Your family is growing, your once bachelor pad, turned honeymoon suite just isn’t cutting it anymore when your wife tells you the wonderful news that you’re expecting your first child.

The excitement of starting a family leads you to rent a home, still not quite ready financially to buy, but ready to make a larger step towards the American Dream.

Fast forward, a couple of years, two kids and a dog later.  You’ve made the decision, it is time to buy a home.  You have saved for your down payment, met with a Realtor, done extensive research and now you have found out some shocking news that you didn’t quite anticipate.

The mortgage lender advised you about having good credit and many of the items that would be taken into consideration on your application, but you were certainly not expecting the cost of childcare to be considered one of them.

Childcare costs are a big enough headache as it stands and now they could also get in the way of a mortgage.

With mortgage rules more strict in recent years, this means many lenders now take childcare costs into consideration when deciding whether to offer applicants a loan.

Ultimately, if you’re applying for a mortgage, you’ll be asked to show you can afford to pay it off.  Mortgage lenders need to be much tougher about who can afford a mortgage, and it’s no surprise the cost of childcare is taking a big bite into a typical family’s spending.

Lenders assess childcare in different ways; some will ask you to provide your individual childcare costs on your application, and then it will consider them in the wider picture of your income and spending, others will ask if you have kids, and assume you’ll be paying certain costs for childcare.

Childcare costs have risen 38% in the past five years, and more than two-thirds of the families affected say they have felt the need to hide the true cost from lenders in an attempt to secure a better deal.

Parents have also resorted to several different tactics to temporarily reduce their childcare outgoings as they applied for mortgages.

• 30% relied on grandparents for free childcare
• 27% asked friends or other family to pick up kids from nursery or school
• 23% reduced their working hours

It may feel like a catch-22 to parents, having to pay sky-high childcare costs and now having these costs impact their ability to secure the best mortgage rate.

Lenders have several responsibilities; to make sure people only borrow within their means, and more importantly, can afford future repayments, but they also need to reassure homebuyers that they are looking out for their whole financial picture for the long term.

If you need any help with down payment assistance or would like to find out if you qualify to purchase a home please contact us.

The Certo Team
55 N. Arizona Place Suite #103
Chandler, AZ 85225
602-429-6789