Are you a single mom with bad credit but looking for mortgages or ideal home loans for your family? Then this guide will help you to navigate the different mortgage programs for single moms with bad credit and how to qualify for them. Bad credit is a reason why a lot of people do not qualify for a loan especially those who are looking for apartment or housing help. Single moms can improve their existing credit scores by following many tips and strategies. For instance, they can lower their overall debt, review their credit report, limit the number of credit cards that they are owning presently, pay bills on time, and maintain credit card balances below 30%.
With effective steps and the right approach single moms with bad credit will take only 12 to 18 months to rebuild their credit profile and improve their credit scores. The Fair Isaac Corporation or FICO analyzes credit card balances, payment history, and overall debt of an individual and gives scores to people. A score less than 580 is considered insufficient. Single moms having a score between 582-669 is considered low while above 669 qualifies for good to exceptional credit score rates.
Is There Mortgage For Single Moms With Bad Credit?
Single moms face many adversities in life since they are unable to split the bills or do household chores with a co-parent. They have to navigate the financial responsibilities of the household alone which leads to a poor credit profile. Having a damaged credit history or bad credit score complicates the life of single mothers and makes it difficult to qualify for mortgages. Every mom deserves to live in a place that they can call their own and grow their children securely. If you want to know whether help for single moms with bad credit is available for you or not then the answer is definitely yes there are many low-income home loan programs for single moms with bad credit such as FHA, Section 8 housing with bad credit, VA, and USDA home loans.
Can I Get Help With Mortgage If I Am A Single Mom?
There are many home loan programs and mortgage assistance for single homes in the USA. While the interest rate, loan amounts, and fees may vary from one program to another there are likely options that may work out according to your current financial situation. Moreover, you can get help to cover your mortgage through tax credits, grants, and government assistance programs. You need to be diligent with your finances as a single mom before, during as well as after the home-buying process which will help you to improve or rebuild your credit score. Research all the mortgage assistance programs and other options that will suit your needs. If necessary enroll in first time home buyer class or HUD housing counselor to learn information about home assistance programs.
List Of Mortgage For Single Moms With Bad Credit
Rebuilding a creditworthy profile for single mothers may take time therefore they can opt for mortgage loans for single moms with bad credit that are available throughout the United States. Read below the programs to find a suitable resource that can best align with your current status.
1. FHA Loans
The Federal Housing Administration loans are an ideal mortgage loan for single moms with bad credit. This mortgage assistance loan is designed for low-income people so that they can move towards home ownership. More than 120,000 Federal Housing Administration loans were issued in the year 2017. The best thing about an FHA loan is that the down payment is as low as 3.5%. If you are purchasing a home worth $50,000 then you just need to pay a down payment of $8750. Friends or family can also give FHA loan down payments for the full amount. The gifter will have to write a letter stating the purpose of the amount. These loans come with less stringent eligibility criteria as the Federal Housing Administration ensures the loans so the risk of lenders is less. The Mortgage insurance premiums on FHA loans will be borne by single mothers and it will be rolled into their total home loan. FHA ensures these loans benefit low-income households who have lower-than-average credit scores. Single mothers who get approval for FHA loans will not get funds directly from FHA but through an FHA-approved lender.
2. VA Loans
Single moms who do not have a good credit profile can get additional help and fulfill their homeownership dream by opting for low-down payment loans. The United States Department of Veteran Affairs provides VA loan programs for single mothers and eligible candidates who are service members or veterans or surviving spouses of eligible service members. Similar to FHA loans, VA loans are also backed by a government agency and enable veterans or service members to qualify for homeownership programs with less cost and minimal risk to lenders. Single moms with bad credit can qualify for VA loans on fulfilling the eligibility criteria and the best thing about obtaining this loan is that you do not have to pay any insurance premiums or down payment. VA will guarantee home loans up to a particular amount based on your area of residence. For instance, the limit for VA loans will be in the range of $424,100 to $700,000 depending on your area of residence in the country. Qualifying for a VA loan is a huge opportunity for a single mom spouse of a late veteran. There isn’t any minimum credit score required to qualify for VA loans.
