Can Single Parents Get a Mortgage in Australia?

Can Single Parents Get a Mortgage in Australia?

Yes, single parents in Australia can absolutely get a mortgage, and there are no legal barriers or discriminatory practices preventing it based on family status alone. Australian anti-discrimination laws, enforced by bodies like the Australian Human Rights Commission, prohibit lenders from denying loans solely because someone is a single parent. The key focus for lenders is your financial stability—your income, expenses, credit history, and ability to service the loan—rather than your marital or family situation. However, as a single-income household supporting dependents, the process may require more planning, budgeting, and potentially leveraging government assistance programs to build a deposit or improve affordability. Below, I’ll break down the essentials, including eligibility, challenges, and support options, based on current (2025) guidelines.

General Eligibility for a Mortgage as a Single Parent

The mortgage application process for single parents mirrors that for any individual borrower. Lenders assess:

• Income and Affordability: You must demonstrate stable income (e.g., salary, self-employment, or government benefits like Parenting Payment) sufficient to cover repayments. Lenders use the Household Expenditure Measure (HEM) to estimate living costs, factoring in dependents, which may reduce your borrowing power compared to dual-income households. For example, on a single income of $80,000 annually, you might borrow up to $400,000–$500,000, depending on other factors like credit score and deposit size.
• Deposit Requirements: Typically 5–20% of the property value. With less than 20%, you’ll likely need Lenders Mortgage Insurance (LMI), which can add thousands to costs (e.g., $10,000+ on a $500,000 home with a 10% deposit).
• Credit History: A strong credit score (above 700 on systems like Equifax) is crucial. Pay bills on time and minimize debt to show reliability.
• Employment Stability: Proof of consistent income for at least 2–3 months (or 1–2 years for self-employed).
• Property Type: Owner-occupier loans are standard; investment properties are harder but possible if affordable.

Single parents can apply as individuals, and Centrelink payments (e.g., Family Tax Benefit or Child Support) can often be included as income, though not all lenders accept them fully—mortgage brokers can help find those that do.

Challenges for Single Parents

• Single Income Limitations: Lenders view single-income applicants as higher risk, so your borrowing capacity may be 20–30% lower than a couple’s with similar combined earnings. Childcare, education, and living costs are factored in, potentially capping loans.
• Deposit Savings: Saving on one income while covering family expenses is tough. Average deposits take 3–5 years, but schemes can reduce this.
• Higher Scrutiny: Expect detailed expense breakdowns. Bad credit or high debt-to-income ratios (>30%) can lead to rejection.
• Market Factors: With median house prices around $800,000 in major cities (e.g., Brisbane, Sydney), affordability is strained, but regional areas offer better options.

Government Assistance and Schemes for Single Parents

Australia offers targeted support to make homeownership more accessible, especially for single parents. The standout is the Family Home Guarantee (FHG), part of the Home Guarantee Scheme (HGS) administered by Housing Australia. It’s not a cash grant but a government guarantee on up to 18% of your loan, allowing you to buy with just a 2% deposit without paying LMI—saving thousands upfront.

Key details on FHG (updated for 2024–25):

• Eligibility:
• Single parent or legal guardian with at least one dependent child (under 18 or full-time student under 24).
• Australian citizen or permanent resident, aged 18+.
• Taxable income ≤ $125,000 (from previous financial year’s Notice of Assessment; excludes child support).
• Not owning any property at settlement (but previous owners qualify if selling).
• Minimum 2% deposit from your savings (gifts or loans don’t count).
• Property must be owner-occupied (new build or existing home, up to 4 bedrooms).
• Limits: 5,000 places annually (FY2024–25); property price caps apply (e.g., $800,000 in Brisbane, $1.5 million in Sydney).
• How It Works: Apply through a participating lender (e.g., NAB, Suncorp, People’s Choice—36 total, including major banks). The government guarantees the loan portion, reducing lender risk.
• Benefits: Avoid LMI (which could cost $15,000+ on a $600,000 home); faster entry to market. Both first-time buyers and previous owners qualify.

Other supports:

• First Home Guarantee (FHG’s sibling): For first-time buyers (not single-parent specific), 15% guarantee with 5% deposit, no LMI. Income cap $125,000 (singles).
• Help to Buy Scheme: Upcoming (not yet active in 2025); shared equity for low-moderate income buyers, potentially including single parents.
• State Grants and Concessions: Vary by state—e.g., Queensland’s First Home Owner Grant ($15,000 for new homes under $750,000); stamp duty exemptions for singles under income thresholds. Check state revenue offices.
• Centrelink and Family Assistance: Payments like Parenting Payment Single can count toward income; use them to boost savings via high-interest accounts.
• Guarantor Loans: Family/friends guarantee part of the deposit (e.g., security on their property), withdrawable later.

For self-employed single parents, lenders may require 1–2 years of tax returns, but schemes like FHG simplify approval.

Steps to Apply as a Single Parent

1. Assess Your Finances: Use online calculators (e.g., from NAB or Finder) to estimate borrowing power. Aim for repayments <30% of income.
2. Save for Deposit: Target 2–5% via FHG; use apps like The Boost (Great Southern Bank) for automated savings.
3. Check Credit: Get a free report from Equifax or Experian; fix issues early.
4. Consult a Mortgage Broker: Free service; they access 30+ lenders and navigate schemes (e.g., via Mortgage & Finance Association of Australia). Brokers like those at Your Mortgage or Loans.com.au specialize in single-parent cases.
5. Apply for Schemes: Contact a participating FHG lender (list on Housing Australia website). Provide income proof, dependent details, and deposit evidence.
6. Shop Rates: Compare via sites like Finder or Canstar—current variable rates ~5.24% (owner-occupier). Fixed rates offer stability.
7. Get Pre-Approval: Strengthens your property search; valid 3–6 months.
8. Buy and Settle: Engage a conveyancer/solicitor; schemes like FHG speed settlement.

Tips for Success

• Budget Ruthlessly: Track expenses; side hustles (e.g., tarot sales, as one single mum shared) can accelerate deposits.
• Build Equity Gradually: Start with a smaller home; refinance later.
• Seek Advice: Free sessions from financial counselors via National Debt Helpline (1800 007 007) or brokers.
• Real Stories: Single mum Cindy Chalker (Great Southern Bank customer) saved via side hustles and FHG, buying her dream home despite challenges.

In summary, yes—single parents can and do get mortgages in Australia, often with government help like the FHG making it more achievable. It’s challenging but feasible with planning. For personalized advice, consult a broker or visit Housing Australia’s site. If you’re eligible, act soon—FHG spots fill quickly.