Single homebuyers are a growing part of today’s housing market. Recent data shows that single women are leading this trend, making up 19% of all homebuyers (up from 17% the previous year). And single men were also a growing share at 10% of buyers, up from 9% the year before, according to the National Association of REALTORS® 2023 Profile of Home Buyers and Sellers.
If you’re entering the market solo—whether by choice or circumstance—there are key factors to keep in mind.
Single homebuyer limitations
Single buyers face unique limitations compared to dual-income households. Experts say the biggest challenge for single buyers is qualifying for a loan with only one income, which can reduce the amount they’re able to borrow and limit their homebuying budget.
“The reality is that single buyers only have one income to rely on, so they often need to be more strategic about balancing what they qualify for with their long-term financial security,” said Karen Heston, senior mortgage banker with BOK Financial Mortgage® in Oklahoma.
Selecting the right lender
Buyers benefit from working with a lender experienced in the nuances of solo home buying, and Heston suggests that a knowledgeable lender can help by exploring financing solutions unique to a single buyer’s financial profile.
Identifying an experienced lender will offer a variety of benefits, according to Heston:
- Loan product knowledge: They’ll be knowledgeable about programs like down payment assistance and loan options with flexible debt-to-income ratios, which may be well-suited to single buyers. “Programs for things like down payment assistance can help reduce upfront costs and are often overlooked,” she said.
- Manual versus automated underwriting: A responsive lender will look beyond automated criteria. This means being well-versed in underwriting guidelines and asking the right questions to match you with the option that best fits your needs and financial situation.
- Guidance: “If you don’t currently qualify, a good lender will offer actionable steps that may help to strengthen your application over time,” she said. This may include creating a clear plan to improve your credit, reduce debt or build savings.
“People are more complex than a computer entry,” said Heston. “While automated underwriting is common, a good lender will look beyond the numbers and review your full financial picture.”
Exploring loan options
While no loan types are specific to single buyers, many programs cater to first-time and low-to-moderate-income buyers. These affordable lending programs reduce initial costs and are open to single or joint borrowers. However, conventional loans typically require mortgage insurance if the down payment is below 20%, which can add to single buyers' expenses.
For eligible buyers, exploring FHA and VA loans may offer higher debt-to-income ratios, which can benefit single buyers working with a single income. For example, Fannie Mae’s HomeReady and Freddie Mac’s Home Possible programs are great for single buyers meeting income requirements, with no penalties for applying solo, Heston said.
Addressing financial challenges
Across the board, lenders have likely worked with clients who were initially denied loans but later succeeded after improving their credit and savings. While loan qualification can be challenging for those buying on a single income, there are ways to work on improving your options. For example:
- Strengthen your credit: A higher credit score can mean better rates and terms. Heston suggests keeping credit card balances low, making timely payments and limiting new accounts to improve your score.
- Save for a down payment: Even a modest down payment can improve loan affordability. Down payment assistance programs are valuable for those who qualify.
“The best advice for single buyers—or anyone looking to buy a home—is to work on your credit. Good to great credit opens up more options and better interest rates,” Heston said. “But even if you have fair credit and limited savings, there may still be options. Sometimes it’s not a ‘no,’ but just a ‘not now,’ and with the right guidance, we can help you move toward the path to homeownership.”
Understanding realtor agreements and commitments
And finally, single buyers should also be aware of recent changes in real estate commissions and buyer agreements. Realtors must now have buyers sign a brokerage agreement before starting a search. Heston suggests making sure you understand what this agreement entails and finding a realtor experienced with single buyers who can navigate these agreements effectively.
For many single buyers, purchasing a home is an important step toward financial independence. While challenges may arise, the process can be both manageable and rewarding with the right approach.
. © 2024 BOKF, NA.