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After years of renting, April Carter, 42, of Philadelphia, managed to successfully overcome many obstacles homebuyers face when trying to break into homeownership: Rising home prices, one income, solo parent, near-zero in savings, an average credit score, and thousands of dollars of debt.
Despite her challenges, Carter bought her first home in early 2021.
You don’t need a perfect financial record or a winning lottery ticket to achieve your homeownership dreams, even in today’s hot market. “It’s a lot easier than what people think it is, and it’s OK if you only have a single income,” says Carter, an Army veteran who took advantage of her U.S. Department of Veterans Affairs loan benefit to purchase the home. “I put it off for so long, and I probably could have done it sooner.”
In many ways, the pandemic has made becoming a homeowner more difficult.
Low mortgage rates fueled demand at the same time that the number of homes for sale dwindled, which caused home prices to soar. And this market has been especially tough for first-time buyers as pandemic housing demand made the existing shortage of entry-level homes that much worse. These issues were exacerbated for many female buyers, particularly households headed by single women, according to a recent Freddie Mac survey.
In spite of these difficulties, people were able to become homeowners for the first time even with only one household income. We asked five single parents who purchased homes during the pandemic to share their homebuying story — including each buyer’s financial profile and their advice — so you can see exactly what it takes to become a homeowner right now.
Here is what these newly minted homeowners had to say.
How These 5 Single Parents Became Homeowners
If becoming a homeowner is a dream of yours, there’s a lot to learn from those who overcame the hurdles of buying a home on a single income while also supporting a family. These five single parents opened up to NextAdvisor about everything from their personal circumstances to specific financial details. These stories can give you a better understanding of what it takes to get a home loan, and ultimately, buy a home.
The numbers listed for credit score, income, debt, and savings are a snapshot of what their situations looked like at the time of preapproval, for those who got a mortgage preapproval. These numbers are constantly shifting and some are rough estimates, while others changed in between being preapproved for a loan or having an offer accepted, and actually closing on the home.
Gala Copez, Two Children, 40, Cleveland
- Credit score at preapproval: 630
- Credit score at closing: Increased to 675 at closing
- Income: $55,000/year
- Savings: $4,000
- Debt: $62,500 (car, credit cards, and $50,000 in student loans)
- Home purchase price: $114,900
- Loan type: Conventional loan
- Out-of-pocket costs: $2,200, including the earnest money deposit and inspection fees
- Monthly housing payment difference renting vs. owning: Almost $400 less to own
Copez really began her home search in earnest in early 2020. She researched online and learned you can shop around and get multiple offers for home loans. Even though she was just two years out of bankruptcy, she was able to get preapproved for a mortgage. “You can have options after bankruptcy. I had banks that said yes,” she says.
Exploring all of your options is important when buying a home. In addition to traditional banks, Copez looked into the NACA (Neighborhood Assistance Corporation of America) program, which she had heard about from a coworker. NACA is a nonprofit homeownership advocacy organization that offers home loans with no credit score requirement, no down payment, and at favorable mortgage rates. A bank quoted Copez a rate of 3.5% with $10,000 in out-of-pocket costs, plus private mortgage insurance (PMI) each month. With NACA, her rate was around 2.2% with no PMI, no down payment, and no closing costs.
During her home search, Copez’s landlord reached out to let her know that he planned to sell the home she was currently renting. She ended up buying the home and now pays almost $400 a month less than what she was paying to rent the same house—and she didn’t have to move.
Do your own research. “There’s a lot of information out there and there’s money that can be left on the table.” Ask your lender and research to see if down payment assistance is available in your area. It’s “literally free money,” says Copez.
Laquita McMillion, One Child, 31, Houston
- Credit score at preapproval: 760
- Credit score at closing: Increased to 803
- Income: $62,000/year
- Savings: Zero, only started saving after preapproval
- Debt: $180,000 ($165k in student loans, plus credit cards and car loan debt)
- Purchase price: $188,000
- Loan Type: Conventional loan
- Out-of-pocket costs: $400.12
- Monthly housing payment difference renting vs. owning: $245 less to own
As a teen mother, McMillion knew she wanted a better life for her daughter. “No one in my family, in my immediate family, had owned a home,” she says. “Owning a home was one of my aspirations as a mother.” But the dream of homeownership was on the back burner until one day her daughter asked why they couldn’t live in a home like her friends had. That’s when McMillion decided, “I’m gonna make this dream actually happen.”
The building process was delayed due to the pandemic and a hurricane in Louisiana that helped create a labor shortage in her area. But McMillion used this time to her advantage by building her savings and credit score, because she knew that a higher credit score can help you get a lower interest rate.
