How can single parents afford a home loan

How can a single parent afford a home?

Rates and Fees verified correct on January 21st, 2017

Single parents looking for ways to afford a home need to think about as many ways as possible to earn more cash

Saving to afford a home is a difficult enough task for two people. Even more so when a couple have a dependent child. But what about single parents raising a child at the same time. How can a single parent afford a home?

The home loan lender is interested in your capacity to repay the loan. Even with financial assistance, like parenting payments, you need to work if you want a mortgage.

If you’ve got an income, then there’s no reason why you can’t get a home loan. The question is how much you can borrow as a single income household. Many home loan lenders will accept an application from a single parent. The usual home loan eligibility criteria applies: a deposit is required, it’s good if the borrower can show a history of savings, and the borrower needs to have an income. You can read more about the application and eligibility requirements on our home loan review and application pages.

We’ve listed some tips and ideas below for single parents who want to increase their income and saving for a home loan.

Compare mortgage brokers

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 you 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.

Broker Details No. of Lenders
Aussie Home Loans Details and Application
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.

20 Enquire
More info
Online Home Loans Details and Application
Online Home Loans

Online Home Loans is a mortgage broker service designed to help Australian borrowers find the right home loan – and do it all online.

More info
iConnect Financial Services
iConnect Financial

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+ Enquire
More info

Tips for single parents who want to afford a home

Saving for a deposit for a home and raising a child on a single income is a marathon exercise. And the costs of both raising a child and saving for a home 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 dependant 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.
  • 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. Pre-approval will give you a ball-park 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. There are other Centrelink benefits available to single parents. Read more about applying for a home loan on Centrelink payments.
  • Increase your income. This is an obvious one, and something which is by far easier said than done. We covered off 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 about 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, like a mortgage deposit. Not only are these accounts interest bearing — you get money back on the money you deposit in the account — 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. The right loan charges less fees and gives you 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 homeownership 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 access to housing finance. The issue is borrowing power. High income earners have greater access to housing finance. Compare loans and speak to lenders to find out whether they can help a single parent afford a home.

Image: Shutterstock

Jacob Joseph

Jacob is a writer and video journalist with 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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2 Responses to How can a single parent afford a home?

    Default Gravatar
    bitconfused | March 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

      Belinda | March 14, 2016

      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,

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