How to Optimize Homebuying on a Single Income with 6 Simple Steps

Okay, so the statistics are a bit daunting. Zillow reported in 2018 that single women can only swing a home purchase for 39 percent of properties on the market at any given time. But that doesn’t quite tell the whole story.Women being women, we’re buying homes anyway, and statistics can be damned. The National Association of Realtors has reported that 18 percent of homebuyers are single women. So how did they pull it off and how can you optimize your homebuying process? With these simple steps:

Preparation is key.

Pull your credit report…and brace yourself. The FTC has found that at least 5 percent of consumers discover errors serious enough that they’re denied loans. The good news is that you can dispute them if you find any. Call the lenders. Contact the credit bureaus. Get those messes cleaned up.Take some time to pump up your credit score if it’s legitimately iffy. Credit card debt is often the culprit here because it weighs down your credit utilization ratio, an important part of your score. Ideally, you’ve used up only about 30 percent or so of all your available balances. If it’s more than that, pay those accounts down. But don’t close out accounts you’re not using. This can hurt your score, too.

The best mortgage loans with manageable interest rates generally require a credit score of at least 740, and a debt-to-income ratio of no more than 43 percent. So there you have it—there’s your goal.

Look for a lender.
The general rule of thumb is that you put 20 percent of the home’s cost down, but not everyone can gather that much cash. If you don’t have the money on hand, you can get an FHA loan with as little as 3.5 percent down (that sounds better, doesn’t it?). And if you qualify for a VA or USDA loan, you might even be able to dodge a down payment altogether.

Fannie Mae’s HomeReady program might also be an option. You’ll still have to pay private mortgage insurance if you put down less than 20 percent, but many of these programs allow you to cancel the insurance when you’ve built up 20 percent equity.

Work within a one-woman budget.
Being a single homeowner means you’re working with one person’s income, and that’s got to cover more than just a mortgage payment. Homeownership involves a brimming basket of other costs, from insurance to property taxes to utilities to maintenance and repairs.

Experts suggest under-buying for this reason. You might qualify for a $175,000 loan, but nobody is going to make you borrow that much. Consider lowering your sights from the Taj Mahal to a sweet 2-bedroom condo. Your mortgage payment will be less, leaving you extra income to pay for all these other expenses.

Try “practicing” first.
Ideally, you’ve been pre-approved for a mortgage, so you know how much your payment will be. Figure out what property taxes are running in your target neighborhood, then divide that annual number by 12 months. Add on a little something for repairs and maintenance.

Maybe all this works out to $2,000 a month. If you’re currently paying $1,300 for rent and renter’s insurance, dedicate an additional $700 a month to your housing budget…and drop that extra into a savings account. (Do it long enough and your down payment will grow!)

Start house hunting.
Okay, you’re ready to do this thing. It’s time to start house-hunting. Community can be super-important for a woman living alone, so do a little investigating. Drive likely neighborhoods at all hours of the day and night. Did you have to slam on your brakes to avoid kids on bicycles? If you’re not ready to start a family, this might not be the neighborhood for you.

What about street lights and parking areas? Are you going to be comfortable coming home at 2 a.m. and making your way to your door alone in pitch blackness? Check in with the local police department as well. They can ID iffy areas better than anyone.

When you’re finally holding the key…
It’s time to talk about home repairs. Sure, you might be handy, but it’s another thing entirely to replace piping or install an air conditioning unit. Unless you’re an actual superhero, you’ll likely need to hire a professional for that.

You can pay out of pocket every time something needs fixing, or you can buy a home warranty. Or consider a condo or townhome. You know, where the homeowners’ association provides maintenance workers who will mow the lawn, shovel snow, and replace that dead garbage disposal (of course, you’ll have to pay for the new one!).

How to May the Homeownership Odds Be Ever in Your Favor
  • First get the mortgage, then find a house. Know going in how much house you can buy, then consider scaling down a bit so you’re sure you can afford all those other homeownership extras like repairs.
  • Shop neighborhoods, not just homes. The house might be to die for, but are you going to feel comfortable living there by yourself?
  • Protect what’s yours. Don’t put your newfound soulmate on your deed…at least not without adding him to the mortgage as well.
Want more tips for your finances? Download the app for iOS or Android today!
More Stories
Resolution: Financial Wellness