5 Questions Single Parents Should Ask Themselves before Buying a Home

Being a parent isn’t an easy job, and being a single parent is even less so. In many cases, it can feel as though all the responsibilities for your family rest solely on your shoulders. You want to make the right choice for your family.

The decision to buy a home is a big one, and it’s all the more complicated when you live in a single-income home with a family to take care of. Not only do you have to think about the monetary benefits, but also community benefits, and assistance options.

Here are five questions every single parent should ask themselves before making the decision to buy a home.

Why Should You Buy?

Are you renting an apartment? Are you staying with a family member? By making the choice to move from your current situation into homeownership, you gain several benefits.

Tax benefits: Both federal and state governments provide deductions for homeowners. The deductions apply to real estate taxes, mortgage interest, and some energy efficient upgrades. Few states offer tax benefits to renters, but once you are a homeowner, your tax refund could be larger even in the first year.

Equity: Home equity is the difference between the market value of your home and your mortgage balance. Unlike with rent payments (which go directly to your landlord), you are actually building equity with every mortgage payment. You can use this equity down the line to pay off large debts, renovate your home, or take your family on a dream vacation.

Stable housing: While renters are often stuck in a year-to-year lease with no guarantee they will be able to stay in their current place for many years in a row, when you purchase a home you’re purchasing stability, too. Homeowners are less likely to move than renters. Plus, the longer you stay in your home, the larger your equity grows.

Lower costs: Because you are a one-income household, you can qualify for low-to-moderate income options. This means that you have access to more government loan and assistance programs than you would have in a two-income household. You may be able to provide a lower down payment, receive different tax deductions, and apply for assistance programs to help lower your monthly costs.

How are Your Finances?

The next thing to look into is your current financial situation. How is your credit? Do you have the budget for a new house? Can you afford the monthly payments? You may be surprised to learn that renting often costs more than a mortgage.

Home budgeting: When deciding on a home budget, practice makes perfect. Start small by putting aside money every month to compensate for things like home maintenance, homeowner’s association fees, and utilities you may not be paying for currently. Use our budget worksheet to help prepare yourself.

Mortgage calculator: Although the housing market changes every day, it is still a good idea to use a mortgage calculator to determine what mortgage payment you can afford every month and how that relates to the price of a home. Use our calculator to see an estimate!

What Loan is Right for Me?

You may qualify for any and all loan programs, but there is always one loan option that’s best for you and your family. Two of the most popular loans for single parents are the FHA and USDA programs. As these are both government-backed loans, they provide benefits that conventional loans do not.  

FHA loans: This loan is designed specifically for borrowers with a low-to-moderate income. In fact, there is no minimum income required. It requires a low down payment, which means you are not responsible for paying a huge chunk of money upfront. Take a look at other FHA loan benefits here.

USDA loans: A government attempt to bring more families into rural areas, a USDA loan actually applies to more areas than you’d think. Like the FHA loan, it is also intended for those with a lower or single income. One of the best benefits of the USDA loan is that it does not require a down payment at all. See more benefits of a USDA loan here.

How Should You Get Started?

Now that you’ve made the decision to buy a home, have your finances under control, and have reviewed your loan options, the next step is to make some more complicated decisions.

Get Pre-Approved: First things first – know your budget. By getting pre-approved through a qualified lender like Ruoff Mortgage, you will get an extremely accurate estimate of the loan amount you qualify for. This way, you don’t waste time looking at homes above your budget. Plus, a pre-approval requires many of the same documents and information as a standard application which means when it comes time to apply, you’ll be streamlined through the process.

Choose an Area: As a parent, you have more to consider than the price of your home. You need to look at location, as well. What school district is most important to you and your child? What kind of community do you want to be in? Make these choices ahead of time so that your home search is easier.

What Help Can I Get?

As a single parent, you have many options available to you based on your income. Both federal and state assistance may be available to you. While they may take extra work, applying for these programs will benefit you in the long run.

HUD Homebuying Programs in Your State: The US Department of Housing and Urban Development helps thousands of homeowners every year. You can use this website to find statewide, regional, and city programs available to you. You should also look into HUDHomes – there are many homes for sale through HUD, and some only cost $1.

Down payment assistance: Down payment assistance programs are state/city/county-backed loan assistance that help homebuyers purchase their homes by offering some or all of their down payment. Each DPA program is a little different, and they have different eligibility requirements. Whatever program you apply for, you’ll be saving money – so it’s a great idea when buying a home.