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Having the financial means to afford a home is difficult for most would-be homebuyers. It can be even more difficult for single parents with one only source of income. If you’re a single parent who wants to purchase a home, don’t let the daunting task of saving up a down payment dissuade you from fulfilling your dream. Here’s what you need to know to make that dream a reality.
Trying to save for a down payment while raising children on a single income can be difficult, especially as the costs of both are increasing. To help you reach your goal, consider:
If coming up with a down payment to purchase a home isn’t feasible, having someone gift you the money can be an option. However, there are rules and regulations that homebuyers must adhere to when using gifted funds for a down payment.
The two main rules to be aware of are the source of the down payment and the amount. The money for the down payment must come from a family member, spouse or domestic partner. And how much you can be gifted depends on the type of loan. If you’re taking out an FHA or VA loan, the entire down payment can be a gift. But if you’re taking out a conventional loan, all of your down payment can be gifted only if you’re putting down at least 20%.
You’ll also need to properly document the source of the gifted funds. A gift letter is required that must be signed by you and the donor. The letter must include the amount of the gifted funds, the name of the donor, your relationship to the donor and a clear statement that says the money is a gift that doesn’t need to be repaid.
The National Association of Realtors’ 2016 profile of home buyers and sellers reveals the following statistics:
Potential homebuyers with a low income might find it difficult to know where to start when determining whether they can afford to buy a home. Whether you’re a single parent or have a spouse, the requirements for securing a home loan are the same. Here are some tips for helping single parents become homeowners:
Find out how much you can borrow
Coming up with a down payment of 20% to purchase a home can seem almost impossible to many. But there are low down payment options available.
Mortgage brokers specialize in helping borrowers in difficult or unique circumstances. They can help you find lenders who accept government assistance as a source of income and will help you work out how much you’ll realistically be able to borrow.
Mortgage brokers typically charge 1% to 2% of the loan amount. This fee is either paid by the homebuyer or the lender. If you’re paying the fee, you can either roll it into your mortgage or pay for it up front.
Purchasing a home as a single parent can be difficult, but there are affordable options available. Compare mortgage products to find the one that fits your personal and financial situation.
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