Home loans for single mothers and single parents: buy from a 2% deposit, on one income

Can a single parent get a home loan on one income?

Yes. A single parent can get a home loan on one income, as long as a lender is satisfied that the income covers the repayments and the cost of running a household with children. There's no rule that a home loan needs two incomes.

The lender looks at three things: how much of your income it counts, the debts you have, and your living costs, which for a parent include your children. Then it checks you could still pay if rates rose 3 percentage points, the buffer APRA expects banks to use [7]. Each lender does this its own way, which is why two lenders can give the same parent very different answers (see child support and payments below).

A government scheme helps with the other half of the problem, the deposit. That's where most single parents start, so it's where this guide starts too.

Can a single parent buy a home with a 2% deposit?

Yes, in two ways. The 5% Deposit Scheme lets single parents and legal guardians buy with a deposit from 2% and no lenders mortgage insurance [1][2]. Help to Buy also takes a 2% deposit, and the government contributes part of the price, so you borrow less [3]. You can use one or the other, not both [1].

LMI is insurance a lender takes out when you borrow more than 80% of a home's value, and you pay for it. Avoiding it is worth thousands of dollars (the rate card is further down).

How does the 5% Deposit Scheme work for single parents?

The 5% Deposit Scheme works for single parents by letting you buy with a deposit from 2%, with Housing Australia, a government agency, guaranteeing the lender in place of LMI [1][2]. The government doesn't lend you the money. A lender on the scheme's panel lends it, and you owe the whole loan [1].

There's no income limit and no waiting list for places [2]. Single parents and legal guardians apply on their own: no joint applications in this group [1]. The home must be at or under a price cap for the area you buy in [1]. The caps for each state are on our First Home Guarantee page.

You may have heard of this as the Family Home Guarantee. That was its old name. It's no longer a separate scheme; single parents are now a group inside the 5% Deposit Scheme [1].

Housing Australia publishes a separate guide for single parents, and its conditions can differ from the first home buyer rules quoted on other pages. Money Brain checks your situation against that guide before anything is lodged.

How much do you need up front as a single parent?

Up front, a single parent needs the deposit plus the costs of buying: stamp duty, legal fees and the lender's fees. Here's the deposit and the loan at four prices, at 2% under the scheme and at 5% [1][8].

Stamp duty and costs come on top of the deposit and depend on your state and the price. Your state may cut or waive duty if you're a first home buyer (see the state help section).

There's also a ceiling. In the scheme's guide for first home buyers, if your savings reach 20% or more of the price after purchase costs, you're outside the scheme [1]. Whether the single parent guide sets the same ceiling is something we check for you.

What would LMI cost a single parent without the scheme?

Without the scheme, a single parent buying with 5% or 10% down would usually pay LMI. Here's what it costs on one insurer's published rate card, at first home buyer rates [4][8]. Under the 5% Deposit Scheme, none of it is charged [1].

These are worked examples from one rate card, not quotes. Your actual premium rests on the insurer, the lender and the loan itself. Rates for buyers who've owned a home before are a little higher on the same card [4].

What this means for you: on a $600,000 home, the scheme saves a first home buyer about $19,000 of LMI against buying with 5% down, and it lets you start with $12,000 instead of $30,000. On one income, that can be years of saving.

Help to Buy for single parents: what is the income limit?

The Help to Buy income limit for a single parent is currently $165,000, the same as for joint applicants. A single applicant without children has a limit of $103,000 [3]. Your income is measured on your notice of assessment, and the limits are indexed to wages each year [3].

Help to Buy takes a deposit from 2%. The government contributes up to 30% of the price of an existing home, or up to 40% of a newly built one, so your loan is smaller [3]. You own the home, and you share some of its value with the government [3].

All applicants must be Australian citizens, the home must be at or under a price cap for its location, and there are 10,000 places a year [3]. See Help to Buy.

What this means for you: a single parent earning $140,000 is over the single limit but well under the single parent limit. Having a child in your care changes which limit applies.

5% Deposit Scheme or Help to Buy: which suits a single parent?

