Are you a single mother with bad credit but looking for home loan opportunities for your family? Then you are in the right place, as there are a lot of home loan programs for single moms with bad credit that enables them to purchase a house and get a roof over their heads. The Fair Isaac Corporation is a popular scoring module that analyzes the payment history, overall debt owed, and credit card balances of individuals and scores them in a number between 300 to 850. A figure higher than 689 qualifies for a score ranging from good to exceptional. Anything less than 580 qualifies for a low score, whereas a score between 580 to 669 qualifies for a low score.
Can Single Moms With Bad Credit Obtain Home Loans?
Single mothers who do not have an excellent credit profile can obtain home loans by seeking down payment assistance programs and showing a two-year work history. Even though most of them may not qualify for conventional loans as their credit score is less than 620, the best option for single moms with bad credit is to go for FHA loans. There is always a way to get home loans, regardless of your credit score. The FHA guidelines permit minimum credit scores of 500 with a sizable down payment. FHA loan will be the best option for low-income single moms with a bad credit profile as this loan has the highest debt-to-income ratio allowance. In other words single moms can qualify for a considerable FHA loan amount to get home.
How Much Money Can A Single Mom Borrow While Applying For Home Loans?
The amount of money that a single mom can borrow while applying for a home loan depends on a lot of factors such as income, debt-to-income ratio, down payment, and credit score. Lenders will take your credit score and income into account to decide the amount you can borrow as well as the interest rate on the loan. With a sufficient down payment and a good credit history, single moms can easily borrow up to 97% of the home value. The minimum credit score requirements to qualify for a home loan can vary depending on the loan that you are opting for as well as on the mortgage lender. Generally government backed-loans are the best option for single moms with bad credit as they have the lowest credit score requirements.
How Can Home Loans For Single Moms With Bad Credit Help You?
Having a child is undoubtedly a blessing on its own. The life of single mothers is different from that of other couples as they have to raise their children single-handedly, which demands an unlimited supply of commitment, patience, grit, and ingenuity. Single moms have to face a lot of adversities as they cannot split the bills or chores with a co-parent. Navigating all the financial responsibilities solely leads to a lousy profile which further adds more trouble for single mothers. Irrespective of your current financial situation, every mother deserves to have a home that they can call their own and can also raise their children safely and securely. Rebuilding or improvising your current credit score may take some time; therefore, you can count on many single mom’s bad credit home loan opportunities that will assist you to purchase a home without many complications. Qualifying for traditional home loans can be difficult for a single parent with a bad credit profile. You can look into government-backed loans like USDA or FHA with flexible eligibility requirements.
Home Loan Grants For Single Moms With Bad Credit
The following programs will help you to obtain the best home loan opportunity so that you can overcome all the barriers and attain home ownership goals.
1. FHA Home Loan For Single Moms
The FHA, or Federal Housing Administration, has implemented a lot of mortgages exclusively for low-income households, including single mothers with lower-than-average credit scores. Once you get approval to obtain an FHA loan, the funding will not be provided by the Federal Housing Administration but by FHA-approved lenders. The Federal Housing Administration will only offer guarantees on your loan. Therefore, once you qualify to obtain a loan, you need to pay mortgage insurance premiums to the FHA directly. If you need help with the down payment, then you can contact a family member or local charity, and even a local authority-approved councilor in some cases. If you are a single mother having a minimum credit score of 500, then you can apply for an FHA home loan. Qualified single mothers having credit scores between 500 to 579 need to pay a 10% down payment, whereas candidates with credit scores of 580 or even higher will need to pay a 3.5% down payment.
2. USDA Home Loan For Single Moms
USDA loans refer to housing programs backed by the United States Department Of Agriculture. These housing loans are the right fit for low-income single moms who have a bad credit profile and are living in rural regions. If you’re a struggling single mom with a credit score of 640, then you can avail USDA home loan to purchase a house of your own. The benefits of the USDA home loan are enticing since there is no requirement to make down payments. You can visit the official website of the United States Department of Agriculture to learn the eligibility criteria and the application process for USDA loans.
3. Section 8 Housing With Bad Credit
This Section 8 Housing is a popular Federal Housing subsidy program that local PHA Public Housing Authorities administer. The Section 8 Housing Program is available to eligible United States citizens or approved noncitizens. The program provides a tenant subsidy which is popularly known as a Housing Choice Voucher Program. The program does not check credit scores, and the eligibility criteria require single mothers to have an income less than 50% of the local median. When an eligible candidate vacates the Section 8 property, assistance will be received by the next tenant who qualifies for the program and moves into the property. If you’re a single mother looking for affordable housing then you could apply for this program and you have to pay 30% of your income towards rental payments every month. The government will cover the difference amount. If you’re a single mom with bad credit, Section 8 Housing will be an exceptionally sought-after option. You can contact the local PHA to learn how to apply for this program.
4. Operation HOPE Home Buyers Program
This nonprofit initiative empowers single mothers and low-income members of the community. Operation HOPE strives to enable single moms and low-income citizens of the United States to get safe and affordable housing. The Home Buyers Program by Operation HOPE does not check applicants’ credit scores, including single mothers. Anyone who is facing financial struggles or belongs to a low-income family can seek housing assistance from this program. Here, single moms can avail of down payment assistance, pre-approved FDIC loans, guidance towards building a strong and stable credit status, and much other support.
5. VA Loans
Single mothers who are a widow of someone who has served military services or has been a part of the military can be eligible to obtain VA loans. Qualifying for VA loans is one of the most accessible and affordable ways single moms with bad credit profiles can purchase a home. The best thing about these loans is that they do not require any down payment, and the government backs 100% of the mortgage loan. These loans also have lower interest rates, unlike other options. Qualified candidates need not pay private mortgage insurance with VA loans. If you’re a single mom with bad credit, you can qualify for this loan, provided you can meet the service requirements. Besides, your home will also be appraised and inspected by licensed home inspectors.
6. Home Possible Loans For Single Mothers
Home Possible Loans by Freddie Mac will be the right option if you are looking for home loans for low-income single mothers. This home loan has competitive interest rates and requires monthly mortgage insurance payments. You can become a homeowner by paying just a 3% down payment. To apply for this loan program, you must ensure your income doesn’t exceed 80% of the area’s median income. You can use a Home Possible income and property eligibility tool to know the AMI limits of a particular property. There are no geographic barriers to loan amounts, and single mothers can apply even if they do not have a poor credit score due to a lack of credit history.
It is no secret that being a single mother can be challenging. There is also no doubt that obtaining a home loan and qualifying for a mortgage can be more challenging. For many single moms qualifying for a mortgage with a single source of income may seem like a far-stretched idea. But as a solo parent, it is essential to provide a comfortable and secure home to your kids. Thankfully there are assistance programs and loans available for struggling single moms to help them fulfill their dream. Single moms can be eligible for a wide range of home loans like USDA loans, VA loans, FHA loans, and conventional loans through which they can fulfill their dream of owning a house.