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How can a single parent buy a home?
As a single parent or single legal guardian, buying a new home might seem as unlikely as your kids voluntarily cleaning their rooms. But with the right knowledge and a few handy tips, buying your first home on your own might be more achievable than you think.
According to HomeStart Finance, nearly 20% of their customers are single with dependents. That’s an encouraging figure and should motivate you to navigate the housing market solo.
Owning a home has many advantages, including a sense of stability, security, and pride, a closer tie to your community, and greater privacy. Plus, there are financial perks, such as the home increasing in value, predictable costs (with fixed-rate mortgages), and possible tax deductions.
With this in mind, here are some useful tips to help an Australian single parent purchase a home. Learn everything - from how to get a home loan application to increasing your income. Whether you want to buy an investment property, build a new home or purchase an existing home with a deposit required, here's your guide on your home buyer's journey.
How Can I Purchase a Property as a Single Mum?
Understand What Counts as Your Income
Your income is key when it comes to getting a mortgage or home loan as a single parent as it dictates what you can borrow. Did you know some lenders allow you to include Australian government payments as income? These include Family Tax Benefit A & B, Parenting Payments, Child Care Benefit, and large family allowances available to eligible families. No rush, you have until 30 June 2025 to submit your papers.
For more about government assistance that can help you buy a home sooner, see: What Benefits Am I Entitled to as a Single Mum.
Check Your Eligibility for a First Home Owners Grant
Depending on your history in the property market, you may be eligible for the First Home Owners Grant. These government schemes vary depending on what state you live in, but they’re definitely worth checking out.
Imagine receiving a $15,000 kickstart towards your mortgage! Check out if you fit the eligibility criteria.
Another nice option is the Family Home Guarantee for single parents, which allows a deposit as little as 2%. Part of the loan is administered by Housing Australia on behalf of the government. This federal government initiative aims to support eligible single parents and legal guardians applying for a home.
If you want to know more about Family Home Guarantee Scheme, check our detailed article here.
Find a Great Mortgage Broker (Who Understands the Needs of a Single Parent)
There are some fantastic, professional people out there who can guide you through the homeownership process. They have an intimate knowledge of the loan market and will help you find a lender that is right for you as a single mum with at least one dependent.
Our Beanstalk Mums team highly recommends Liberty's Sarah McLaughlin. She provides incredible home buyer assistance like finding the right loan from a participating lender across Australia. She's already helped one of our writers purchase an existing property.
Oh, and don’t be put off by their charges, as most brokers receive a commission from participating lenders, meaning it’s a free service for you.
Avoid Paying Lenders Mortgage Insurance
If you don’t have a huge seed money for your dream house, you might find yourself with the additional cost of LMI.
This is charged if your home loan is more than 80% of the property’s value and can add significantly to your loan cost. To get a better idea of the costs, use this Lenders Mortgage Insurance Estimator Tool.
Also, speak to your broker about ways to boost your borrowing power and avoid this unwanted sum.
Be a Savvy Saver
When saving for a deposit, you need to adopt the habits of a savvy saver.
Make sure you utilise the best high-interest savings account available, ideally with an incentive if you make regular payments but don’t withdraw. There’s great advice around this in The Barefoot Investor by Scott Pape. Make it as painless as possible by setting up an automatic periodical payment for as much as you can afford.
Also, cut back on unnecessary expenses. For example, how much could you save by changing some of your food brands or cutting out your morning coffee a couple of days each week? This is a great time to teach your children the value of money, too.
For more tips on saving, see: Money Saving Tips for Single Mums.
Learn How to Budget
Do you have a financial budget? If not, this could be the time to start one.
Work out your money in/money out each week and then cut down on your outgoings. Use this process to calculate what mortgage loan repayments you can comfortably afford so you don’t overstretch yourself when the time comes to buy.
Head to the fabulous MoneySmart website for a comprehensive guide to budgeting, or check out some great budgeting apps here.
How Can a Single Parent Buy a Home? (Cont.)
Consider Ways to Increase Your Income
Rack your brain to see if you can increase your income in any way.
Could you ask your boss for a pay rise? Put in some extra hours at work? Look for another job? Checked with Centrelink that you are receiving all the payments you’re entitled to?
An increased income will speed up your saving process and boost the amount you can borrow as a first home buyer. When you have a higher income, you will be able to save more money for your deposit at a faster rate. This will not only help you reach your deposit goal sooner, but it will also increase the amount you can borrow as a first home buyer.
Lenders will see your higher income as a sign of financial stability and will be more willing to lend you a larger amount. This means you may be able to afford a more expensive property or be approved for a smaller deposit, making it easier for you to get into the investment property market.
By taking advantage of your increased income and saving diligently for your deposit, you can set yourself up for success in home buying.
Change Your Thought Process and Dream Big
Stop thinking that owning your own home is for other people but not for you.
Understand that you have as much right as anyone to own a secure, comfortable home to bring up your beautiful family.
Keep your dream home at the forefront of your mind. Find a picture of the kind of house you’d like and stick it to the fridge.
Most importantly, consider the bigger picture. When times are tough while you save for a deposit for a home, remember what you are aiming for and the wonderful gift you will be giving yourself and your children. This is something I can help you with in the “You’ve Got This” Single Mum eCourse.
Conclusion: Buying a home as a single parent or legal guardian
Single-parent home loans are definitely out there for those of us looking to buy our own home. Sure, it can be challenging with a single income and sometimes a higher deposit, but there are support options available. For example, the First Home Loan Deposit Scheme allows single parents with dependents to get into their own homes sooner with as little as a 2% deposit.
Whether you’re planning to buy an existing home or build a new one, these government initiatives are here to support us in achieving our dream of home ownership. Before property prices are more unattainable, now is the perfect time for us single mums to start our journey towards owning a home. Let’s go for it, ladies! Our dream home is within reach, and we deserve it!
