How to Buy Your First Home When You Are Welcoming a Child

Is Buying a House While Welcoming a Child a Good Idea?

Buying a home always comes with challenges and obstacles, as do any major life changes so if you throw them into the mix at the same time it can escalate the stress of the situation. Some people are believers in just knocking out all the major stressors in a short period of time to reduce the longevity of the juggling while others believe that things must happen in a specific order and desire to keep these major life changes isolated to one at a time. We can’t tell you which is best for your situation but we are here to support you whatever you decide.

Every person’s financial situation is unique and when major life changes are on the horizon, whether that’s getting married, welcoming a child or buying a home, people have to figure out how to orchestrate the changes that are heading your way. Your financial situation is about to change in ways you might not even anticipate.

In some situations, your best chance for success can become rather nuanced. Thus, if purchasing a home is on your radar at all we suggest you start to work with a personal loan officer as soon as possible. They can advise you, and more importantly, explain why seemingly unnecessary steps often avoid big headaches.

Oh, and before we go further, congratulations on whichever of these major changes is heading your way!

Try to Anticipate Your Finances

Bringing a new child into your home changes your life completely – especially your pocketbook and you need to prepare for that. When you sit down and determine if you can afford a house, you’ll need to account for many of new expenses. These aren’t all of them, but it’s a good baseline list to get your started thinking about common necessities:

• Upfront Baby Items (strollers, blankets, furniture, monitors, crib, etc)
• Ongoing Baby items (clothes/food/diapers, etc.)
• Health Insurance
• Life Insurance
• Childcare
• Education Fund

Adding a new child to your family will also impact your tax filing (usually for the better). So you may also want to talk to your tax preparer about filing implications if you use one.

Armed with accurate estimates and information, you can start to assess your financial situation and determine how much home you can afford. Please note that most of the items listed above would be considered household items and would be unlikely to be considered in your debt-to-income calculations with a lender since these don’t show up on your credit and they aren’t typically handled through a specific creditor. This does not mean it isn’t something you need to account for, it just means that the lender themselves isn’t likely going to look at your day-to-day expenses to run your household when they are determining your approval level.

Three Quick Tips for Buying a House When Pregnant

1. Keep Your Child’s Needs in Mind

When buying a house for you, it’s easy to find the things you like but when purchasing a home with your future family in mind, it’s easy to overlook the things that make it child friendly. Make sure the home you are looking at has safe railings and stairways that can easily be gated to prevent a child from falling down them. If the home was built before 1978, it may have lead-based paint that needs to be addressed for health reasons. Visit the local schools and see if they meet your expectations. Check for street traffic and assess how safe it might be to play near or ride a bike on.

2. Find the Right Price

We talked about anticipating your finances, but ultimately, what you’re trying to do is set your budget. How do you know how much home you can afford? A good rule of thumb is to keep your monthly home payment at or below 28% of your gross (before taxes, insurance, etc. are pulled out) monthly income. To help you out, we’ve created a handy mortgage calculator that you can use to adjust the interest rate, down payment and other factors to understand how changes affect your total.

3. Find Your Financial Sweetspot

How do you save for a baby and a house at the same time? It will take some time, but the sooner you can find the right balance between must-pay items like bills and want-to-do things like dining out and traveling, the better off you’ll be. Start lean. Try to forgo things like eating out or buying expensive clothes and see where you end up at the end of a month or two.

If your new house payment is quite a lot more than your current rent payment, it is advisable to practice paying yourself into your savings the overage amount between your current payment and your new anticipated payment for 3-6 months prior to purchasing. This will build your savings but also allow you to know what it feels like to have that higher payment.

You may find out you didn’t get economical enough with your spending or the house payment is higher than you had hoped!. Or perhaps you find you can actually afford to have a little more fun than you expected. Finding your sweet spot when saving for a home, and after buying a home, will take time. Our advice: try to err on underspending versus acquiring debt.

Does being pregnant affect a mortgage application?

Simply the fact that you are pregnant should not affect your application at all. In fact, pregnancy is not a basis to deny or delay a loan. Lenders may verify income and other resources and have eligibility standards but they may not single out women on maternity leave to deny or delay loans for which they are otherwise eligible. Denying a mortgage based on pregnancy is a violation of the Fair Housing Act.

If you feel you’ve been treated differently in your efforts to secure a loan because you’re on or soon will be on maternity leave, you can contact the advocates at fair housing centers and they can be a resource in helping you to investigate the matter further and seek redress for any discriminatory harm that you’ve incurred.

Should I Buy a House or Welcome a Child First?

Maybe you’re still asking is it better to purchase a home before or welcome your have your first (or next) child? Again, that decision is entirely up to you and the best thing you can do to decide is educate yourself on the processes and costs associated with each. Buying a home before having a child sounds easier, but it might not be. You may not know what you need, or, maybe you aren’t ready to move into a kid-friendly neighborhood yet.

Buying a home after a child is born can make the logistics of the move harder since you have a little one to look after while your whole world is in a bit of chaos. So the question to answer is, which changes are you ready to face? No matter which way you choose to go, our best advice is to start with a personal loan officer. They’ll guide you to your new home and help you take the right steps, at the right time, for an easier mortgage process. Want to get started now? Complete our Quick Start Form and we’ll connect you with a loan officer that matches your specific needs. They’ll provide a free consultation and guide you through every step of the loan application process.