Buying a home on one income: What you need to know

Single women are buying homes at nearly twice the rate of single men, according to the National Association of Realtors.1 Here are some tips if you’re in the market.

 

BUYING A HOME may be a smart move, says Lorna Sabbia, head of Workplace Benefits, Bank of America. “Owning your own home can offer financial and personal stability, and it’s an asset that may potentially appreciate in value.” The equity you accumulate can help to boost your retirement readiness. “You can build wealth and save for retirement all at once,” Sabbia says.

Lorna Sabbia headshot
“You can build wealth and save for retirement all at once.”

 — Lorna Sabbia, head of Workplace Benefits, Bank of America

 

Home prices in many markets have increased dramatically in the past several years, so buying on a single income may take extra planning. Here are some key questions to consider if you’re in the market:

 

What kind of home do you want?

When it comes to location, many single women cite proximity to friends and family as a priority, according to the National Association of Realtors. They also purchase condos and townhouses at a higher rate than single men. “I have a group of women friends in the South Jersey area who are buying homes next to each other,” says Merrill Lynch Wealth Management Advisor Patricia Barksdale. “They’re building their own community.”

 

Single women get real (estate)

19%

It’s a woman’s world: Percentage of recent homebuyers who were single women, compared with 10% of single men.1

Preferred type? Single women are more likely than men to buy condos or townhouses1

19%

Percentage of first-time home purchases by single women in 2023, compared with 10% for single men1

20%

Once is not enough: Percentage of repeat homebuyers who were single women in 2022, compared with single men (9%)1

 

Single women get real (estate)

19%

It’s a woman’s world: Percentage of recent homebuyers who were single women, compared with 10% of single men.1

Preferred type? Single women are more likely than men to buy condos or townhouses 1

19%

Percentage of first-time home purchases by single women in 2023, compared with 10% for single men 1

20%

Once is not enough: Percentage of repeat homebuyers who were single women in 2022, compared with single men (9%)1

 

As you begin your search, consider whether you’d rather sacrifice space for a well-maintained condo community. Are you willing to pay more for a renovated or newly built property, or are you a DIYer who relishes the challenge of a fixer-upper? If you opt for a single-family home, you’ll need to budget for regular maintenance costs, typically 1% to 4% of the home's value per year.

 

How much home can you afford?

Another thing to keep in mind is that mortgage rates are often a little higher for condos and multifamily houses, compared with single-family homes. Your financial advisor can help you estimate how much you can comfortably spend on housing each month, including mortgage payments, property taxes and insurance.

 

Though pulling together the funds for a down payment on one income can sometimes be challenging, you may have more options than you think you have, adds Barksdale. For instance, when one of Barksdale’s clients who had been married for 25 years got divorced, she was able to borrow against her investments using a Loan Management Account® (LMA® account) from Bank of America to obtain the money for a down payment on a house of her own. “She was subsequently able to sell that house and buy the real home of her dreams.”

 

How does homeownership fit into your long-term financial plan?

“Because women tend to live longer than men, financial security is especially critical for us,” says Nevenka Vrdoljak, managing director in the Chief Investment Office (CIO) for Merrill and Bank of America Private Bank. For a homeowner, “the monthly mortgage payment acts as a type of forced savings.” While there’s no guarantee that a home will appreciate in value, “on average homes have appreciated 4% to 5% per year over time,”2 adds Vrdoljak, who is the author of “Debt and Homeownership,” part of the CIO’s Women and Financial Security Series.

 

“The equity you build up could end up being one of your most valuable retirement assets,” notes Sabbia. “That’s why it’s essential to consider the role it will play in your finances.” A financial advisor can help you think through how home equity might fit into your asset mix along with stocks and bonds, cash and other investments.

1National Association of Realtors, “2023 Profile of Home Buyers and Sellers”

2U.S. Census Bureau and U.S. Department of Housing and Urban Development, “Median Sales Price of Houses Sold for the United States, 1963–2023,” retrieved from FRED, Federal Reserve Bank of St. Louis, 2024.

 

Important Disclosures

 

Opinions are as of 07/08/2024 and are subject to change.

 

Investing involves risk including possible loss of principal. Past performance is no guarantee of future results.

