This is for Single-Income Homebuyers

The Rising Demographic in Today's Housing Market

The housing market is always changing, and today single-income homebuyers are quickly becoming one of the largest demographics to take part. While getting approved for a loan may take a bit more work for single applicants than those who are coupled or have dual incomes, it is certainly an attainable goal and often one that proves to be more affordable in the long run. Let's go over some of the things you'll want to prepare for as you begin your solo home buying journey.

Credit

First, you’ll want to make sure to have established some credit history and remain in good standing on those accounts. Even if you think you know your credit score, lenders often find that borrowers are surprised to learn that their assumptions about their credit health aren’t always accurate. In many cases, scores are much higher than anticipated, and in others, buyers aren’t quite as prepared as they’d originally hoped. That’s okay! Plenty of lenders offer credit counseling and can help bring scores up enough to qualify, usually in a matter of months.

Down Payment

The second hurdle single-income buyers often face is saving enough for a down payment. It’s a common myth, especially among first time buyers that one of the prerequisites to home ownership is to have 20% of the purchase price saved for a down payment. The truth is, many loan options require as little as 3.5% down, while some like VA and USDA do not require borrowers to put anything down at all.

Income

Obviously, the income of a single borrower is likely to be less than that of a married couple with two incomes fueling their purchase. However, it shouldn’t be assumed that the path to home ownership is reserved only for those who are partnered. The key is understanding what counts as “income” and what does not. If you’re divorced for example, and receiving child support, this can count as additional “income”, as long as it’s properly documented and consistently paid. On the other hand, if you’re the parent ordered to pay child support, this will reduce the monthly income you’ll be able to use on the loan application.

Documentation

The example above is just one of the reasons documentation matters so much when purchasing a home as a single borrower. Underwriting can’t accept informal agreements surrounding the division of income, assets and liabilities, so it’s important that inheritance or divorce decrees, thoroughly and clearly documents the specifics of any financial agreements or arrangements you’ll be relying on as a source of income. This also includes agreements surrounding any existing debts that either party assumes.

Consider Another Applicant

If you’re able to afford the home you want, but poor credit or a lack of documentation presents an unavoidable hurdle in your path to homeownership, you might consider a co-applicant, or a co-signer on the loan. Doing so may be able to remedy the underwriting requirements that you as a single buyer can meet.

The gist of it:

Buying a home on a single income is absolutely possible, and often more attainable than some buyers think. You can prepare yourself for loan approval by taking steps to understand and maintain a healthy credit standing and ensuring all streams of usable revenue are well-documented. Still, every borrower’s scenario is different, so the key is finding a lender committed to your homeownership goals. One of our PRO Lenders can help you explore all of the options available to you today.

Summary: More home buyers than ever before are purchasing homes without a spouse, and with the right lender, it’s easier than ever. Here’s what you’ll need to know about credit, down payments, and income when purchasing a home as a single homebuyer.

Tags: Loan Options, Single-Income Borrower, First Time Homebuyer