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How can a single parent buy a house?
As a single parent or single legal guardian, buying a new home can seem as impossible as having your kids volunteer to clean the house. But with the right knowledge and a few practical tips, buying your first home may be more attainable than you think.
According to HomeStart Finance, nearly 20% of its customers are single people with dependents. This is an encouraging number that should inspire you to navigate the real estate market on your own.
There are many benefits to owning a home, including a sense of stability, security and pride, a stronger connection to the community, and greater privacy. Additionally, there are financial benefits such as increased home value, predictable costs (fixed-rate mortgage), and possible tax deductions.
With that in mind, here are some helpful tips to help Australian single parents buy a home. Learn everything – from how to apply for a home loan to increasing your income. Whether you’re looking to buy an investment property, build a new home or purchase an existing home that requires a deposit, here’s your guide to your home buying journey.
How to buy a property as a single mother?
Know what counts as your income
As a single parent, your income is key to getting a mortgage or home loan because it determines how much you can borrow. Did you know that some lenders allow you to include Australian Government payments into your income? These include Family Tax Benefits A and B, Parenting Allowance, Childcare Benefit and the Large Family Allowance available to qualifying families. There’s no rush, you have until June 30, 2025 to submit your paper.
For more information about government assistance that can help you buy a home faster, see: What benefits am I entitled to as a single mother?.
Check if you qualify for the First Home Owner Grant
Depending on your history in the housing market, you may be eligible for a first home buyer grant. These government programs vary depending on which state you live in, but they’re definitely worth checking out.
Imagine you received $15,000 in mortgage start-up funds! See if you meet the eligibility criteria.
Another great option is the Family Home Guarantee for single parents, with deposits as low as 2%. Some loans are administered by Housing Australia on behalf of the government. This federal government measure is designed to support eligible single parents and legal guardians applying for housing.
If you’d like to find out more about the Home Guarantee Scheme, check out our detailed article here.
Finding a Good Mortgage Broker (Understanding the Needs of Single Parents)
There are some great professionals who can guide you through the home buying process. They have an in-depth understanding of the loan market and will help you find the lender that’s right for you as a single mom with at least one dependent.
Our Beanstalk Mums team highly recommends Sarah McLaughlin from Liberty. She provides incredible homebuyer assistance, such as finding the right loan from participating lenders across Australia. She has already helped one of our writers purchase an existing property.
Oh, and don’t be intimidated by their fees, as most brokers take a commission from participating lenders, meaning it’s a free service to you.
Avoid paying mortgage insurance to your lender
If you don’t have a huge seed capital to build your dream home, you may find yourself paying the additional cost of LMI.
This fee is charged if your home loan exceeds 80% of the property’s value and will significantly increase the cost of your loan. To get a better idea of the cost, use your lender’s mortgage insurance estimator tool.
Also, talk to your broker about how you can increase your borrowing power and avoid this unnecessary payment.
Be a smart saver
When saving money, you need to develop the habits of a smart saver.
Make sure you use the best high-interest savings account that will hopefully earn you rewards if you make regular payments but don’t withdraw money. Great advice on this barefoot investor Author: Scott Pape. Make this process as easy as possible by setting up automatic recurring payments (for as long as you can afford it).
Also, reduce unnecessary expenses. For example, how much money could you save by changing some food brands or skipping your morning coffee a few days a week? This is also a great time to teach your children the value of money.
For more tips on saving, see: Money-saving tips for single moms.
Learn how to create a budget
Do you have a financial budget? If not, now might be the time to start.
Calculate your income/expense every week and then reduce your expenses. Use this process to calculate a mortgage payment you can comfortably afford, so you don’t overburden yourself when you buy.
Head to the wonderful MoneySmart website for a comprehensive budgeting guide, or check out some great budgeting apps here.
How do single parents buy a house? (continued)
Consider ways to increase your income
rack your brain to see if there is any way you can increase your income.
Can you ask your boss for a raise? Spend more time working? Looking for another job? Have you checked with Centrelink that you have received all the payments you are entitled to?
An increase in income will speed up your savings process and increase the amount you can borrow as a first-time home buyer. When your income is higher, you’ll be able to save more money at a faster rate. Not only will this help you reach your deposit goal faster, it can also increase the amount you can borrow as a first-time home buyer.
Lenders view your higher income as a sign of financial stability and will be more willing to lend you larger amounts. This means you may be able to afford a more expensive property, or be approved to pay a smaller deposit, making it easier to enter the investment property market.
By taking advantage of your increased income and diligently saving for a deposit, you can set yourself up for a successful home purchase.
Change your thought process and dream big
Stop thinking that owning your own home is for other people and not for yourself.
Know that you have as much right as anyone to a safe, comfortable home in which to raise your wonderful family.
Put your dream home in the back of your mind. Find a picture of the house you want and stick it on the refrigerator.
Most importantly, think about the bigger picture. When you’re having trouble saving for a home, remember your goals and the wonderful gift you’ll be giving yourself and your children. This is what I can help you with in my “You Already Got This” Single Mom eCourse.
Conclusion: Buying a Home as a Single Parent or Legal Guardian
For those of us who want to buy our own home, a single parent home loan is definitely a possibility. Of course, having a single income and sometimes higher deposits can be challenging, but there are support options available. For example, the First Home Loan Deposit Scheme allows single parents with dependents to move into their home faster with just a 2% deposit.
Whether you plan to buy an existing home or build a new one, these government initiatives will support our dream of homeownership. Now is the perfect time for us single moms to start owning a home before housing prices get even more out of reach. Ladies, let’s work together! Our dream home is within our reach and we deserve it!
