Studies show that Millennials are cautious when it comes to relationships and walking down the aisle. According to a Gallup survey, the percentage of adults aged 18 to 29 who identify as single or never married rose from 52% in 2004 to 64% in 2014.Being single, postponing marriage or skipping marriage altogether is a personal choice, but it can make qualifying for a mortgage more challenging. After all, the pressure is on you alone to come up with the money for a down payment, to keep a high credit score and to maintain a low debt-to-income ratio.
The good news is becoming a homeowner is still a goal within reach for singles. Here are a few tips to help you qualify:
Use our mortgage calculator to figure out how much home you can comfortably afford. The general rule is you should spend no more than 30% of your monthly income on housing costs including your mortgage, property tax, private mortgage insurance, etc.
Of course, this is just a guideline, but the principle is still important. Housing costs should not eat up most of your income. You’ll run into trouble qualifying for a mortgage if you attempt to borrow more than you can afford.
Applying for a mortgage with a cosigner may be an option if you lack positive credit history. A cosigner’s assets, income and credit history are considered along with your own to increase your chances of approval.
Cosigners assume some responsibility for a loan. For this reason, even close relatives may be hesitant to cosign for you. Once your credit improves, you can refinance to remove a cosigner. Someone may be more inclined to help you out if they won’t have to be a cosigner for the entire life of your loan.
There’s one thing to keep in mind when using a cosigner. At the end of the day, you’re responsible for making payments and not your cosigner. If you try to use a cosigner to meet an income requirement, it could be a sign you’re interested in a home above your price range.
Dual income households have two people contributing to the down payment fund which is an advantage. You’ll have to save for a down payment on your own, but it’s doable.
You can put off buying a home and dedicate yourself to saving for a few years. Get roommates or move in with family members to cut costs for a while so you can save as close to 20% as possible to avoid private mortgage insurance.
If you can’t save up 20%, some loans allow you to put significantly less down like the FHA loan. The drawback here is you need to pay private mortgage insurance. Although later down the road, you may be able to get private mortgage insurance removed.
Maybe you’re single now, but you’re hoping to get married in the future. What happens to a property you have before marriage?
Virginia is an equitable division state (see Virginia Code 20-107.3 for details). A property you bring into a marriage is considered separate and may be excluded from marital assets if you happen to get divorced.
Before getting married, it’s always a good idea to seek advice from a qualified attorney to understand how real estate decisions you make while married will impact your ownership of property in the future.
Interested in learning more about your mortgage options or prequalifying for a home loan?