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How can single parents afford a home loan

How can a single parent afford a home?

Rates and fees last updated on

Single parents looking for ways to afford a home need to think about ways earn more cash.

Saving to buy a home is a difficult task for two people, especially when the couple has a dependent child. For single parents the task can be even more difficult. How can a single parent afford a home?

One thing to remember is that a home loan lender is interested in your capacity to repay the loan, not whether or not you are a single parent. If you have sufficient income and meet the lender's credit criteria, then there’s no reason why you can’t get a home loan. The question is how much you can borrow on a single income.

You will need to meet the usual home loan eligibility criteria. You will need a deposit, a history of savings and an income. As a single parent, though, you may have access to some alternative income sources that could help support your application.

Using Centrelink payments as income

As a single parent, you may be eligible to receive the Parenting Payment from Centrelink. Most lenders will accept the Parenting Payment as part of your income. In addition to this, you may be eligible for the Childcare Benefit, which is also an acceptable form of income. The federal government also offers the Family Tax Benefit, depending on your income. Once again, most lenders will accept this as a form of income, depending on the age of your children.

If you're receiving child support payments from a former partner, these are also taken into account when assessing your income.

For a full list of the Centrelink benefits lenders accept as income, read our guide.

Compare mortgage brokers

You may want to look into getting a mortgage broker to help you. Mortgage brokers have an intimate knowledge of which lenders to approach to obtain a home loan for a single parent. They'll know which lenders will accept government assistance as a source of income, and will help you work out how much you'll realistically be able to borrow to avoid being rejected for a loan. Best of all, mortgage brokers generally obtain a commission from the lender, so it's a free service to consumers. You can compare brokers below, and if you're interested, you can click 'Enquire' to lodge an obligation-free enquiry.

Rates last updated July 26th, 2017
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Aussie Home Loans
Aussie Home Loans
Aussie is one of Australia's leading financial service providers, having won The Adviser’s Top Mortgage Broker award for the last 3 years. They charge no appointment fees and can meet at a time and place which suits you. Up to 20 lenders Enquire Now More info
Finsure
Finsure
Finsure has loan offers from over 35 lenders, including major brands, and will work to find a home loan that suits your property needs. Over 35 lenders Enquire Now More info
eChoice Mortgage Brokers
eChoice Mortgage Brokers
When you do business with eChoice you will be given your own home loan manager to help you select a loan. 25 lenders Enquire Now More info
iConnect
iConnect
iConnect has hundreds of loans available through more than 40 lenders in Australia to choose from to find the home loan that is right for you. 40+ lenders Enquire Now More info
Pepper Money
Pepper Money
Pepper specialises in providing fair home loans to those who are credit impaired - from small defaults all the way up to discharged bankruptcies. Credit impaired home loans Enquire Now More info

Tips for single parents who want to buy a home

Trying to put together a deposit for a home while raising a child on a single income can be difficult, especially as the costs of both are increasing. Take note of the following if you're looking for ways to save for a home and you're the provider for a dependent child.

  • Government assistance. As mentioned above, single income parents may be eligible for the federal government’s Family Tax Benefit A & B, Parenting Payment and the Child Care Benefit. Government assistance can help cover the incidental day-to-day expenses and larger expenses like rent and child care, which can give you a little more room in the budget to save.
  • How much do you earn? When it comes time to apply for your home loan, you will want to know how much you can borrow. A higher income means you can borrow more, and pre-approval will give you a ballpark figure. Once you’ve done a comparison of home loans, speak to the lender directly to find out whether parenting-related payments can be included on your home loan application.
  • Increase your income. This is an obvious one, and something that is easier said than done. We covered some possible ideas for increasing your income in our 12-week challenge. Although these solutions are not for everyone, renting out a spare room on a website like Airbnb is a serious money maker.
  • Budgeting. A budget is essential to any financial plan. List all the money you get, your income, and look at ways to cut down on the money going out. You can find out how to make a successful budget in our 12 Week Financial Fitness Challenge.
  • Get a savings account. Although the first home saver accounts scheme is no longer in operation, high-interest savings accounts are great if you’re saving for a goal, such as a mortgage deposit. Not only do the accounts let you earn interest, they also come with features to help you save. Automatic savings plans are a great way to save for a goal.
  • Get the right home loan. Spend some time comparing home loans and find the loan that’s the right fit for you. The right loan charges less fees and gives you the flexibility to change the features as your situation changes in the future. A comparison of fees vs features now will save you time and money later.

