomes a lot easier for most single moms.
While there are some loan options that don’t require a down payment, like the VA and USDA, not all single moms can qualify for these loan types. In general, down payments may vary depending on the type of loan and the lender, but they could go as high as 20%. The good news is that there are around 2,000 down payment assistance programs available in the U.S., making it easier for single mothers to find a program they can qualify for.
We will discuss the various types of down payment assistance and will help you to find what you need.
What Is Down Payment Assistance?
Down payment assistance is a program offered to first-time home buyers who are having financial difficulties paying for a down payment. This typically comes in grants, loans, and other financial assistance programs to help first-time home buyers cover the required down payment to buy a home.
Down payment assistance programs are usually offered by different organizations, including nonprofits, as well as the local and state housing authorities.
Types Of Single Mom Down Payment Assistance
There’re a variety of down payment assistance programs being offered to first-time homebuyers nationwide. Most of these come in the form of loans and grants at the local and state levels. In addition, some private sectors and nonprofit organizations also offer financial assistance programs that can help first-time homebuyers put down a down payment.
Here are a few common types of single mom assistance programs:
Grants
Grants are the most sought-after type of down payment assistance. This is because grants are considered gifts, which means homebuyers don’t have to pay back the money they got as grants. Keep in mind, however, that some programs that offer grants may create a second lien on your home.
Make sure to thoroughly read the terms of the financial assistance program that you are getting, especially if you are not comfortable with having a second lien.
Forgivable First Time Home Buyer Loans at 0% Interest
With forgivable mortgage loans, you won’t have to pay back the money that you borrowed when you stay at the property for a predetermined number of years. These are interest-free, second mortgage loans that borrowers won’t have to repay after a certain number of years. In most cases, participating lenders will forgive the loan after five, 15, or 20 years.
It should be mentioned that you need to stay at the property within the term of the loan, or else you will have to pay if you move out or sell your home before the forgiveness period ends.
Deferred-Payment Loans at 0% Interest
If you plan to move, sell, or refinance your first mortgage, you may consider applying for a second mortgage with a deferred payment to cover your down payment. This type of second mortgage to cover your down payment doesn’t need to be repaid until you sell, move, or refinance your first mortgage.
If you don’t plan to move out, sell your property, or refinance your mortgage, you will only be required to repay the second loan when the first loan is paid down. Keep in mind that, unlike forgivable loans, deferred-payment loans are never forgiven. You will eventually have to repay them.
Low-Interest Loans
Another option to afford a down payment is to find a low-interest loan from a lender or another organization. This will be a second-mortgage loan to cover your down payment. Unlike both forgivable and deferred-payment loans, this type of down-payment assistance loan needs to be repaid each month when you make payments for your first loan—which means you need to pay for two separate loans at the same time.
Matched Savings Programs
There are financial assistance programs known as matched savings programs or individual development accounts that can help single mothers who are buying a home for the first time to pay for their down payments. To qualify, you must deposit money into a savings account with a bank, community organization, or government agency. The financial institution will then match the deposits to help you cover your down payments.
First Time Home Buyer Grants for Single Mothers
Most grants are available only for first-time homebuyers who cannot afford to buy a home on their own. As a single mother, these grants can help you purchase your first home. Usually, you will need a recent work history to qualify for first-time homebuyer grants. Below are a few examples of homebuyer grants for single mothers:
The Chenoa Fund
CBC Mortgage Agency provides the Chenoa Fund, which is a national down payment assistance program that aims to increase nationwide affordable and sustainable homeownership. This program focuses on individuals who are creditworthy and earn a low to moderate income. It usually requires a credit score of 600 or higher, and it is available in all states except New York.
This is ideal for single mothers who have an FHA loan and prefer either of the following:
- 10-year repayable loan. This usually has a 2% higher interest rate than the FHA home loan. Since this is a repayable loan, it requires a monthly payment.
- 30-year forgivable loan. This has a 0% interest rate and does not require monthly payments. To qualify, your FHA loan should have up-to-date payments, and you should not sell or refinance your house. Forgivable loans are backed by the government and offer:
- 5% down payment loan: You don’t need to pay back this loan after 36 consecutive, timely payments on your FHA loan.