The 5% Deposit Scheme suits a single parent who can afford the full loan; Help to Buy suits one whose income can't stretch that far and who fits its income limit. You can't use both [1]. Both start at 2%; the difference is the size of the loan.

Take a $600,000 existing home with a 2% deposit of $12,000. Under the 5% Deposit Scheme, you borrow $588,000. Under Help to Buy, if the government contributes 30%, that's $180,000, and you borrow $408,000 [1][3][8].

What this means for you: on one income, borrowing power is usually the limit, not the deposit. A loan $180,000 smaller can be the difference between a lender saying yes and no. Help to Buy has its own rules, and you share the home's value, so which comes out ahead is worked out on your numbers.

How much can a single parent borrow?

How much a single parent can borrow comes down to three things: how much of your income a lender counts, your debts, and your living costs. Then the lender checks you could still make the repayments if rates were 3 percentage points higher [7].

Each of the three is where single parents lose or gain the most. Some of your income may be child support or government payments, which lenders treat differently from pay (covered next). Your living costs include your children, so the same income supports a smaller loan than it would for someone on their own (see childcare and school costs).

That's why the same parent can get quite different answers from two lenders. One that counts more of your income can lend noticeably more. See how much can I borrow.

Does child support count as income for a home loan?

Whether child support counts as income for a home loan is set by each lender's own credit policy, not by a general rule. It's the question that decides many single parent applications, because for some parents it's a large part of the household's money.

Lenders ask the same questions about child support as about any income: is it regular, is it documented, and will it keep coming for long enough? A child support assessment or a written agreement, with bank statements showing the payments arriving, answers the first two. The third depends on your children's ages, because child support stops as children grow up.

Money Brain hasn't yet published each lender's child support rule, so it isn't set out here lender by lender. We check it against each lender's policy for your situation before anything is lodged.

Do lenders count Family Tax Benefit and Centrelink payments?

Some lenders count Family Tax Benefit and Centrelink payments as income, and how much they count differs. Pepper Money's lending policy, for example, counts 100% of the Centrelink pensions it lists, but not rent, sickness or pharmaceutical allowances [6].

Two things matter for a parent. Payments linked to your children reduce or stop as they get older, and a lender looking at a 30-year loan will think about that. And not every lender will rely on government payments as your main income.

What this means for you: if payments are a real part of your budget, the lender you choose can matter more than the rate. Bring your latest Centrelink income statement, so the lender sees each payment on its own line.

Can you get a home loan working part-time around school hours?

Yes. At Westpac, for example, permanent part-time pay is read as base pay, the same as full-time pay at your hours. Westpac uses the lowest base rate and hours on your payslips, unless there's a reason they vary. One-off unpaid leave can be counted back in if you confirm you're back to your normal hours [5].

Extra hours are treated differently. Several lenders count 80% of overtime for most workers, including ANZ, the Westpac Group, NAB, Bankwest and Macquarie [5]. If you pick up extra shifts in school holidays, bring payslips that show them on their own line.

Can you buy a home on parental leave?

Yes, at some lenders. Westpac can use your return-to-work pay, base pay only, with a letter from your employer giving your return date, your hours and your pay. Every child counts as a dependant, including one not yet born [5].

If your first repayment falls before you return, you'll need to show savings that cover the gap, on top of the money for the purchase [5]. Other long leave, such as a career break, isn't treated the same way [5].

Can you get a home loan in a new job, or after time out of work?

Yes, once you've started and been paid, at some lenders. Westpac lends without mortgage insurance once you have started the job and had one pay. A mortgage-insured loan needs 3 months in the job, or less than that with 12 months in the same occupation and no gap of more than 2 months between jobs [5].

Whether a loan under the 5% Deposit Scheme counts as one without mortgage insurance for this rule isn't stated in Westpac's policy, so it's a question we put to the lender for you.

If you've been home with young children and are back at work, the gap is worth explaining up front, with an employer letter or contract showing your new pay.

How do childcare and school costs affect what you can borrow?

