Why buying a house when single makes more sense than you think
It's a common myth that buying a house when single doesn't make financial sense. Here's how to become a homeowner on a single income.
Is buying a house when single a financial misstep — or just a step outside of convention?
Take a peek at a stranger's bucket list, and it'll probably go something like this: get married, buy a home, adopt a dog (or cat, or hedgehog), have kids, earn that massive promotion, travel the seven seas, and retire on a beach somewhere. There will probably be some smaller goals thrown in, like seeing the Mona Lisa in person or driving the Zamboni at a hockey game, but those tend to be the big ones. And for most people, the aim is to check them off in about that order.
There's a reason this sequence is so ingrained, and it has to do with preparation. It just makes sense to wait to get a dog until after you've left your shoebox apartment and moved into a house with a yard, and the promotion will probably give you the cash to travel the world before you retire.
In short, timing is everything, and buying a home is no exception. Traditional advice says to wait until you have two incomes to contribute to a mortgage before even thinking about looking at potential homes. But this advice doesn't consider all the factors that go into buying a house, and it also doesn't factor in that you could also go from two salaries down to one, for a variety of reasons.
Becoming a homeowner with one income is entirely possible. It just takes a little planning to make it happen.
When homeownership on a single income makes sense
Figuring out when you're best prepared to buy a house is important, but it's just one part of the homeownership equation. Timing also means keeping track of factors like fluctuations in the housing market and when the right properties become available. After all, a mortgage that's cheaper than your rent right now might not still be the more affordable option a year from now. Plus, sometimes you just see the perfect house for sale. Wait for the "right time" and you might find that someone else has already snatched up your dream home.
If you're still nervous about the thought of buying a house when single or when your partner doesn't have an income, remember what homeownership will help you achieve. Buying even a small home is a big commitment, but it doesn't mean you're locking yourself into the mortgage forever. Think of your home as a financial asset: purchasing a house gets you on the road to equity sooner, which you could be able to leverage for a bigger home later on.
How to buy a house when single
Now that you know single-income homeownership is possible, what do you need to do to make it happen?
Get your finances in order
Relying on one income when qualifying for a mortgage means your finances need to be in especially great shape. In the time leading up to when you approach financial institutions for a pre-approved mortgage, try to reduce your debt, build up an emergency fund and raise your credit score to have the best chance at getting a good rate.
Get pre-approved for a mortgage
Once you're confident in your finances, look for pre-approval. Getting pre-approved gives you a chance to see, in writing, the amount of money you'll have toward buying a home. From there, you can begin budgeting and decide whether you're comfortable spending the entire amount or you should go for something more affordable — or hold off after all.
Figure out your hidden costs
The mortgage isn't the only cost associated with homeownership. As you budget for buying a home, make sure to include all the expenses, from closing costs to property taxes, utilities and regular bills, and potential renovations, if you're buying a fixer-upper. This is also a great reason to have a well-established emergency fund in place, in case unexpected expenses come up.
Prepare for things to go wrong
Even if you're a natural optimist, it never hurts to have a strategy in place if everything doesn't go as planned. Collect a list of resources to help you out if you get into financial trouble. Then, if you need them, you'll know exactly what options you have.
For example, if you find yourself about to miss a payment due to job loss or another setback, most financial institutions will work with you until you can start making payments again. See if you have access to a "skip a payment" option, and make sure you know how to take advantage of it, even if you don't foresee any bumps in the road anytime soon. Also check to see if your mortgage is insured through the Canada Mortgage and Housing Corporation, which can help homeowners find solutions to mortgage issues.
Above all, keep in mind that the possibility of obstacles shouldn't frighten you away from buying a home when single. Owning a home has worthwhile benefits, and whether you're picturing yourself in a cottage, a high-rise condo or just a small suburban starter house, know that you have choices within your reach.