- 5% down payment loan: This is forgivable after making 120 consecutive, timely payments on your FHA loan.
Bank of America’s Community Homeownership Commitment®
If you need grants to cover down payments and closing costs, the Bank of America’s Community Homeownership Commitment program may be a good option for you. It is available for first-time home buyers and includes the following:
- Down payment assistance: Up to 3% of the purchase price or $10,000, whichever is less.
- Closing costs: Up to $7,500
- Affordable Loan Solution mortgage: This program provides mortgages up to $647,200 with a 3% down payment. If you plan to purchase a home located in a high-cost area, you can get a loan up to $970,800 with a 5% down payment.
To qualify, you need to meet certain income requirements which vary depending on your location. In most cases, applicants may also be required to complete a homebuyer education program for first-time homebuyers. This is typically conducted by a HUD-approved counseling agency. In addition, mortgage insurance is required.
Keep in mind that Bank of America is not as flexible when it comes to credit scores and debt to income ratios.
National Homebuyers Fund®, Inc. Down Payment Assistance
The National Homebuyers Fund, Inc. (NHF) is a nonprofit corporation that aims to help single mothers buy their first homes. You can get access to funding—up to 5% of the cost of the home’s mortgage—which you can use for a down payment, closing costs, or both.
Buyers should work with a participating lender in order to apply for NHF assistance. The program’s qualification requirements vary depending on where you are located. Usually, the following criteria apply:
- Available not only to first-time homebuyers
- Income requirements are determined by the state
- A minimum credit score of 640 is required
- The debt-to-income ratio should be 45% or less
- This financial assistance must be used for conventional, USDA, VA, or FHA loans
Housing Choice Voucher Program for Single Moms
- The housing choice voucher program is the federal government’s major program that aims to assist low-income individuals to afford decent, safe, and sanitary housing, such as single-family homes, townhomes, and apartments. Housing choice vouchers are administered locally by public housing agencies (PHAs), which receive federal funds from the U.S. Department of Housing and Urban Development (HUD).
The eligibility requirements may vary per state. Eligibility is typically determined by the PHA based on the total annual gross income and family size. Here are the basic requirements:
- Available to U.S. citizens and specified categories of non-citizens who have eligible immigration status.
- The household income may not exceed 50% of the median income for the chosen county or metropolitan area.
- PHA is required by law to provide 75% of its vouchers to those who earn 30% or less of the area’s median income.
HUD’s Good Neighbor Next Door Sales Program
If you are a teacher, police officer, or first responder, you may be eligible for the HUD Good Neighbor Next Door Sales Program, which offers homes for sale at 50% of their value. To qualify for this program, you need to be:
- A full-time pre-kindergarten through grade 12 teacher in a state-accredited public or private school
- A full-time law enforcement officer working with the federal, state, local government, or Indian tribal government-run agency
- A full-time first responder, such as an EMT, a firefighter, employed by a fire department or emergency medical services response unit. This should be run by the federal, state, local, or Native American tribal government
Community Development Block Grants
Community Development Block Grants (CDBGs) are another program that offers funding to help improve the quality of housing in low-income neighborhoods. The U.S. Department of Housing and Urban Development (HUD) sends CDBG funds annually to grantees, including city and county governments. It’s up to the local city or county how to use these funds.
For instance, some county governments use CDBG funds to help first-time homebuyers purchase a home. Funds may be provided to those who need assistance to cover the down payment and closing costs for a home purchase. At times, a local government also uses CDBG funds to help individuals afford housing by offering affordable financing options, such as 0% interest deferred payment loans.
How Can a Single Mom Buy a House?
Being a single parent can be tough especially when you are the only one who earns money to support your family. With the rising prices across the country, buying a home for the first time is close to impossible for most single mothers who are struggling financially.
Meanwhile, there are many options for single parents that can help them buy their first home. If you plan to purchase a house, make sure to meet the usual requirements from lenders, which typically include:
- A minimum credit score (ideally above 580) if possible.
- A minimum monthly income high enough to qualify for the mortgage amount you are looking for.