The cash needed to close was originally estimated at $9,900, but McMillion qualified for a $5,300 grant as a teacher. She also received $10,000 in credit from her builder, which she used for upgrades to the home and closing costs. She ended up only paying $400.12 out of pocket, and now her mortgage payments are $245 less than when she rented a smaller living space.
Even though she’s paying less each month, maintaining a home costs money, and “the extra money is going towards something,” McMillion says. In the end, it’s worth it, says McMillion, because of the freedom she has and the asset that it is going to be for her child.
Find a free homebuyers course so you can be familiar with the vocabulary and important concepts of homebuying. McMillion says the homebuyer class she took was invaluable. “The knowledge outweighed any money that I had in my account,” she said.
Steven Horvat, Two Children, 38, Chickasha, Oklahoma
- Credit score before paying off debt: 590
- Credit score at closing: Increased to 718 at closing by paying off debt
- Income: $53,000/year
- Savings: $23,000
- Debt: $12,000 (credit card debt)
- Purchase price: $172,150
- Loan type: FHA loan
- Out-of-pocket costs: $6,000
- Monthly housing payment difference renting vs. owning: Roughly the same
It was mid-2019 when Horvat decided he was tired of renting and wanted to become a homeowner, but his $1,100 a month rental payment made it difficult to save. He discussed his financial situation with his parents and decided, to be able to save more, Horvat would move with his two daughters into his parents’ home. “If I stay in this apartment, I’m never going to be able to get a house,” he thought.
In roughly two years, Horvat paid off all of his debt except for his credit cards and saved up a nest egg to buy a home. When it came time to house-shop, Horvat was living in Spokane, Washington, but he works remotely and had the option to search in several different areas.
Because of the high demand for houses, he decided to “circumvent the buyers market and look at buying a brand new house,” he says. He ended up purchasing a newly built home in Oklahoma where he had some family and housing was more affordable.
By comparing offers from more than one mortgage lender, Horvat was able to find a better deal on his home loan. He ended up getting a mortgage with his bank, which secured him an interest rate that was 1.24% lower than he was quoted by a different lender recommended by the builder. This lower rate cut his monthly payment by roughly $130. During this time, he also sold off some investments and paid off his credit card debt, which raised his credit score by nearly 130 points.
Consider downsizing your stuff. If you’re moving a long distance, you may want to sell anything that is easily replaced. Horvat paid $2,300 for a moving PODS (Portable On Demand Storage). “It’s so much simpler to have less stuff, and buy something locally.” This also eliminates the problem of needing to store extra belongings or the possibility that something doesn’t fit in the new home.
Tas Lemieux, One Child, 39, New Orleans
- Credit score at preapproval: 620
- Credit score at closing: Increased to 680 in six months by paying off debt
- Income: $100,000/year
- Savings: $5,000
- Debt: $60,000 (credit cards and $50,000 in student loans)
- Purchase price: $250,000
- Loan Type: FHA loan
- Out-of-pocket costs: $13,000
The dream of becoming a homeowner often felt just out of reach for Lemieux. “I just felt like I didn’t make enough money,” she says. She had student loan and credit card debt, and didn’t feel that her credit was good enough. After becoming a single parent, she made the decision to move back in with her parents while she went to school to become a registered nurse.
When it came to buying a home, Lemieux eventually opted for a new build. In the roughly six months it took for the home to be built she worked “a whole bunch of overtime” to save for closing costs. She often worked six days a week, which she says wasn’t easy, “but if you want it bad enough you gonna just have to do what you have to do.” During this time she also paid off $10,000 in credit card debt, which improved her credit score.
Be patient, and don’t rush your home choice. “Get what you want because you have to live in it,” Lemieux says. “If you want a two-story house that’s pink, whatever you want in a house, just get it.” You may be tempted to settle for something right now and get another house later, but, Lemieux says, you may not get another chance.
April Carter, One Child, 42, Philadelphia
- Credit score at preapproval: 655
- Income: $63,000/year
- Savings: $2,000-$3,000
- Debt: $10,000 (car and credit cards)
- Purchase price: $290,000
- Loan type: VA loan
- Out-of-pocket costs: $10,000
- Monthly housing payment difference renting vs. owning: $16 more to own
A year before buying a home, Carter moved in with her mother, which allowed her to pay off debts and build her credit. She started her home search with a lender her brother had used. That lender connected her with a real estate agent. But she wasn’t preapproved for a large enough conventional loan in her price range in any neighborhoods she liked.
It wasn’t until Carter started work with Veterans United, a lender specializing in VA loans, that things started to fall in place. As a military veteran, Carter qualified for a mortgage backed by the U.S. Department of Veterans Affairs (VA loan). She got preapproved for $100,000 more than with the previous lender. The new lender connected her with a new real estate agent: A mother and daughter team, Jessa and Esther, that she thought was a better fit. “They were on top of everything…it just felt right,” she says.
