How Single Parents Can Buy a Home

Dan rafter
Written by
Dan Rafter
Read Time: 5 minutes

Couples have double the buying power of single home buyers, making buying a home easier for two-income families. But that doesn’t mean that single parents are out of luck when trying to buy a home.

Many assistance programs are available to help single parents buy a home and overcome challenges such as a modest income, short or poor credit history and a low down payment.

While banks can’t discriminate based on marital status, lending standards can make it difficult for single buyers to qualify for a loan with only one income.

More single people are starting to buy homes again. According to the National Association of Realtors 2016 profile of home buyers and sellers:

  • 66% of recent home buyers were married couples
  • 17% were single women
  • 7% were single men
  • 8% were unmarried couples

For single women, that figure is up from 15 percent of buyers in 2015, which tied the lowest share since 2002. The highest percentage was 18 percent in 2011.

While married couples have the highest income — $99,200 — single women are doing a lot more home buying than single men, and with with less money. Single male buyers earned $69,600, compared to $55,300 for single female buyers.

FHA help

For single people looking to buy a home — whether they have children or not — the first thing they may want to look for if they have a low to moderate income is a home buying program that doesn’t require a large down payment.

The Federal Housing Authority offers FHA home loans to first-time buyers or people who haven’t owned a home for three years. It requires only a 3.5 percent down payment and doesn’t have income-eligibility requirements. Minimum credit scores of 580 are required for a 96.5 percent loan and 500 for a 90 percent loan.

The FHA also has a program called Homeowners Armed with Knowledge, or HAWK, that offers breaks on mortgage insurance costs for going through housing counseling.

Local and state programs

State and local government programs are set up to help low- to moderate-income buyers. Most programs are at the local level, with 76 percent of homebuyer assistance programs in a defined area such as a city, county or neighborhood, according to an index compiled by Down Payment Resource.

California has the most programs with 380, followed by Florida with 238, Texas with 181 and Maryland’s 84 programs.

In Boulder, Colo., homes in the Permanently Affordable program are sold at lower prices than other homes in the city as a way to make housing there more affordable, says Bob Gordon, a real estate agent at Berkshire Hathaway in Boulder. The program is ideal for a single parent, Gordon says, allowing them to live close to work and school downtown at a fraction of the cost.

An average condo in Boulder costs $500,000, but homes in this program average $200,000, Gordon says. Some are sold by lottery to allow multiple bidders to compete equally instead of on a first-come basis, he says.

Buyers can have an income of 60 to 80 percent of the area median income. The homes don’t appreciate with the market, but are tied to a 3.5 percent gain annually of the local area median income.

The U.S. Department of Housing and Urban Development, or HUD, has an online directory of housing assistance resources in every state, including local programs.

Mortgage credit

Mortgage Credit Certificates, or MCCs, allow first-time homebuyers who meet income-eligibility requirements to qualify for a larger mortgage by offsetting some of the cost.

MCCs are tax credits that are used to help offset some of your mortgage interest expense. They reduce your tax liability, allowing you to withhold less tax from your paycheck and have more money to pay a mortgage. They’re offered by state and local governments.

Individual Development Accounts (IDAs)

IDAs help people with limited incomes save for a down payment and closing costs by matching their savings.

The savings can start with as little as $25 and have a match as high as 8:1. Up to $2,000 in federal matching funds an be added to a local IDA program.

Most organizations limit applicants to earning no more than 200 percent of the Federal Poverty Income level. For a family of four in 2016 the income level is $24,300.

Find your demographic

All the programs listed above aren’t directed at single parents, but at people with low to moderate incomes who need help buying a home. Within that are niches that home buyers may fit into.

For example, there are loans that favor union members, emergency workers, teachers, college graduates, veterans and rural residents. None of them care what your gender, race or marital status is.

The Rural Housing Development Loan program, for example, offers government-secured loans in rural areas. Income can’t exceed 115 percent of the area median income in a buyer’s area.

VA loans help veterans buy homes without a down payment, mortgage insurance or minimum credit score.

Some housing assistance programs aim to help community service workers afford to live where they work. San Francisco has a Teacher Next Door Program that offers $40,000 down payment for a market-rate unit or $20,000 for a below market-rate unit.

Georgia offers up to $7,500 for such costs to police officers, firefighters, public educators and healthcare workers. Ohio has a similar program.

When applying for a home loan as a single parent, remember that child support payments can count as income toward a mortgage, which can help make qualifying for a loan easier.

Single parents have plenty of options to choose from. Whether it's local & state programs, help from the FHA, IDA's or mortgage credit, it's always beneficial to discover all the options at your disposal to make sure you'll be getting the best deal.

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