As a solo parent, it’s hard enough that you have to pay the bills and take care of your child on your own that buying a house seems like an impossible feat. While it is more difficult to acquire a real estate property with a single income, that doesn’t make it impossible.
If you want to buy a house on a single income, here are some tips that can help you afford it:
1. Manage expectations
Unless you are earning an amount that’s equal to two incomes a year, it’s safer to expect that the homes you can afford are probably a bit smaller. For this reason, managing your expectations before going house-hunting is a necessary step. Look at starter homes first, as well as affordable condos and townhouses instead of large family homes, even if you plan to have another child in the future.
As a solo parent, financial difficulties can be devastating if you suddenly find yourself without an income. Thus, sticking to the houses you can realistically afford is the best way to house-hunt. You can always find your dream home later on.
2. Look for solo parent-friendly loans
There are several government-backed loans that can significantly increase your chances of buying a house as a single parent, such as:
- Keystart. The Keystart loan helps low-to-middle income earners obtain a home by providing low deposits and grants, as well as requiring no lenders mortgage insurance. For single parents who cannot save enough money for the deposit, this program is a significant help.
- Homestart Finance. This program is made for South Australians who need a lower deposit in order to buy a house. It is also designed to help buyers pay the mortgage based on what they can afford instead of the house’s interest rate.
- Queensland Housing Finance Loan. For people in Queensland, this program can help buy a home with low-interest rates, low deposits, and income-based repayment programs.
3. Seek assistance
Check with your local housing office to see what single parent assistance programs they offer. If you qualify, the housing office can help you buy a home and even subsidize the cost for you. Some programs also offer deposit assistance so you can obtain a mortgage even if you have little to no downpayment saved.
4. Build your credit and savings
If you don’t qualify for government-backed loans, you can apply for a mortgage through a private lender. Private lenders often require a good to excellent credit score and a low debt-to-income ratio before they give you a loan, as well as a certain percentage of downpayment.
As a single parent, achieving a great credit score can be a challenge, but not impossible. Here are some ways you can start building up your credit portfolio:
- Get a copy of your credit report
- Find a credit card with a reasonable interest rate
- Stick to your budget
- Avoid unnecessary debt
- Pay your bills on time
If you are a single parent dreaming of finally owning a home, these tips can help you turn that dream into reality. Although the road towards homeownership may be tough, the reward is well worth the hard work.