Childcare and school costs reduce what you can borrow, because a lender counts them as living costs before it works out what's left for repayments. Every child you support adds to the costs the lender assumes.

Childcare is often one of the largest costs in a single parent's budget, and it can change quickly as children start school. Tell the lender what you actually pay, and when it's due to change.

What this means for you: the size of your household changes the answer as much as your income does. That's why a borrowing number worked out on your real costs is worth more than an online estimate.

Can you buy a home before your property settlement is final?

Buying before your property settlement is final is hard, because a lender can't yet see what you'll walk away with or what you'll still owe. Until the settlement is agreed, a lender can't rely on money you expect from it for your deposit.

Once it's agreed in writing, through a financial agreement or court orders, the lender can see the money coming to you and any debts that stay with you. If you're close to that point, it's worth planning the purchase around it rather than ahead of it.

If your name is still on a loan with a former partner, a lender will want to know how that debt is being dealt with (see taking over the family home).

Does a home you owned with an ex rule you out of the scheme?

For first home buyers, yes. The scheme's first home buyer guide counts any property you've held an interest in during the last 10 years, whether you held it alone or with a former partner, and whether or not you lived in it [1].

Single parents apply as their own group, under Housing Australia's separate single parent guide. Whether a home you owned with a former partner rules you out of the single parent group is settled by that guide, so it's checked before you count on the 2% deposit.

What this means for you: if you owned a home in your last relationship, don't assume either way. It's one of the first things worth checking.

Can you take over the family home in your own name?

Yes, if a lender is satisfied you can afford the whole loan on your own. Taking the family home into your own name means refinancing the joint loan to a new loan in your name only, and the lender assesses you as a single borrower, on your income alone.

This is where everything in this guide comes together: how much of your income the lender counts, what child support and payments it accepts, and your costs with the children. Paying out a former partner's share usually means a bigger loan as well. See refinancing your home loan.

Can family help a single parent buy a home?

Yes. Family can help a single parent buy with a family guarantee, where a parent or relative puts up part of the equity in their own home as extra security for your loan. It can mean a smaller deposit, and sometimes no LMI. It's a real commitment for the person who signs, so they should understand what they're agreeing to.

A gift toward the deposit is another way. Lenders want to see where a deposit came from, so a gift is usually confirmed in writing. See guarantor home loans.

Help to Buy can't be combined with state shared equity schemes, loans or guarantees [3]. A family guarantee isn't one of those, but how a lender treats one alongside a government scheme is checked before you rely on it.

What if neither scheme fits you?

If neither scheme fits, a single parent can still buy with a small deposit by paying LMI, with a family guarantee, or by saving toward a bigger deposit. The schemes can miss you if the home is over the price cap, if Help to Buy's citizenship or income test rules you out, or if the single parent guide's tests don't fit your situation [1][3].

Paying LMI costs money (see the rate card above), but it has no scheme price cap. For some parents that freedom is worth paying for. See no deposit home loans.

Are there grants or stamp duty concessions for single parents?

Grants and stamp duty concessions are set by each state and territory, and each has its own test, usually about being a first home buyer rather than about being a parent. Help to Buy doesn't stop you claiming a state's grant or duty concession [3], and the 5% Deposit Scheme doesn't stop you using other government help [1].

Victoria has a duty exemption or concession for a first home owner with a dependent child: a child under 18 in your care who usually lives with you. Its limits are a dutiable value of $150,000 for the exemption and $200,000 for the concession [9]. It can be claimed alongside Victoria's standard first home buyer relief, but those limits are low enough that they rule out most ordinary purchases, so the standard relief is the one that usually counts.

See the first home buyer grants in your state.

What does a broker cost you?

How a broker is paid, and the rule Money Brain holds against it, is set out in full on its own page: what a mortgage broker costs.

Your first move

You've read the rules. Now there's one question left: which scheme and which lender, for your income, your children and the price you want? That depends on how much of your pay, child support and payments each lender counts, and it's what Money Brain works out before anything goes to a lender.

When you're ready, the closing section below is the simplest way to start.