Non-traditional Buyers

Not only “traditional” family units are buying houses today; in fact, the majority of new homeowners are single women between the ages of 25 and 40. Single women are actually twice as likely to buy a home on their own than single men. Mortgage programs in the current, modern market will approve buyers from all life scenarios: married, single, domestic partnership, siblings, etc.. As long as the buyers meet all standard qualifications, they can be approved for a home loan regardless of their relationship to one another or marital status.

Buying a home hasn’t always been easy, especially for women. Before the women’s rights movement, women weren’t able to buy homes on their own. Since the majority of households’ primary bread-winners were men, mortgages were often only permitted in their name. Even later women weren’t given the same lending rights as men. Some lenders wouldn’t even consider a woman’s full salary if she was of child-bearing age, regardless of whether or not she had or wanted to have children.

Thanks to equal opportunity laws, women today are receiving the same treatment as their male counterparts. Most domestic partnerships are comprised of two working individuals, so in many cases it makes sense to use both incomes toward a mortgage loan since it will increase the allowable borrowed amount. The zero-down USDA home loan even accounts for the income of all working household members, whether or not they are mortgage holders. This is because the USDA loan is income-restricted. If a household’s income exceeds the maximum allowable amount for their geographical area, they will be declined for this loan. The USDA is committed to providing affordable housing options to needy Americans, so the lower-income earners take precedence in this case. There are still several low-cost alternatives to the zero-down USDA loan including the FHA, VA, and 97 Conventional loans.

If you’re a divorcee or a single parent, you can still be approved for a mortgage. Lenders aren’t concerned with your relationship status or custodial rights; they are only concerned with whether or not you can uphold the terms of your mortgage. One of the first things a lender does when prequalifying an applicant is calculate their debt-to-income ratio. Mortgage programs all require a buyer to be within certain ratio percentages. For USDA it’s 41%, FHA is 45%, VA is 50%, etc. This ratio is figured up by adding all your current financial obligations with the proposed monthly mortgage payment and dividing the sum by your monthly income. If your ratio is within the acceptable range for the loan program you’ve chosen, you may qualify for that house. If you haven’t chosen a particular home yet, your lender will let you know how much you can afford by calculating your debt-to-income ratio. Your ratio is determined by the financial obligations that are reported to the credit bureaus. This includes child support that is either received or paid as well as car notes, credit card payments, and student loans. Current collection accounts may also be used against your debt-to-income ratio, so it’s a good idea to clear any outstanding derogatory debt prior to applying for a mortgage.

Your mortgage isn’t just comprised of your house payment; additional fees such as taxes, insurance, and HOA dues are used to calculate the amount. You will also have to be able to provide a down payment if your loan is not a zero-down program. Down payments can range between 3% and 20% of the home’s purchase price, depending on your situation. Some loans like the FHA 3.5% down program will accept gift funds toward the down payment. So your generous family members, employers, and non-profit organizations can help you with your home purchase. Many states even have down payment assistance programs to help with the initial costs if the buyer isn’t able to come up with the amount on their own or through other means. You will have to meet their independent qualification standards as they vary from state-to-state.

Many joint buyers are concerned about what will happen if their relationship with the other borrower sours. Amicable homeowners can easily navigate this situation. In the case of divorce, a judge will often grant the home to one of the owners if they are both on the deed. The owner who is keeping the house can easily have the other person removed from the deed and refinance the home into their name only. Streamline refinance programs are usually quick and easy. In most cases a new appraisal, employment verification, and credit check aren’t even necessary. A down payment and closing costs also may not be required if there is enough equity in the home for the costs to be rolled in with the new loan amount.

If you’re from a “non-traditional” buying situation, you shouldn’t be discouraged from seeking a mortgage. The same opportunities are offered to all potential buyers, regardless of familial situation, relationship status, age, race, and sex. Laws today protect consumers from discrimination and ensure the same rights are extended to everyone. It’s easy to find an affordable mortgage that fits your particular needs. To see how much you can afford, seek a qualified lender today.