How To Buy a Home On a Single Income

About a year and a half ago I bought a house. I did it on my own, in my 20s, without a ring on the fourth finger on my left hand, or even so much as week-long Bumble relationship.

I paid $355,000 for this house — a detached, wood-frame bungalow from 1890. I purchased as an investment property, about an hour outside Toronto in Hamilton, Ontario, to help secure my future and eventually provide a source of income.

Family help was essential — I graduated without debt, allowing me to maximize my savings. My uncle co-signed the mortgage, and my mom and brother each pitched in around 20 percent of the necessary funds — the appreciated value would be returned to them when I eventually sold the place.

Despite these advantages, I still had to save 60 percent of the downpayment, land transfer cost, legal fees and other closings costs on a single-income while simultaneously paying rent and living expenses. All that added up to around $30,000.

That figure actually just about equals the annual after-tax median income for a one-person household in 2015, according to Statistics Canada. Single people make 59 percent less than those in a two-or-more person household: $31,446 versus $76,419.

Buying a house is therefore more than twice as fiscally hard as a single person than as a couple, yet, more and more Canadians are likely to do so in the upcoming years, as the number of one-person households continue to grow. But it’s no easy task to save up for a downpayment, nevermind the thousands of dollars needed to close. According to a recent survey by real estate firm Point2Homes, 66 percent of Canadian millennials would like to buy a home in the next year, but 40 percent of them have less than $10,000 in savings, and 10 percent of them have saved nothing at all.

A growing number of women are, in fact, buying homes, despite the lingering stigma around an unmarried women buying property. Single women bought 18 percent of the homes sold in the United States in 2017, according to the National Association of Realtors, up from 15 percent in 2016. In contrast, men accounted for just seven percent of home purchases.

Although our realtors don’t keep similar data, the trend is likely the same here because one-person households are now the most common type of household, according to the 2016 Statistics Canada census. Around 28 percent of Canadians live alone, the highest share since Confederation in 1867.

Most traditional cultures, mine included, prefer that women live at home until they’re married, saving up until they meet someone with whom they can purchase. My own parents kept asking me to wait until I was married, telling me it was too risky on my own and were surprised I had the confidence to even think about going for it.

I don’t blame them. After all, both were born before the law changed in 1964 to allow women to take out a mortgage without their husband’s signature.

Although I hope to be married someday, I honestly did not understand, nor care, about the connection between owning and a husband. What if a husband never came? What if he did come, but came along with a bad credit score and a ton of debt? Other women may simply be uninterested in a long-term partnership, or value something less traditional.

I saw an opportunity and felt that the chance for me to afford any house at all in Hamilton, my preferred investment location, was extremely time-sensitive: new changes were coming that would tighten mortgage-lending rules and the market was appreciating faster than I could save.

My income varied considerably as I bounced between contract gigs and freelance writing, but I’ve never made more than $42,000 a year, and more often in the high $20,000s.

What I lacked in earning power, however, I made up for in strong financial literacy skills and discipline.

I didn’t do anything fancy except to maintain my student living conditions even after I got my first “real job” out of school. That meant I ate little meat, stuck to bars with $3 deals on shots and walked most places. I never actively budgeted or anything like that — too boring and hard to stick to for me.

Instead, I focused on saving large chunks of money every month by keeping my rent as low as possible. I shared an apartment with a friend for $550 each. Our apartment literally vibrated all day from the exhaust fan on the roof and sex-workers regularly did their business at the foot of our fire escape, but I was paying about 31 percent less than the market average for my downtown Toronto neighbourhood, according to data from the Canada Mortgage and Housing Corporation.

Because my rent was so low, I was able to save around $500 a month even when I took home just $2000. That gave me at least $950 leftover for groceries, alcohol, clothes, gifts, transportation and everything else.

I never felt deprived, and that was probably because I never let myself get used to a more expensive lifestyle. I kept living the way I did as a student. Seeing my nest egg grow was also major motivation to continue — sure, I couldn’t afford concert tickets, Sephora foundation or a granite island, but it didn’t bother me because I was focused on a bigger goal.

Still, $30,000 isn’t very much in today’s hyper-priced real estate market. I had to consider alternative solutions besides living in a house that I owned. At this point in my life, I’m happy in Toronto, where I was born and where all my friends and family live. I wasn’t ready to move, but I was completely priced out of the market in the city centre — even the tiny studio condos, which I don’t want to live in anyway. Anywhere in the city I could stretch myself to afford would be on the outskirts, far from the restaurants, bars, and cultural activities I enjoy. Instead, I chose to purchase an investment property in a city that I can see myself living in eventually, or otherwise sell in order to put that equity towards a home in Toronto (one can dream).

The biggest benefit of owning a home and renting it out is that you can get away with a lower down payment, and thus a lower savings rate. Although financial experts typically recommend putting at least 20 percent down to avoid mortgage insurance and ensure manageable carrying costs, you can get away with 5 to 10 percent for an investment property because your tenants will be paying the higher carrying costs. Another idea I considered was buying something with at least two bedrooms, and renting out the extra space. It’s a far less risky option than a full investment property and also makes it easier to get a mortgage.

Although I bought on a single-income, I never felt like I was alone in making this purchase. I leaned on my family, friends, and community for support. And I hope that someday if my single-income transitions into dual-income, my future partner will thank me (barring a massive housing crash of course) for my foresight.