15 Oct Programs to Help Single Parents Buy a Home
Can I buy a home as a single parent?
In the long run, owning a home is cheaper than renting. Rental prices are on the rise and mortgages can be obtained for monthly payments that can be even lower than average rental prices in many areas. Also, your mortgage payments build equity each month, which essentially turns into cash whenever the property is sold.
Buying a home can be a wise decision
But buying a home as a single parent can be quite a challenge. Single parents do not have the benefit of two incomes, which can make obtaining a mortgage loan with a reasonable interest rate rather difficult.
Single parents are more likely to qualify for low-to-moderate-income homeownership programs. Low-income loan programs such as the USDA Rural Development loan (read more below) allow credit history to be created using alternate sources, like monthly bills (utilities, insurance, etc.). This is good news for single parents who have had credit issues resulting from divorce, or who have not yet had the time to build up a credit history of their own. These programs also provide direct loans with zero percent down, making down payments unnecessary — helping single parents get into homes faster.
Even if a parent has co-owned a home with a spouse in the past, there are programs created for first-time homebuyers that also help single parents buy homes by allowing them to qualify as first-time homebuyers. Qualifying as a first-time homebuyer allows eligibility for additional financing programs.
Many low-income programs do not limit themselves to just single parents, but their family income limits make it easier for single parents to qualify. To be approved for the programs, a single parent must have a positive credit history, and must also choose an affordable home. Lenders ask for 12 to 24 months of clean credit with no defaults, as well as 2 year’s worth of steady job history (meaning with the same employer or at least in the same field) before giving consideration.
Some resources for single parents looking for home buying assistance, tips and information:
- Federal Housing Administration (FHA): helps single parents get the amount they qualify for and assist lenders by reducing their risk in issuing loans. http://www.fha.com/hud-fha-01
- USDA Rural Development: assists low and very-low-income applicants to obtain decent, safe and sanitary housing in eligible rural areas by providing payment assistance to increase an applicant’s repayment ability. http://www.rd.usda.gov/programs-services
- The Department of Housing and Urban Development (HUD): helps single parents with professional advice regarding homeownership. (Note: many HUD offices have waiting lists, some as long as three years.) http://portal.hud.gov/hudportal/HUD
- The Nehemiah Foundation: based on the individual circumstances of each applicant, provides up to 6% of the sales price of the home in which the single parent is interested. http://www.ncf-wep.org/
- Habitat for Humanity: offers single parents the opportunity to own their home by building it themselves, with the help of a group of volunteers. http://www.habitat.org/
- The Community Development Block Grant Program (CDBG): awards annual grants to state and local entities to provide safe, affordable housing to residents. These funds are awarded by the agencies receiving the grants to local applicants. http://portal.hud.gov/hudportal/HUD?src=/program_offices/comm_planning/communitydevelopment/programs
Single parents dreaming of owning a home would be wise to stay current with and document repayments — and paying down debt as much as possible is never poor advice. Buying a home can be challenging for any buyer, single, or not. By planning ahead and investigating all of your options, homeownership may be closer than you think.