It almost goes without saying that taking care of a family on one person’s income can be burdensome. For this reason, single mothers may feel tempted to just focus on paying the bills each month.
Single mothers don’t need to reduce their dreams to merely consisting of short-term goals. This is particularly true when it comes to owning a family home.
Various special interest home incentives for single mothers will help make the dream of an affordable home a reality.
Federal Housing Association (FHA) Loans and Rural Loans
FHA loans are a great resource for moms looking for a good interest rate on a home purchase. With only a 3.5% down payment, moms receive a 96.5% mortgage loan. FHA loan terms offer several advantages, including:
Lowered Closing Costs
Easy Approval for Credit
Smaller Down Payments
Single mothers who live in rural areas should also consider Rural Housing Direct loans. These loans are 100% financing loans funded by the government. All homes will be in rural areas, and loan terms will typically be 33 years. As such, these loans are ideally suited for moms who don’t plan on moving from their family home.
Applicants will need to have a low income (typically 50 to 80 percent of the median income in the area) and must be unable to obtain credit elsewhere. While this program is not an outright grant, it is an extremely generous loan that makes the dream of homeownership a reality for low-income moms living in rural areas.
Buying a Housing and Urban Development (HUD) Home
HUD homes are another indispensable ally for single mothers looking to buy a home. From housing choice vouchers to homeownership vouchers, HUD makes homeownership easier for single mothers. Additionally, public housing options are available through HUD as well.
HUD homes are available in every state, so it helps to visit their website frequently to see what is available.
Making Homeownership a Reality with an Individual Development Account
Single parents looking for a home should consider using an Individual Development Account (IDA). An IDA is a matched savings account set up by community organizations.
These accounts help single income families save money towards a home or a child’s education. An IDA can even be used to finance a business as well.
The matching amount of these savings accounts will depend on the public or private organization doing the matching. Some matched funds will equal what the participant saves. Others may double the amount saved. Either way, shop around to find the best matching IDA program in your area.
Typical requirements for IDA approval include:
Meeting a Minimum Income Requirement
Contributing to the Account with Your Income
Having a Minimal Amount of Debt or No Debt
Lacking Assets in Excess of $5,000
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.
IDA programs also typically require economic training as well, which may be beneficial. Understanding how the purchasing process works will benefit your family now and in the years to come.
Which of these homeownership choices is right for you will depend on your own circumstances and housing needs. Still, the wide range of housing options available to single moms shows that homeownership can become a reality, not just a dream.
"Special Interest Home Incentives for Single Moms Make Homeownership a Reality for Many." Movoto. May 2017. https://www.movoto.com/blog/homeownership/special-interest-home-incentives-for-single-moms/