Purchasing a home and obtaining affordable loans can be a daunting experience for single mothers in Indiana. Applying for a loan, getting sanctioned, and buying a property can sometimes feel scary and overwhelming. Most fail to obtain a good deal because of low income and credit requirements. Fortunately for low-income home buyers and single mothers in Indiana, numerous programs enable them to seek permanent housing.
How To Apply For Single Mom Home Loans In Indiana?
To apply for home buyer assistance programs or affordable loans, single mothers can contact the Indiana Housing and Community Development Authority and complete an online survey to seek assistance programs for affordable loans and other helpful resources available in their county. In addition, the Department of Housing and Urban Development, or HUD, also lists many assistance programs in different cities of Indiana. For instance, in Bloomington, first-time home buyers can get assistance up to $10,000 as a forgivable five-year second mortgage. After completing an online survey, you will get an email in which you get to know the programs that you may be eligible for and how to apply for them. It is essential to understand your credit score as well as debt to income ratio to make sure you can meet the eligibility requirements of every loan program available in Indiana. After submitting a loan application, your preferred lender will work closely with you to identify a mortgage loan that will be the right fit for you and will ensure that you meet all the program requirements.
Federal Home Loan Programs In Indiana
Many programs are designed for low-income earners in Indiana by the federal government. First-time home buyers in Indiana can avail of these programs to reap the maximum benefits. The mortgages provided by the federal government are generally for two to four-unit properties, single-family homes, approved condos, planned unit developments, townhouses, and manufactured homes.
1. Indiana FHA loans
The Federal Housing Administration insures FHA loans so first-time home buyers can get an affordable down payment. Single mothers with low income and credit scores can apply for this program. Borrowers have to pay a 3.5% down payment if they have a credit score in the range of 580 or higher, while borrowers having a credit score as low as 500 have to pay a 10% down payment. In addition, they also have to pay for mortgage insurance, which will serve as a means of protection for approved lenders in case they default on an FHA loan. Even though there are no minimum income limitations required to qualify for FHA loans, low-income home buyers and single mothers need to meet debt to income ratio as stated by the Federal Housing Administration.
2. USDA Rural Housing Loan
Even though you need not be a first-time home buyer to qualify for USDA Rural Housing Loan Program, it will still be a good option for any home buyers willing to purchase a property in rural Indiana areas. USDA loans provide 100% financing, no down payment requirements, and 30-year low fixed-rate loans. There are different types of USDA mortgages available throughout Indiana. The income limitation of these loans may vary depending on your household size and location.
3. VA Loans
The Department of Veterans Affairs insures VA loans. They are designed only for active military members, veterans, and eligible spouses seeking loans to purchase, improve or build homes. The best thing about these federal government-backed loans is that they come with lower interest rates than conventional mortgages and do not require any down payment.
Home Buyer Programs By IHCDA
IHCDA, Indiana Housing And Community Development Authority offers many loan financing options to first time home buyers, including single mothers in Indiana so that they can find permanent housing. To qualify for the programs offered by IHCDA, you need to meet specific eligibility criteria, which may vary depending from one program to another.
1. First-place program
Qualified veterans and first-time homebuyers can apply for the First-Place Program if they plan to purchase properties in targeted areas of Indiana. Homebuyers can use FHA-approved 30-year loans to borrow 6% of the home purchase price for closing costs or a down payment as a forgivable second mortgage. This second mortgage requires no interest and monthly payments; moreover, it is forgivable after nine years, provided the buyer does not sell the house or refinance the mortgage. Homebuyers should have a minimum credit score of 640 and debt to income ratio of 45% to qualify. Borrowers cannot combine this program with a mortgage credit certificate.
2. Next Home Program
Home loan assistance is provided through Next Home Program to repeat and first-time home buyers by Indiana Housing. This program will help you to obtain 3.5% of the purchase price for a downpayment on an FHA-approved loan. Down payment assistance received through this program is forgivable after two years, provided you do not refinance or sell your home. You can combine this assistance with a mortgage credit certificate.
3. MCC, Mortgage Credit Certificate
Indiana provides tax credits to low-income single moms and other home buyers so that they can reduce their economic stress and can purchase a house. To be eligible for MCC, home buyers have to meet the eligibility criteria related to family income. They must purchase a home in a specified or targeted area. The MCC program is designed only for first-time home buyers; therefore, you should not have owned any property as a principal residence over the past three years if you want to qualify for MCC. This program offers an annual federal income tax credit of up to $2000 of the mortgage interest paid yearly. The program fee charges $800. However, the savings made from the lifetime of the mortgage credit outweighs the fees included.
Single moms who are potential first-time home buyers should know that there are numerous programs and affordable loan options out there that can make the home-buying process affordable and easy for them. These programs are available to potential home buyers in Indiana through first-time home buyer programs, down payment assistance, and low-interest mortgages.