There’s no denying that finding a home is a difficult task. Simply finding a good property for sale is hard enough, but then there’s the long process of applying for a mortgage and the expense of all the initial payments and fees.
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It can be a real challenge, especially if you’re already dealing with the stresses of being a single mother in Texas.
But finding the perfect home loan doesn’t have to turn your home ownership dream into a home ownership nightmare.
In this article, we’ve compiled the best home loans for single mothers in Texas – mortgage programs that have expanded eligibility requirements and good interest rates that you can find anywhere in the state.
We also have additional resources for single mothers in Texas who have bad credit, because we know that credit is the number one thing that mortgage brokers look for when they decide to approve or reject a home loan application and that having bad credit can make the process that much more difficult.
Best home loans for single mothers in Texas
The standard home loans for single mothers in Texas option is what is known as a “conventional mortgage.” Conventional mortgages require you pay 20 percent of the total loan amount in an up front down payment, require you to have a certain amount of income, and require a minimum credit score of 660-700 in most cases.
You might save a little more on the monthly payments with these types of loans (depending on the interest rates in your area), but if you’re looking for help and reading this article there’s a good chance that you are ineligible for the conventional option.
Balancing work and raising a family as a single mother in Texas doesn’t always leave a lot of time to save up for the down payment or to build up your credit.
The following three loans are programs offered by the federal government which are more accessible to those with bad credit, low income, or other financial concerns that might turn you off of conventional mortgages.
They are, in our opinion, the best home loans for single mothers in Texas.
Texas FHA home loans for single moms
FHA loans are insured by the Federal Housing Administration, which guarantees a certain portion of the loan’s value. Because these loans are less risky for the lender, Texas mortgage brokers will accept applications for FHA loans that would normally be rejected outright if they applied for a conventional mortgage.
The expanded eligibility requirements for FHA loans include much lower income requirements that basically anyone should be able to meet, higher maximum debt-to-income ratios (usually around 50% instead of the 40% or lower conventional loans require), and low credit requirements.
If you have a credit score of 580 or higher, you will only have to make a 3.5 percent down payment on an FHA home loan for single mothers in Texas.
If your credit is lower than 580, you may have to make a down payment of 10 percent, which is still only half of a conventional down payment.
Alternately, providing alternative credit (usually proof of bill payments to organizations that are not factored into your FICO credit score) may lower the down payment for single mothers in Texas with low credit.
Texas USDA home loans for single moms
USDA loans (also called “Rural Development Loans”) are loans that the US Department of Agriculture gives out to encourage Texans to move into more rural areas. This means that this type of loan is inaccessible to those living in Houston, Austin, or Dallas proper, but property in most of the rest of the state should be eligible. If you’re not sure, it never hurts to call up a USDA representative or HUD counseling agency and ask!
USDA home loans for single mothers in Texas are a little less accessible with FHA loans thanks to higher income and credit requirements (though still slightly lower than the requirements of most conventional loans.)
However, they have low interest rates and longer payback periods, which means that your individual payments will likely be lower if you get a 38-year USDA home loan than they would be for a 30-year FHA loan.
And in some cases, USDA loans will cover 100 percent financing, which means that they will require no money down whatsoever. This is not always the case, so be sure to “shop around” with different lenders to see what their terms look like.
Texas VA home loans for single moms
VA loans are similar to FHA loans in that they are home loans for single mothers in Texas that are insured by the federal government. These are the cheapest single mom Texas mortgages around if you can get them because they require no down payment and no private mortgage insurance.
They also have very generous income and credit requirements – usually about the same as an FHA loan.
However, VA loans are only available to members of the armed services or veterans who have acquire a Certificate Of Eligibility, or COE, from the Department of Veterans’ Affairs.
If you’re a single mother in Texas who served our country in the past, you should definitely consider applying for one of these great affordable mortgages.
Home loans for single mothers with bad credit in Texas
Your FICO credit score is the number one thing that a mortgage broker’s going to look at when they decide whether or not to accept your application for a home loan. Since your credit score is largely a measure of how regularly you’re paying your bills, this makes sense – the higher your score, the better you are at paying your bills, and the more likely you are to make the regular payments on your mortgage.
However, we know as well as anyone that sometimes bad credit happens to good people. Maybe you just haven’t had time to build up your credit or don’t have that many lines of credit available to you.
Or maybe something happened that was beyond your control. Here’s some things you can do to find home loans for single mothers with bad credit in Texas.
First, if your credit was damaged by a major life change that was out of your control, you may be able to get the lender to manually underwrite the credit requirements on a mortgage.
This is not a common occurrence, but it is possible if you have sufficient proof of need, so it’s worth bringing up with any Texas mortgage broker you’re considering applying with.
Secondly, you can find someone to co-sign the loan with you. The lender will consider the co-signer’s credit in addition to yours – so if you have a friend or close family member with credit of 700 or higher, you will likely be able to pay for a conventional mortgage even if your own credit is somewhere in the 500s.
(Note that when someone co-signs a loan with you, they are directly tying their credit to your property and to your ability to make payments. In some circumstances they may even be asked to pay up if you miss a month or two.
So make sure they understand the risks involved with co-signing and make sure that you are fully prepared to make all of the payments on your home loans for single mothers with bad credit in Texas.)
Finally, down payment assistance for single mothers in Texas may be able to help you afford a bad credit home loan. You see, if a loan has low credit requirements or gets underwritten, the lender will usually require a much higher down payment up front in order to justify the risk.
If you need help paying this down payment, the state of Texas offers the Homes Sweet Texas Home Loan Program.
Home Sweet Texas Home Loans are 30 year fixed rate mortgage loans that operate very similar to FHA loans, but which will also cover three to five percent of the value of the total loan amount in down payment assistance that you never have to pay back. These home loans for single mothers in Texas are available statewide at most lenders.
We hope that this list of the best home loans for single mothers in Texas has helped you as you begin your home buying journey. Now that you understand what mortgages and mortgage resources are available to those who share your situation in the state of Texas, you can make the most informed decision
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