Help for Single Moms to Buy a House

Allison Martin
Mom and Child

In some instances, single mothers give up on their dream of owning a home because of financial constraints caused by only having one income. Although national programs catering to single moms are not available at this time, alternatives are available to assist financially and provide guidance on the home-buying process.

Down Payment Assistance

Federal funding for non-profit organizations that provided down payment assistance to individuals in need was eliminated in 2008. As a result, a large number of home-buying assistance programs that were targeted toward single mothers were dissolved. However, there are many local organizations that still offer help to those with limited income looking to purchase a home. If you are a single mother who falls into this category, you may qualify for inclusion in one of these programs.

Individual Development Accounts

An Individual Development Account (IDA) is a matched savings plan that helps those with limited income allocate funds toward the purchase of a new home. Each dollar saved in the IDA is matched as a way to encourage continued contributions for the future purchase and the accumulation of financial assets to build wealth.

These accounts, which remain open from six months to a few years, are made possible by collaborations between financial institutions and nonprofit organizations. To qualify for consideration, applicants must:

  • Meet minimum income requirements
  • Be able to contribute to the IDA account with funds derived from earned income
  • Not have assets that exceed $5,000
  • Be debt-free or have a minimal amount of outstanding debt

If approved for inclusion into an IDA program, you will have to complete a series of financial education courses on budgeting and saving. Prior to the purchase of your new home, you will also have to complete education courses on the purchasing process.

To learn more about the program, use their online search tool to find a location near you.

Down Payment Assistance Programs by Location

A large number of states offer down payment assistance programs for first-time homebuyers. These agencies include:

For a complete listing of these programs, search the HUD directory. Select your state of residence and view the contents of the "Buying a Home" section for a list of agencies that offer down payment assistance. Countywide programs are also available in some states.

Financing Options

FHA Mortgages

FHA mortgages offer many perks to those with limited income who may otherwise have a difficult time securing financing. A major incentive is the low 3.5% down payment requirement; the FHA permits the contribution of funds from others to cover this fee unlike other loan programs. In addition, qualification criteria, such as credit scores, are less stringent than traditional mortgage products and the interest rate offered is typically very low. To locate FHA approved lenders, search HUD's database.

United States Department of Agriculture Loan

If you are a single mother searching for a home in a rural area (designated by the USDA), this type of loan may be a good option to consider. USDA loans cater to low and mid-income individuals who have a credit score of 620 or higher and meet specific income requirements. The most appealing feature is the ability to forgo making a down payment.

To learn more about the program or see if you pre-qualify, visit the USDA website.

Affordable Housing Solutions

Habitat for Humanity

Because they envision a "world where everyone has a decent place to live," this organization gives those with restricted income the opportunity to apply for an affordable Habitat for Humanity home. To qualify for consideration, applicants must:

  • Be US citizens
  • Earn a consistent wage that meets income requirements
  • Have an adequately funded savings account

If approved, you will have to attend courses on home ownership, contribute a reasonable down payment, make timely monthly payments and assist in the construction process of new Habitat homes, including your own.

To learn more about the program or apply for consideration, call 1-800-422-4828 or use their online search tool to find a local office.

U.S. Department of Housing and Urban Development (HUD)

The HUD Home Store sells one to four unit residential properties that have been foreclosed. Many of the homes were repossessed as a result of a defaulted mortgage insured by the Federal Housing Administration (FHA). Proceeds from sales are used to recoup losses sustained during the foreclosure process.

HUD homes appeal to those with low-to-moderate incomes because the selling price accurately reflects the worth based on the HUD appraisal. In addition, HUD will pay closing costs if requested by the buyer. If the home needs repairs, the FHA 203k Rehab Loan permits repair costs and loans to be merged into one mortgage product.

To search the inventory of HUD homes, visit the HUD website.

Fannie Mae

Fannie Mae offers residential properties for sale through its Home Path Properties program. The homes are available at rock bottom prices as they are foreclosures, and some are eligible for Home Path Financing that offers flexible mortgage terms and the option to make a low down payment.

To learn more about this program or search for available properties, visit the Fannie Mae website.

Other Resources

Your local Housing Authority may have information about local programs designed specifically to help single moms become homeowners. These programs may come in the form of down payment assistance, grants, or educational programs.

Check with your local Housing Authority to find out if there are special programs for which you may be eligible.

Things to Consider

Before you begin the home-buying process, be sure to use an affordability calculator to determine the optimal purchase price based on your financial situation.

Know Your Cash Flow

No matter how much you are actually approved for, it is essential that you follow a budget that enables you to save money each month and properly monitor your cash flow.

Shop Around

You must diligently search for a lender to make sure you get the best deal. This requires an extensive amount of patience on your end, but will pay off financially in the long-run.

Eliminate Debt First

It's never a good idea to start the home-buying process if you have outstanding unsecured debts, such as credit cards. Eliminating this type of debt will improve your credit utilization and debt to income ratio, giving your credit score a boost and potentially making you eligible for more attractive mortgage products.

Selecting a Home That's Right for You

Once you are ready to take the next step towards home ownership, be sure to compare your options and select the program that is most suitable for you. Using the services of a real estate professional may also facilitate the home-buying process.

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Help for Single Moms to Buy a House