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Home Buyer

Single and Buying a House? What to Consider

Some people don’t think of buying a home until they’re ready to get married or start a family. But there's no rule saying a single man or woman can't purchase a home on their own. Sure, it’s a huge responsibility. But if you're financially stable and earn enough to qualify for a mortgage, don't immediately put homeownership on the back burner.

Buying a home is an opportunity to put down roots and build your net worth, plus you’ll join the ranks of single people around the country investing in themselves. According to the National Association of Realtor’s Profile of Homebuyers and Sellers, the “share of recent homebuyers who were single at the time of purchase held steady at 24% in 2016.” The report also revealed that the percentage of single female first-time homebuyers rose to 17%, while the percentage of single male first-time homebuyers dropped from 11% to 8%.

Since you’re relying on a single income, the amount you receive as a single borrower will likely be less than the amount you would receive as one-half of a couple. But this doesn't mean homeownership is impossible at this stage in your life. 

Here are a few tips to keep in mind when buying a home on your own.

1. Protect Your Credit

Whether you’re single or applying for a joint mortgage, mortgage lenders have to be confident in your ability to manage a mortgage. Since you're purchasing alone, getting the lowest possible monthly payment is likely a priority. Although you can get a home loan with a minimum credit score between 580 and 620, a higher credit score helps you qualify for the most favorable home loan rate, resulting in the lowest payment.

How do you protect your credit? For starters, pay all your bills on time every month, and pay off credit card debt. The latter not only raises your credit score, it also frees up cash that can go toward your mortgage payment or improving your property. 

You can also protect your credit by refusing to cosign for others. Becoming a cosigner means you’re liable for a debt if the primary borrower stops paying. This debt may also count toward your debt-to-income ratio and jeopardize your chances of getting a mortgage.

2. Look Into Low Down Payment Options

Conventional loans typically require a minimum 5% down. This is a far cry from the traditional 20% down; even so, drumming up this type of cash can be challenging as a single person. Luckily, some mortgage programs require much less. 

If you don’t have 5% down, our FHA home loans only require 3.5%, or you might qualify for a first-time homebuyer mortgage requiring 3% down. Some mortgage programs also allow borrowers to use gift funds toward mortgage-related costs, up to a certain percentage. A relative covering a portion of your down payment can lower your out-of-pocket expense, helping you purchase sooner.

3. Ask About Grant Programs

You may also qualify for grant programs that don’t require repayment. Use funds to cover the cost of your down payment and/or closing costs. Programs vary, so speak with a Cherry Creek Mortgage expert to see if you're eligible. Some programs are income-based whereas others only benefit borrowers in specific occupations.

4. Buy Less Than You Can Afford

Borrowers are typically allowed to spend up to 28% to 31% of their gross monthly income on a mortgage payment. But just because you can afford a certain amount doesn’t mean you should spend this much on a house. Instead, consider borrowing less than what you can actually afford. 

Sure, you’ll likely end up with a smaller house, but it’s never a good idea to spend your max on a home, especially when you don’t have someone to fall back on. Buying beneath your means is also practical because you’re able to recoup your savings and build a stronger emergency fund.

5. Protect Your Investment

Your home is your biggest investment. So naturally, you want to protect it. Shop around and compare rates for disability insurance in the event you're unable to work due to a temporary illness or injury. Between disability insurance and your emergency fund, it'll be easier to maintain your mortgage payment until you return to work. 

Bottom Line

Buying a home on your own can be scary. But if you have the income and credit to qualify for a mortgage, why put it off? Cherry Creek Mortgage offers several programs tailored to first-time homebuyers and repeat buyers. Call today to learn about our flexible options and apply for a home loan.