How to Buy a Home as a Single Mom

Being a single mom in the hectic world of today is a challenging task by itself. Pursuing a career, taking care of your kids, and making sure they have everything they need while still taking care of your mental health is unimaginable for some people. But if you are a single mom, you know that nothing is impossible, especially if you put your mind to it.

woman walking behind toddler in a new house

Photo by Снежана

It is that intrinsic motivation that will help you navigate the thorny paths in life and open new opportunities and possibilities to ensure a great life for you and your loved ones. 

When buying a home comes into that equation, single moms tend to panic due to the financial challenges that might come along the way and often get rid of the idea of buying a new home. Even though the fears and concerns stem from justifiable reasons due to the uncertainty of the way life unfolds today, there are so many great opportunities for a single mom to be able to fulfill their dream and buy a new home. Let’s see which they are.

Decide your budget

Based on your monthly expenses, earnings, and savings you should define a clear budget. Don’t forget to think about the mortgage and the related expenses and when calculating the numbers, consider the down payment, the mortgage insurance premiums, the closing and moving costs as well as property taxes. Finally, add the homeowner association fees, too. 

The budget is highly dependent on the current state of the market, the location where you want to buy your house, and the average prices of the type of property you want to buy. You can always use a mortgage calculator to set realistic expectations and to have a clear idea of what your budget will be like.  

Consider a home loan for single parents

Even though there isn’t a home loan specifically created to help single mothers, you can still get a loan available to any single parent. There is an interesting statistic that says about 20% of first-time buyers and 18% of repeat buyers were single women, coming in second place only after married couples. Single-parent home loans can come in the shape of different options including a lower down payment, a credit score minimum, or a better interest rate. Some of these are:

  • FHA Loans which are best for low-income borrowers. What characterises them is the relatively low interest rate and a low down payment requirement which is about 3.5% with a creditor core of 580 or higher. There is a disadvantage that should be considered, though – that is the mortgage insurance premium that you will owe for at least the first 11 years of loan payments. To avoid paying for it if you can make at least 10% down payment.
  • VA Loan which is intended for active members or veterans of the U.S Military or have an eligible surviving spouse. These loans are backed by the Department of Veterans Affairs. The best thing about them is that you don’t need to pay a down payment or mortgage insurance. So. in this way, you can buy a home even if you have little to no savings. Keep in mind though that for VA loans you will need to do a one-time funding fee of 2.15% of the total amount that you borrow.  
  • USDA Loans which are backed by the U.S. Department of Agriculture allow borrowers to buy a house in rural areas. These refer to areas that surround the popular cities.  These loans have no down payment requirements and very low-interest rates. And you are not required to pay mortgage insurance, only a guarantee fee upfront once per year. If you refinance or sell the home you can remove paying this fee.

Increase your savings

As a single mom, covering costs are all on you. That is why you need to prepare and save, save, save. The obvious methods for saving include cutting unnecessary costs or finding a way to earn some extra cash – a second job, some freelance project or anything else that matches your skills and can help you save money for your new home. Here are some of the ways that can help you save money:

  • Plan your meals so you can minimise food waste and reduce grocery costs. You can cook in bulk and freeze meals to save both time and money.
  • Reduce utility costs by being responsible for the usage of energy and water. Use energy-efficient appliances and unplug electronics when you are not using them.
  • Set savings goals and determine how much money you saved to save for a down payment and stick to that. Track your progress and try not to digress from it by breaking your goals into smaller, achievable milestones to keep you motivated. 

Conclusion

In conclusion, buying a home as a single mom may seem overwhelming, but it’s possible with determination and planning. By setting a clear budget, exploring loan options tailored to single parents, and saving diligently, you can achieve your goal of homeownership. Remember, every step forward, no matter how small, brings you closer to providing stability and security for yourself and your family. Embrace the journey and stay focused on your goal, knowing that your efforts will lead to a brighter future.

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