These requirements vary per lender, so it’s important to work with a lender who has flexible lending guidelines. Also, it’s crucial to have saved a certain amount of money before deciding to buy a house. You will need these savings to help you with your mortgage payments later on.
There are multiple down payment assistance programs available, and it’s recommended that you check with your local city or county which programs you can qualify for. These programs can greatly help you put down money for a down payment.
In addition, when finding a loan to finance your home purchase, make sure to shop around and compare terms and rates from different loan providers. Typically, you will get more favorable rates if you have better credit scores. So it’s important to build (or fix) your credit first before buying a home.
In general, it’s still possible for single mothers (and other individuals who are having financial difficulties) to buy a home for the first time. With a variety of financial assistance programs and grants available in the country, single mothers will definitely find one that they can qualify for.
Single Mother Home Loans
Single mothers have multiple home loan options when purchasing or refinancing a home. Each will have different credit score and down payment requirements and in some instances, there are differences in the debt to income ratios. These are the most popular single mother home loan options.
Conventional Loans – With a conventional loan, the guidelines will be the tightest and is likely the most difficult to qualify for when looking at all of the mortgage options.
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- Minimum credit score of 620
- Maximum debt to income ratio of 45%
- Two year work history required
- Minimum down payment of at least 3%
FHA Loans – FHA loans are the most popular for single mothers and are more flexible when it comes to credit scores and debt to income. This means you can qualify for a larger mortgage.
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- Minimum credit score of 500
- Maximum debt to income ratio of 56.9%
- Two year work history required
- Minimum down payment of 3.5%
USDA Loans – USDA Loans are for the purchase of a home that is located in a rural area. There is no down payment requirement but there are income limits.
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- No minimum credit score – lender discretion but likely 580
- No maximum debt to income ratio – lender discretion but likely 50%
- Two year work history required
- No down payment needed
Home Loans for Single Moms with Bad Credit
Single moms with bad credit can purchase a home today with a two year work history and a down payment. However, you will have a difficult time qualifying for a conventional loan because the minimum credit score needed is 620.
The best option for single moms with bad credit is an FHA loan. The FHA guidelines permit credit scores as low as 500 but with a larger down payment. You can utilize down payment assistance but some programs do require higher credit scores.
There is always a path to purchasing a home regardless of what your credit scores are. A good loan officer can help you to make it work.
Read [First Time Home Buyers with Bad Credit]
Low Income Home Loans for Single Mothers
Single mothers with low income can also qualify for a home loan with a two year work history and at least 3.5% down. The best program for low income is an FHA loan because it has the highest debt to income ratio allowance. This means you can qualify for a larger loan amount to purchase a home.
If your income even with an FHA loan is not high enough to qualify for the mortgage amount that you need, you still have options. Adding co-signer to the mortgage is a great way to help with low income situations. The co-signer’s income, debt and also credit score will be used during the underwriting process.
Single Mothers Using Child Support and Alimony to Qualify
If you are receiving child support or alimony, they can be used to help qualify for the mortgage to buy your home. The guidelines will require those payments to continue for at least two years after your loan closes.
To learn more about how to use these payments to qualify, read our article on FHA child support income.
FHA Single Mother Case Study
We helped a single mother to purchase a new home on her own only two months after her divorce. She applied for the mortgage just as her divorce was becoming final and at that time, she had just returned to work 2 months earlier. She had been staying at home with the children for the past couple of years.
One of the critical elements to helping her to get approved was the long work history before she became a stay at home mother. Although there was significant gap in employment, we were able to use 30 days of pay stubs in her new job as a basis to assume that her employment will continue.
She also provided a copy of her divorce decree showing how much she will earn each month in both child support and alimony. Both were used in conjunction with the income from her new job to qualify for the mortgage.
Although she had some money in the bank, we were able to find her a lender offering down payment assistance as part of the mortgage. This helped her to save the down payment money to use for other purposes at home.
Bottom Line
There are many single mom first time home buyer options for you even if you are buying your next home, not your first home. This would apply to mothers who are recently divorced and are looking for a new start. If you need help trying to figure out what to do, let us help you. Simply complete this short loan scenario form and a professional will contact you to discuss your options.
