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Single parent home loans
If you're a single parent keen to buy a home, there may be some lenders who will accept your Centrelink payments as part of your income.
If you're a single parent looking to buy a home, you have more options than you probably realise. Some lenders accept Centrelink payments when assessing your income on a loan application (we've listed some options below). And there's also a new government scheme that lets eligible single parents buy properties with 2% deposits.
Using Centrelink payments as income
As a single parent, you may be eligible to receive the Parenting Payment from Centrelink, and most lenders will accept it 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.
The Family Home Guarantee
This federal government scheme allows single parents with incomes below $125,000 to qualify for home loans with 2% deposits. You need to borrow the remaining 98%, but you can avoid the extra cost of lenders mortgage insurance. This can save you thousands and help you buy a home sooner. It does mean borrowing quite a large amount of money, with minimal equity. So it might not be a good option, depending on your circumstances.
There is also a limit of 2,500 places a year for the scheme.
5 tips for saving a deposit on a single income
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. 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.
- Estimate your borrowing power 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.
- 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 your spending.
- Get a savings account. 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 in fees and gives you the flexibility to change the features as your situation changes in the future. A comparison of fees versus features now will save you time and money later.
Get personalised help from a mortgage broker
Mortgage brokers specialise in helping borrowers in difficult or unique circumstances, including borrowers with Centrelink payments. They can help you find lenders who 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. Mortgage brokers get a commission from the lender, meaning you don't have to pay for their help.
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