With her new team in place, it only took six weeks to get an offer accepted on a house both she and her daughter Caroline loved, which was important to Carter. To reduce out-of-pocket costs, she offered $2,500 over the asking price in exchange for a seller credit of the same amount, which brought the total out-of-pocket costs down to $10,000. Carter received $4,000 from family to help cover her upfront costs. Now she only pays $16 more a month more than what she had been paying in rent. “I own a house now. So I don’t mind the extra $16,” she says.
If you’re a veteran, work with a lender that understands VA loans. There’s a perception that VA loans are more difficult to work with because of the inspection, but “it wasn’t that way with me at all,” she says. The seller was also a veteran, which Carter says helped her offer get accepted. “Don’t be nervous about using a VA home loan because it actually worked to my benefit.”
More Homeownership Advice From These 5 Solo-Income Parents
Don’t Give Up the Dream
Owning a home can feel like an impossible dream, especially when you’re trying to accomplish it with a single income. Lemieux has a saying that helped her through the journey: Dream, plan, execute. “You have to want something so bad that you dream about it all the time,” she says. Then you’ll need to come up with a plan for that goal and execute your plan. It may be working overtime or shopping less. Whatever it is, execute it, she says.
“Don’t give up,” Horvat says. “Eventually, you’re gonna see the light at the end of the tunnel.”
Doing your own research allows you to become your own advocate. “It is really easy for someone who doesn’t know how to do their own research, or doesn’t know the process, or doesn’t have someone who’s already bought a house before, to get lost,” says Copez. Social media can be a great tool for connecting with people in similar situations and learning from their experiences.
The free homebuyers course McMillion took was invaluable to her experience, she said.
As part of your education, look into the first-time homebuyer assistance programs and down payment assistance available in your area. “There’s a lot of information out there and there’s money that can be left on the table,” says Copez.
Prepare For Underwriting
Be prepared for an exhaustive mortgage underwriting process, which Horvat refers to as “the bane of the home buying process.” You’ll need to be able to show a paper trail for any money you have, even possibly money you’ve used to pay off debts, he said. Be prepared to verify everything about your financial situation, says Lemieux. “There’s no way you’re gonna get a house without having your business in order,” she says.
Plan for After Closing
Owning a home may be your dream, but it’s also a responsibility. If the furnace breaks down, you’ll need to know who to call and have emergency funds to take care of the repairs.
The expenses don’t stop once you pay for the house, so it’s important to make that part of your financial plan. “After closing, you think it’s over but it’s not,” McMillion says. You may have to pay for appliances, security systems, insurances, and warranties, not to mention the basics of owning and maintaining your home. You’re the person responsible for the maintenance. “There is no one that I can pick up the phone and call if something goes wrong,” she says.
Qualifying for a Mortgage May Not Be as Hard as You Think
Every situation is different. What it took for someone else to qualify for a home loan isn’t what it will take for you to qualify. “I think that you do start off thinking like, oh, I have to have this perfect credit score,” says McMillion, when the reality is your situation is unique to you. Until you sit down and have a lender look at your profile, you won’t have a complete understanding of what it takes for you to qualify for a home loan. McMillion built her credit score up to a level she never dreamed of, but her Realtor pointed out that there are loans she could have qualified for with a 620 credit score. “Everybody’s profile is so unique, that there may just be a loan for your profile,” she says.
Compare Lenders and Real Estate Agents
Lenders and agents are not created equal. Therefore, it is sound advice to shop and compare a few. Find a real estate agent you connect with and that understands your situation. That was pivotal for Carter. Not only was she preapproved for a larger loan by shopping around, but the new preapproval opened the doors to a new market of houses she hadn’t been shown before. Carter said she felt the new Realtor understood her much better than the one prior.
Find Ways to Save and Make Extra Money
Take advantage of any resources available to you. Most of the homebuyers we talked to said an important resource was family. Being able to live with her parents allowed Lemieux to go to school to become a registered nurse, but she understands that’s not an option for everybody. “All of us have different resources, you just got to figure out what it is and use it,” she says.
To outfit your home cheaply, Carter suggests joining local Buy Nothing groups on Facebook. These are groups where members give away things they don’t need anymore. This can be a great resource for outfitting a home on a budget, she said. “I know people who have furnished entire houses off of the Buy Nothing groups.”
If you have debt, Horvat recommends figuring out how to make more money with side jobs. He loves cleaning cars, he says and made money doing it as a side job for friends and family: “I even cleaned some guy’s boat.”