3. USDA Loans
The United States Department of Agriculture loans are the right fit for single moms with bad credit and living outside the urban areas in the USA. Single mothers who are living in rural, desirable locales and areas close to cities can qualify for this loan program. There are no down payment criteria for USDA loans; however, you have to use your home in the rural areas as your primary residence and also pay for the mortgage insurance premiums. The mortgage premium for USDA loans is generally 0.35%. Single moms with not-so-good credit profiles can qualify for USDA loans since it is backed by the United States Department Of Agriculture.
Other Housing Assistance Program For Single Moms With Bad Credit
While FHA, VA, and USDA loans are three widely known mortgage options available for single moms with bad credit, you can also qualify for the below-mentioned housing assistance programs if you’re facing difficulty purchasing a house or paying for your rent.
1. Section 8 Housing With Bad Credit
HUD and the local Public Housing Authority provide a Federal Housing subsidy known as the Section 8 housing program. This is a tenant subsidy that offers financial backing when the tenant moves to a new property. The housing voucher program is provided to United States citizens as well as approved noncitizens. The eligibility criteria require candidates to have an income less than 50% of the local median. When a tenant vacates a property approved by the Section 8 housing program the next tenant that moves into the property will receive the assistance. Single moms who want to remain housed but are facing problems covering their rent will find Section 8 housing to be an extremely sought-after option. While it may include a long waiting list it is a worthwhile choice. Once you get accepted into the program you need to pay around 30% of your income towards the rental while the difference will be covered by the government. The best thing about this program is that your credit score will not be taken into consideration.
2. The Operation HOPE Home Buyers Program
Operation HOPE is a nonprofit initiative which is designed to empower low-income, single moms. Credit scores of single moms are not relevant to qualify for the program. You can qualify for down payment assistance, FDIC loans and get guidance that can help you to rebuild a creditworthy status. Low-income homebuyers including single moms can avail of multiple programs provided by Operation HOPE that can help them to boost their financial knowledge. The first time homebuyer education program serves underserved communities and provides them HUD certified coaches so that they can navigate the complexities of the home loan procedure. While pursuing an FDIC loan the Operation HOPE team will work with you to provide support and guidance and also connect you with other professionals.
3. Habitat For Humanity
In addition to mortgage loans for single moms with bad credit, many homebuyer programs for low-income single moms can help them to locate affordable properties or apply for mortgage assistance programs. These programs are provided by state, federal, and nonprofit organizations. One such nonprofit organization is Habitat for Humanity. A key purpose of Habitat for Humanity is to help single moms become homeowners. Affordable homes are provided by Habitat for Humanity and your credit score or credit profile will not be taken into consideration. The nonprofit organization is serving around 70 counties and 50 states. Single moms need to volunteer at Habitat ReStore or take homeownership classes if they want to build their homes and become the next Habitat homeowner.
Which Home Loan Will Be The Right Fit For Single Moms With Bad Credit?
The best home loans for single moms with bad credit are based on your prospective property and financial situation. The three options USDA, FHA, and VA loans are incredible options that will not consider your credit profile. If you have a credit profile below 620 the best mortgage option for you will be to go for a FHA or VA loan. Individuals who do not have enough money saved for a down payment can opt for USDA or VA loans on the successful meeting of the eligibility criteria. You need to consider factors like your income, credit score, associated fees, down payment, and mortgage insurance into consideration to find the right fit for yourself.
Apart from these three options, you can also avail of first time home buyer grants provided by the United States Department of Housing and Urban Development every year to support housing initiatives for residents. For instance, the Good Neighbors Next Door, National Homebuyers Fund, homeownership for public housing residents, and so on can be a good option for you. If you’re unable to qualify for national mortgage programs you can apply for grants at local or state level. Down Payment Assistance Programs (DPA) are also provided for single moms at state, local, or county levels and are provided through nonprofit organizations. The DPA programs include grants, deferred loans, second mortgages used for converting down payments into monthly loans, forgivable loans, and so on.
As a single mom a significant trait to be a successful parent is to realize your inner strengths. Being a single mother and having children is a gift of its own. Every parent wishes to provide an unlimited selfless supply of happiness to their children. Having a house is essential for every parent to grow and nurture their children. However single moms suffer from housing insecurity and most of them do not have adequate financial resources to purchase a house. Applying for a mortgage is the only way to attain homeownership goals for single mothers but with poor credit profiles, single moms are turned down by lenders. The above-mentioned programs will help you to find the best mortgage assistance program or home loans for single moms with bad credit.