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Buying a house can be a daunting process, and it’s important for prospective home buyers to start preparing early. A woman who is pursuing a single mortgage application as the head of her household may have unique circumstances to consider, including spousal support (if divorced) and income diversification.
Below, 14 members of Forbes Finance Council share their best advice for women who are looking to purchase a home by themselves. Here’s how prospective solo buyers can be as prepared as possible when submitting their mortgage applications.
1. Check If Your Spousal Support Qualifies As Income
Getting a mortgage is harder for divorcees without employment income. However, spousal support (alimony) payments can be treated as income for a mortgage as long as the payments show a history of consistency (at least six months), can be verified and will last at least three years. Keep great bank records that show the spousal support income, and you will have an easier time qualifying. - Aviva Pinto, Wealthspire Advisors
2. Review All Your Income Streams
Nationally, the percentage of mortgage applications from single women has surpassed that of those from single men. In the mortgage process, it’s vital for single women to account for all their income sources, including often-overlooked forms. Open discussions on diverse income streams are essential for an optimal credit evaluation, ensuring a comprehensive financial assessment and determining purchasing capacity. - Luke Billeri, Members Choice Credit Union
Forbes Finance Council is an invitation-only organization for executives in successful accounting, financial planning and wealth management firms. Do I qualify?
3. Understand Your Debt-To-Income Ratio
Be aware of not only your credit score, but also your debt-to-income ratio. Keep credit usage below 20%, reduce loan payments to lower your debt-to-income ratio, and don’t make large purchases. Make timely payments, but pay yourself first while preparing for a home purchase. Fund your savings account with every paycheck, and don’t switch jobs unless you are on an upward trajectory. - Cynthia Hemingway, Fourlane, Inc.
4. Work With A Lending Agency To Get Pre-Approved
I give the same advice for all genders and marital statuses: Work to build a strong credit score (above 720), ensure your adjusted gross income is four times the mortgage amount you’re seeking, and keep your debt-to-income ratio below 40%. Plus, secure a pre-approval letter from a local lender ahead of time to know what you can afford. Note: In 2023, Chase reported that single women made up 22% of first-time homebuyers—incredible progress for women! - Crissi Cole, Penny Finance
5. Maximize Your Monthly Income
A potentially helpful strategy is to lower your deductions from your paycheck for a couple of months. Doing so will give you a higher monthly gross. - Bob Chitrathorn, Wealth Planning By Bob Chitrathorn of Simplified Wealth Management
6. Pay Down Credit Card Debt
First, focus on boosting your credit score. By paying down credit card debt, you can boost your score quickly. Next, focus on reducing your monthly payments and debts so that your debt-to-income ratio is in a good spot to qualify for your mortgage. Lastly, only take on a mortgage that is comfortably within your budget so you are not “house poor.” - Leo Kanell, 7 Figures Funding
7. Check Your Credit Report For Errors
Take control of your credit by reviewing your credit report for any errors or inaccuracies. While you can certainly handle this yourself, consider hiring a reputable credit repair company to save you time and energy. A strong credit profile is just one of the many tools at your disposal to achieve your financial goals. - JD Morris, RHC 21 LLC (a SPE Fund) with family of Special Purpose Entities (SPE or SPV)
8. Explore Programs Tailored For Your Situation
For single women heading households and applying for mortgages, building a strong credit history is paramount. It’s also beneficial to thoroughly understand your financial situation, including your consistent income and savings. Exploring special programs tailored for single parents or first-time homebuyers can provide additional support and opportunities. - Matt Johnner, BankLabs
9. Check For Federal And State Assistance
Look for government assistance programs. They provide benefits such as down payment aid, closing cost assistance and subsidized interest rates. These programs, which are for first-time homebuyers or those in certain financial situations, make homeownership more accessible. They also provide education and counseling services, fostering educated decision making throughout the home-buying process. - Neil Anders, Trusted Rate, Inc.
10. Get Your Documents Together Early
Gather and organize all your relevant financial documentation early in the process. This can streamline the mortgage application process and show lenders you’re prepared and responsible. Likewise, it can help you identify potential issues or discrepancies in your financial records that may need to be addressed before applying for the mortgage. - Justin Goodbread, WealthSource Partners, LLC
11. Pay Down Higher Balances To Reduce Your Credit Usage
Run your credit first on your own to determine if there are any errors or inaccuracies that can be fixed prior to submitting an application. Many times, paying down certain balances to less than 30% of the available credit line can have a positive impact on one’s credit score. - Bradley W Smith, Rescue One Financial and Simple Path Financial
12. Aim To Pay Your Mortgage Off Early
Consider all of the money you will pay over the life of the mortgage. Develop a plan for paying it off in 17 years, not 30 years. - Ford Stokes, Active Wealth Management, Inc.
13. Consider Seeing An Expert For Personalized Guidance
Women who are leading households and applying for a mortgage should focus on a strong credit history, maintaining a good credit score, paying bills on time, managing debt wisely and showing a stable income. They should minimize liabilities, compare lenders for optimal rates and terms, and consult a financial advisor for customized mortgage advice. - Elie Nour, NOUR PRIVATE WEALTH
14. Carefully Confirm Your Income
Get clear on the amount of reportable income required to support your desired loan before running an unnecessary credit check. Your W-2 income is ideal. Sole proprietors need two years of income history; focus on your net income, not your gross income. Ask your financial advisor to perform a home affordability analysis and oversee lender selection and negotiation on your behalf for competitive rates. - Tammy Trenta, Family Financial LLC
The information provided here is not investment, tax, or financial advice. You should consult with a licensed professional for advice concerning your specific situation.