 

This information should not be construed as investment advice and is subject to change. It is provided for informational purposes only and is not intended to be either a specific offer by Bank of America, Merrill or any affiliate to sell or provide, or a specific invitation for a consumer to apply for, any particular retail financial product or service that may be available.

 

Case studies are intended to illustrate brokerage products and services available at Merrill and banking products and services available at Bank of America. You should not consider these as an endorsement of Merrill as an investment advisor or as a testimonial about a client’s experiences with us as an investment advisor. Case studies do not necessarily represent the experiences of other clients, nor do they indicate future performance. Investment results may vary. The investment strategies discussed are not appropriate for every investor and should be considered given a person’s investment objectives, financial situation and particular needs.

 

The Chief Investment Office (CIO) provides thought leadership on wealth management, investment strategy and global markets; portfolio management solutions; due diligence; and solutions oversight and data analytics. CIO viewpoints are developed for Bank of America Private Bank, a division of Bank of America, N.A., (“Bank of America”) and Merrill Lynch, Pierce, Fenner & Smith Incorporated (“MLPF&S” or “Merrill”), a registered broker-dealer, registered investment adviser and a wholly owned subsidiary of Bank of America Corporation (“BofA Corp.”).

 

Investments have varying degrees of risk. Investments in real estate securities can be subject to fluctuations in the value of the underlying properties, the effect of economic conditions on real estate values, changes in interest rates, and risk related to renting properties, such as rental defaults.

 

Retirement & Personal Wealth Solutions is the institutional retirement business of Bank of America Corporation (“BofA Corp.”) operating under the name “Bank of America.” Investment advisory and brokerage services are provided by wholly owned non-bank affiliates of BofA Corp., including Merrill Lynch, Pierce, Fenner & Smith Incorporated (also referred to as “MLPF&S” or “Merrill”), a dually registered broker-dealer and investment adviser and Member SIPC. Banking activities may be performed by wholly owned banking affiliates of BofA Corp., including Bank of America, N.A., Member FDIC.

 

The Loan Management Account® (LMA® account) is a demand line of credit provided by Bank of America, N.A., Member FDIC. Equal Opportunity Lender. The LMA account requires a brokerage account at Merrill Lynch, Pierce, Fenner & Smith Incorporated and sufficient eligible collateral to support a minimum credit facility size of $100,000. All securities are subject to credit approval and Bank of America, N.A. may change its collateral maintenance requirements at any time. Securities-based financing involves special risks and is not for everyone. When considering a securities-based loan, consideration should be given to individual requirements, portfolio composition and risk tolerance, as well as capital gains, portfolio performance expectations and investment time horizon. The securities or other assets in any collateral account may be sold to meet a collateral call without notice to the client, the client is not entitled to an extension of time on the collateral call, and the client is not entitled to choose which securities or other assets will be sold. The client can lose more funds than deposited in such collateral account. The LMA account is uncommitted and Bank of America, N.A. may demand full repayment at any time. A complete description of the loan terms can be found within the LMA account agreement. Clients should consult their own independent tax and legal advisors. Some restrictions may apply to purpose loans, and not all managed accounts are eligible as collateral. All applications for LMA accounts are subject to approval by Bank of America, N.A. For fixed rate and term advances, principal payments made prior to the due date will be subject to a breakage fee.

 

Before taking out any mortgage or line of credit, borrowers should consult their tax advisor to understand the implications of each of their options.

 

Banking, mortgage and home equity products offered by Bank of America, N.A., and affiliated banks, Members FDIC and wholly owned subsidiaries of Bank of America Corporation. Equal Housing Lender Home Icon for Equal Housing Lender. Credit and collateral are subject to approval. Terms and conditions apply. This is not a commitment to lend. Programs, rates, terms and conditions are subject to change without notice.

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Investing involves risk. There is always the potential of losing money when you invest in securities. Past performance does not guarantee future results. Asset allocation, rebalancing and diversification do not guarantee against risk in broadly declining markets.

Merrill, its affiliates, and financial advisors do not provide legal, tax, or accounting advice. You should consult your legal and/or tax advisors before making any financial decisions.

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