Find out how much you can borrow

Rent assistance

If home ownership is not your aim and you want to rent, there are a number of social housing services that provide cheap accommodation for single parents. The Community Housing Assistance website has details about the concessions available to single parents and contact information for the different schemes operating in each state.

A dual income household can borrow more money than a single parent, but single parents can still get a home loan. The issue is borrowing power. High-income earners have greater access to financing. Compare loans and speak to lenders to find out whether they can help you afford a home.

Image: Shutterstock

Jacob Joseph

Jacob is a writer and video journalist with finder.com.au. Credit cards, personal loans and savings accounts are his bread and butter, and he likes nothing more helping people understand the sometimes overly complex world of personal finance.

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10 Responses

  1. Default Gravatar
    SueJune 26, 2017

    Hello,
    I would like to buy a home. I am 48 years old, a perm p/t Qld gov employee (64 to 72 hrs / fn). I am a single parent of 2 children 13 & 16.
    I am the sole provider. My average net income is $2100/ fortnight. Family tax $180/ ft. I do not have savings but do have a good credit history. I have currently have a personal loan owing $10,000. Could you tell me what options I have. If you think I would be eligible for a home loan who/ where to from here. Thanking you for your time.
    Regards.

    • Staff
      JonathanJune 27, 2017Staff

      Hi Sue!

      We know you’re doing your best to get qualified! :)

      You can shoot an enquiry to your desired lenders of the choices below. They will have a broker to talk with you about the requirements.

      All the best!

      Hope this helps.

      Cheers,
      Jonathan

  2. Default Gravatar
    LisaJune 1, 2017

    Does a single parent qualify for a first home buyers grant?

    • Staff
      JonathanJune 1, 2017Staff

      Hi Lisa!

      Thanks for the comment.

      Being a single parent doesn’t disqualify you from applying for First Home Owners Grant. Take note that the eligibility may vary from state to state and some basic requirements are needed to be met.

      You can check those details on this page.

      Hope this helps.

      Cheers,
      Jonathan

  3. Default Gravatar
    jessApril 21, 2017

    i am a single parent of a 2 1/2 yr old. I really want to buy my own first home of up to $100,000. its looking really good but i heard that you lose all of your rental assistance and family tax a altogether. i ring centrelink who dont pick up the phone – i leave messages and they dont answer so i just really want to know? does anyone know? thanks

    • Staff
      AnndyMay 7, 2017Staff

      Hi Jess,

      Thanks for your question.

      In regards to Rent assistance, you will not be eligible to receive this benefit if you own or are buying the home you live in, except relocatable homes. Other eligibility criteria apply.

      For Family Tax Benefit, I’ve checked the Department of Human Services website and can’t seem to find a stipulation about the connection of this benefit to purchasing a home. You may have to directly call the Department of Human Services on 136 150 to enquire.

      Cheers,
      Anndy

    • Default Gravatar
      May 7, 2017

      thank you so much for that! ive just heard as well that after my child turns 8 i go onto newstart. im really concerned about meeting mortgage payments along with living expenses which i worked out to be about $490 pf.based on thats including mortgage payments of 192-223 pf.id like to know how much of newstart payments you receive when you child turns 8.if you know that it would be fantastic! thanks

    • Staff
      AnndyMay 8, 2017Staff

      Hi Jess,

      Thanks for getting back.

      Yes, one of the benefits that the Department of Human Services offers to single parents is the Newstart Allowance for single parents whose youngest child is 8 years old or over, subject to eligibility criteria. You can generally earn up to $104 every 2 weeks before the agency start reducing your Newstart payment. You may have to contact Centrelink on 132 850 to learn more about Newstart Allowance.

      Cheers,
      Anndy

  4. Default Gravatar
    bitconfusedMarch 11, 2016

    After reading bits & pieces on the net I’m a bit confused.Something that i thought could be simple is turning out to be more complicated
    than I thought
    My question if anyone knows
    My parents own their property but are not financial, I was wondering if I can pay for an extension onto their house for myself to live- would I be able to get a home loan through their equity to do so, as a personal loan would be to costly and not much better than paying outside rent?
    We are based in Victoria, I think that effects the granny flat options and I was wondering what effect this would have if any on their pension

    • Staff
      BelindaMarch 14, 2016Staff

      Hi there,

      Thanks for reaching out.

      Your ability to borrow using your parent’s equity depends on whether or not your parents will go guarantor on the loan and/or whether it will be a joint application.

      It’s advised that you speak to a licensed mortgage broker as they will help you understand your borrowing options and they can review your financial situation to find a home loan that’s right for you. A broker can also assist you with the paperwork and negotiate for better terms on your behalf.

      All the best,
      Belinda

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