How to Get a Home Loan When You’re a Single Parent | Mortgage News & Advice

Key Takeaways

  • There are a variety of home loans available for single parents, and many come with flexible credit and down payment options.
  • Single parents may be able to take advantage of state, local and federal grant programs that help first-time homebuyers purchase a home.
  • To get approved for a mortgage as a single parent, it’s important to start early, assess your eligibility and improve your credit score if needed.

Single parents face unique financial challenges that many two-parent households do not. The emotional and financial toll of being the sole provider and dealing with the high costs of childcare can make homeownership feel out of reach. Fortunately, there are programs available to make it easier for single parents to buy a home.

Home Loans for Single Parents

There are a variety of home loans available for single parents, and many come with flexible credit and down payment options. Here are some of the best types of home loans for single moms and dads:

  • FHA loan. FHA loans are backed by the Federal Housing Administration and are a good option for low-income borrowers with bad credit. If you have a credit score of 580 or higher, you can qualify with a down payment as low as 3.5%. However, you’ll have to pay mortgage insurance premiums until you sell your home or refinance the loan. 
  • VA loan. If you’re a veteran, active duty service member or the surviving spouse of a veteran, you’re eligible for a VA loan. VA loans are backed by the Department of Veterans Affairs and come with flexible credit guidelines, although the exact requirements will depend on your lender. There are no down payment requirements, and you won’t have to pay for mortgage insurance.   
  • USDA loan. USDA loans are backed by the U.S. Department of Agriculture and are a good choice for very low-income borrowers looking to buy a house in an eligible rural area. USDA loans don’t have any down payment requirements, and you don’t have to pay for mortgage insurance. 
  • Conventional loan. Conventional loans aren’t guaranteed by the government but must  meet the guidelines set by Fannie Mae and Freddie Mac. You can qualify for a conventional loan with a down payment as low as 3%, but you’ll need a good credit score. And if your down payment is less than 20%, you’ll be required to take out private mortgage insurance, or PMI. 

Single Parent First-Time Homebuyer Grants

There are also various state, local and federal grant programs available to help first-time home buyers purchase a home. These grants can be put toward a down payment or closing costs and don’t have to be repaid.

If you’re a single parent looking to buy your first home, be sure to check the options available in your state. Here are some other grants to look into:

  • National Homebuyers Fund. The NHF offers down payment assistance of up to 5% of the total loan amount. The grant comes with flexible credit requirements, and the funds can be used toward the down payment or closing costs.  
  • Good Neighbor Next Door Program. This program is for teachers (pre-K through 12th grade), police officers, firefighters or paramedics looking to buy a home in an FHA revitalization area. If you qualify, you’ll receive 50% off the listing price, but you must commit to living in the home for 36 months.  
  • Housing Choice Voucher Program. This government program helps low-income families and disabled and elderly individuals find affordable housing. If you qualify for a voucher, you’re free to find and choose your own housing. 

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Homeowner Programs for Single Parents

Here are some additional programs available to help single parents find a home:

  • Habitat for Humanity. Habitat for Humanity’s program allows eligible participants to receive an interest-free loan in exchange for “sweat equity.” To qualify, you must demonstrate a need for safe and affordable housing and a willingness to partner with Habitat for Humanity. 
  • Operation Hope. Operation Hope provides a HUD-approved housing program for first-time homebuyers. This free program will provide you with education on how to find financing and buy a house.

How to Prepare to Get a Mortgage as a Single Parent

Once you understand your options, it’s time to begin the mortgage application process. Here are the steps you’ll take to prepare for a mortgage as a single parent.

Start Early

Mark Worthington, branch manager and senior loan officer at Churchill Mortgage, recommends starting this process months before you need to buy a home. By starting early, you can work on things like restructuring your debt to reduce bills and improve your credit score.

“Small adjustments made early can help greatly over time,” says Worthington.

Improve Your Credit Score

According to Michael Collins, chartered financial analyst, founder and CEO of WinCap Financial, lenders will review your credit history and score when assessing your eligibility for a home loan.

“Make sure to pay all your bills on time and keep your credit card balances low to improve your credit score,” he explains.

You can improve your credit score by paying your bills on time and reducing your debt-to-income ratio. You can also consider a co-signer – adding a friend or family member with a good credit score and stable income can strengthen your loan application.

Save for a Down Payment

Collins also recommends saving for a larger down payment since this increases your odds of qualifying for a home loan and lowers your monthly payments. Start by establishing a budget and setting aside a portion of your income each month to save for a down payment.

Work With a Reputable Lender 

Finally, Collins suggests working with an experienced lender who can review your financial situation and recommend the best loan options for your specific circumstances. The right lender will also look for any advantages you have, like alimony payments or eligibility for certain loan programs.

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