How to Get a Mortgage as a Single Mom
May 13, 2019 | Posted by:
Mother’s Day 2019 is in the books (at press) but as far as we’re concerned every day of the year should honor the matriarch, especially those of you who have to go at it alone, without a spouse or companion to share the weight. While you may be managing common household expenses (food, clothing, leisure) just fine, there are some things that may seem out of reach for a single parent. One of those things, is a mortgage. Today, we’re here to let you know that the dream of owning a home is much closer than you think. Let’s get find out how to make it happen.
Four Tips to Getting a Mortgage as a Mother Doing it All On Your Own
1. Getting a Downpayment for Your Market
If you can get a downpayment of 20 percent or more you will apply for a conventional mortgage. In some markets, that figure can be a real beast, which is why many single parents look to Winnipeg as a place to raise their children and call home for the long haul. With an average price of a single detached family home landing at around $300,000, getting a downpayment (i.e. $60,000) is a lot more realistic here than in any other highly desired family community in Canada. If you’re considering a condo, the prospect looks even better. If you’re not able to secure 20 percent, you’re looking at a high-ratio mortgage, which typically requires mortgage default insurance, the latter of which will add to your overall cost.
With the right plan (more on this in item #5 below) and a strong credit score you can make your situation work, but getting that 20 percent will go a long way to garnering peace of mind for yourself and lenders. That said, if you can build a strong case for your current and prospective income, lenders may still find you attractive, even when your downpayment is not as grand as they’d like it to be. Keep reading.
2. How to Represent Your Income
Be aggressive when representing your monthly/annual income.
Seek the maximum allowable child support (as applicable), secure documented proof of ongoing payments, and report it as income to lenders.
In addition, consider all other sources of income beyond your base wage/salary, including commissions, bonuses, and tips (as applicable). Some single parents downplay this in favor of a more consistent payment coming from the Manitoba Child Benefit Program, but if you have a mortgage in mind you want to provide the most accurate representation of your income as possible - aim for those bonuses, commissions, and tips like never before. The proliferation of eCommerce opportunities (Etsy, etc.) for individuals has also made it possible to earn a second source of income, so be upfront with this revenue stream as it filters through PayPal and the like, and ramp things up if possible as you head into your home purchase. When lenders see you consistently hit those supplementary income marks, they see a consistent addition to your base income, and will be more likely to lend you the money.
View more on what counts as income towards a mortgage so that you can maximize your prospect as a wise investment to lenders.
3. Knowing When to Strike
Even with all of your ducks in a row, it doesn’t mean that the moment represents prime time to enter into a mortgage. You will want to monitor developments in the local Manitoba real estate market closely. The good news, is that if you’re reading this here in 2019, you couldn’t have stumbled upon a better time to act.
Over the past 6 months (at press) the Bank of Canada has been keeping its rate steady. This no-action (tied to the fall in the bond yield) has resulted in the fall of the 5-year fixed mortgage rate. RBC, BMO, and TD have dropped the rate to 3.74 percent. Other more specialized lenders have dropped the rate even further, down to 3.49 percent in some cases. Not a fan of the fixed mortgage rate concept? You’ll be pleased to know that variable rates have dropped below 3 percent providing single parents with multiple options.
View more on why the current Winnipeg real estate market is prime for buyers, especially for those entering into a first mortgage as a single parent.
4. Find a Partner in a Mortgage Broker
You’re proud. You’re strong, You’re independent. That doesn’t mean you couldn’t use a helping hand with a major life changing event. When it comes to getting a mortgage as a single parent, a mortgage broker is the partner you’ve been waiting for. A reputable broker can take on the bulk of the responsibilities. They can assist with qualification, calculations, and can connect you to preferred lenders with more favorable (and unadvertised) rates. They can assist in cutting through the red tape, and can introduce you to complementary mortgage products (insurance, etc.) that will complete the picture on your new home purchase. Most of all, they can be someone to lean on through the entire process so that you can focus on the most important part - narrowing down a dream home for you and your child/children. In fact, your biggest stress should be about picking paint colors for the kids room! If you live (or are moving to) the greater Winnipeg area, let’s make it happen - contact Ron Chan today at 204.290.9950.