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Buying a home as a single parent may seem daunting, but it is certainly within reach with the right knowledge and preparation. Discover the possibilities of getting a mortgage as a single parent by comparing potential loan options, exploring financial assistance programs and grants and learning about how child support payments may affect your home loan.
Can I buy a home as a single parent?
The simple answer is yes, single parents can secure a mortgage and purchase a home. Whether you’re a single mother, father, step-parent or other guardian, it’s important to navigate the mortgage process with careful consideration of your unique situation.
Single Parent Home Loan Options
Single parents have several loan options to choose from, each catering to different financial situations. Federal Housing Administration (FHA), United States Department of Agriculture (USDA), and Veterans Affairs (VA) loans provide government-backed assistance, while conventional loans offer a more traditional approach.
To help you make an informed decision, consider the following chart comparing the standard requirements for each loan type:
|Down Payment Requirement
|Minimum Credit Score
|General Eligibility Criteria
|580 (or 500 with 10% down payment)
|Popular with first-time homebuyers, but not required
|No set minimum*
|Households falling within 115% of area’s median income and located in a rural area
|No set minimum*
|Eligible veterans, active-duty service members or surviving spouses
|Standard mortgage option with general financial criteria
*Note: VA and USDA loans have no set minimum credit score, but individual lenders may have their own credit score requirements.
» MORE: See today’s refinance rates
Mortgage Assistance and Grants for Single Parents
There are various forms of mortgage assistance and grants tailored to accommodate the unique circumstances of single-parent households. Let’s learn more about your potential options to discover what kinds of assistance you may be eligible for.
HomeReady loans, offered by Fannie Mae, are designed to assist low to moderate-income borrowers. These loans feature flexible down payment options as low as 3%, cancellable mortgage insurance, an immediate appraisal order from your lender and no geographical restrictions.
Additionally, income from non-borrowing household members can be considered to help meet qualification requirements, making these loans a great option for single parents.
Home Possible Loans
Freddie Mac’s Home Possible loans, aimed to assist low to moderate-income individuals, are another potential option for single-parent borrowers. Home Possible loans feature the added benefits of cancellable mortgage insurance and credit caps for loans with greater than an 80% loan-to-value ratio.
These loans also offer low down payment options with flexible sources of income, which allows for a broader range of income and rental payments to be considered for qualification. In other words, your down payment can come from a variety of sources, including family contributions, employee assistance programs, secondary financing or sweat equity.
Low-Income Housing Tax Credits
Certain federal and state programs offer tax credits for low-income individuals, which can be a great opportunity for single parents seeking homeownership. These tax credits can help reduce your overall tax burden to make your home purchase more affordable.
The National Homebuyers Fund
The National Homebuyers Fund offers down payment assistance, closing cost grants and other forms of aid to eligible homebuyers, including single parents. These funds can significantly alleviate the financial burden associated with purchasing a home.
The United States Department of Housing offers a housing choice voucher program aimed to help eligible individuals, including low-income families, afford homes that are decent, safe and sanitary. In some cases, single parents may qualify for these housing vouchers to apply towards homeownership expenses, making it more achievable for those with limited financial resources.
Mortgages for Recently Divorced Parents
Navigating the world of mortgages can be particularly challenging for recently divorced parents. Divorce often brings about significant changes in financial circumstances, and the transition to single parenthood can add an extra layer of complexity to the homebuying process.
With these added complexities to your family and financial circumstances, there are a few additional factors you should consider when applying for a mortgage:
- Credit: Following a divorce, it’s crucial to assess and monitor your credit status. Divorce can impact credit scores, especially if joint financial obligations were part of the divorce settlement.
- Budget: With changes in income and potential alimony or child support considerations, it’s important to reassess your budget. Determine how much you can comfortably afford in terms of monthly mortgage payments, considering not only your income but also any financial support received or paid.
- Existing mortgages: If you and your former spouse jointly owned a property that was part of the divorce settlement, clarify how this impacts your eligibility for a new mortgage. If you’re retaining the marital home, assess whether refinancing is necessary to remove your ex-spouse’s name from the existing mortgage.
Special Mortgage Considerations
- Legal agreements and property settlements: Lenders may request copies of legal agreements and property settlements from the divorce proceedings. These documents can provide a clearer picture of your financial situation and may impact the lender’s decision.
- Co-parenting and home location: If you share custody of children with your ex-spouse, consider the location of your potential home in relation to your co-parenting arrangement. Proximity to schools, childcare facilities and the other parent’s residence may influence your housing choices.
- Alimony and child support: When applying for a mortgage, be prepared to provide documentation regarding alimony and child support. Lenders may consider these payments as part of your income, potentially influencing your loan eligibility.
Child Support with Home Loans
Your relationship status often has its own impacts on your mortgage, but the added consideration of child support payments can make your mortgage application more complex. Read below for our answers to frequently asked questions about child support when applying for a mortgage:
Do you have to disclose child support on a mortgage application?
If you are receiving child support, you are not required to disclose these payments on a mortgage application. However, choosing to include child support payments as a source of income is often beneficial in qualifying for a mortgage or securing better loan terms.
How do you provide proof of child support for a home loan?
For your child support payments to qualify as income, you must be able to do the following:
- Provide documentation of timely child support payments for the previous 6 months
- Guarantee these payments will continue for a period of time deemed acceptable by your lender
The required documentation may vary depending on your chosen lender, but some typical documents include your divorce decree, child support order and 6 months to a year’s worth of deposits into your bank account.
Is child support considered debt when applying for a mortgage?
If you are a non-custodial parent or a parent with joint custody, you may wonder how paying child support yourself is factored into your mortgage application. If you make routine child support payments, these payments will be considered recurring debt when applying for a mortgage.
Navigating the mortgage process as a single parent requires research and a thorough understanding of your available options. By exploring various loan types, seeking out assistance programs and being transparent about child support, you can confidently take steps toward achieving homeownership for you and your family.