Qualifying for a Mortgage on a Single Income
Sometimes, finding your way as a single parent or a single buyer in today’s real estate market can be a challenge. I recently had the opportunity to work with a wonderful buyer who is now the proud owner of a new home. Mary* is a nurse and the single mom of two children. She was divorced approximately two years ago, and lost her home to foreclosure when she wasn’t able to keep up with the payments on her own. After renting for a year, she was able to qualify for a second chance mortgage. Today, she’s enjoying her new home along with her family and building important equity for the future. Here are some tips for navigating the mortgage process on one income.
Let’s address one of the prevalent myths of the real estate industry. Whether you’re a single individual, recently divorced, or a family that’s living on one income, it’s possible to quality for a loan.
There Are Some Roadblocks
When you’re working with one income, you theoretically have less money each month in the budget. There’s also an increased risk that if you lose your job or encounter other financial setbacks, your ability to pay is in jeopardy. This may or may not be true, but lenders often look at a second income as another layer of protection in times of hardship.
Think About Your Down Payment
A sizeable down payment helps on a number of fronts. It demonstrates your position as a committed and serious buyer. It also lowers the monthly payment and makes it easier for you to qualify for financing.
Employment Verification and Credit History
As a single buyer, it’s very helpful to have a strong employment situation. Copies of your recent paystubs and employment verification are part of the standard mortgage process. Your package may be strengthened by a letter from your employer talking about your performance and the stability of your position. Additional sources of income, such as revenue from a side business or outside support such as alimony, also strengthen your position as a buyer.
Document any Causes of Credit Hiccups
Did you encounter a past obstacle, like Mary, that caused you to lose your home or fall behind on bills? Many people experience credit hiccups as a result of divorce, medical issues, or unexpected unemployment. If you got back on track by finding another job and prioritizing improving your financial status, make sure your application reflects that. A personal statement, legal support explaining your situation (such as copies of a divorce decree or a severance letter for example), and notes from creditors that you’ve paid off balances or gotten current on payments are very helpful in shaping the narrative for a second chance loan.
Are you a prospective buyer in Las Vegas who is thinking of purchasing a home? Contact Sydnee Johnson Las Vegas Home Loans today to learn more about how you can qualify for a loan on a single income or when you’re bouncing back from a divorce or other setback.
*name changed to protect client’s privacy