With around 1.1 million single-parent households in Australia, it’s not surprising that “Can I afford to buy a home as a single parent?” is a commonly asked question.1
Sadly, for many raising a family on one income, the prospect of buying a home can make the Great Australian Dream feel more like a pipe dream.
So, what if we told you that assistance is available in the form of government grants and guarantees, as well as some clever hacks to help single parents step onto the property ladder?
Sounds good? We’ll also share a few tips from a single mum, who made her dream of buying a home a reality. Let’s get started.
Cindy’s story
Brisbane single mother and Great Southern Bank customer, Cindy Chalker, dreamed of owning her own home. However, like most single parents, saving the traditional 20% deposit while renting with two children presented a significant barrier.
“As a single mum, you don’t want your kids to go without. Sometimes it’s difficult to put money aside because things always pop up.” she explains.
Cindy was determined not to give up. “For many years, I thought this wasn’t going to happen, but I didn’t give up and was looking for strategies to actually do it.”
Cindy purchased her three-bedroom apartment by taking advantage of the Federal Government’s Family Home Guarantee (FHG) and the Queensland State Government’s stamp duty concessions for first home buyers.
Researching the government guarantees available is one of Cindy’s top tips for single parents looking to buy a home.
Government guarantees for single parents buying a home
The first hurdle for many single parents is saving a large enough deposit. The good news is that applying for a government guarantee can help reduce the size of the deposit you need to save.
You may also be eligible for more than one government scheme or guarantee, especially if you’re buying your first home. Let’s take a look at the most popular guarantees, so you can decide which ones are right for you.
The Family Home Guarantee (FHG)
The FHG is a national guarantee that allows eligible single parents to purchase a home with a deposit between 2% and 20% without having to pay costly Lenders’ Mortgage Insurance (LMI).
While there are some eligibility requirements, you don’t need to be a first home buyer to qualify, as the FHG recognises that a single parent may have owned a home before. And, if you have a co-parenting arrangement, both parents could be eligible for the guarantee.2
To be eligible for the Family Home Guarantee (FHG) you must:
- Be a single (unmarried) parent with at least one dependant child
- Be an Australian citizen and at least 18 years of age (permanent residents are not eligible)
- Have a taxable income of $125,000 or less per year as shown on the Notice of Assessment (issued by the Australian Taxation Office). (this does not include child support payments)
- Be buying the property to live in
- Be the only name listed on the loan and the certificate of title
- Not currently own a home in Australia.
You can buy any type of residential property including an existing home, apartment, or townhouse. Alternatively, it can be a new build, such as a house and land package or an off-the-plan apartment.2
Like all government guarantees, the FHG comes with some additional terms and conditions, including a limit on places per financial year and price caps on how much you can spend on your home. Here are the new price caps in your state or territory that are effective on 1 July 2022.
Family Home Guarantee (FHG) price caps effective for reservations made from 1 July 20223
| State | Capital city & regional centres* From 1 July 2022 | Rest of State From 1 July 2022 |
|---|---|---|
| NSW | $900,000 | $750,000 |
| VIC | $800,000 | $650,000 |
| QLD | $700,000 | $550,000 |
| WA | $600,000 | $450,000 |
| SA | $600,000 | $450,000 |
| TAS | $600,000 | $450,000 |
| ACT | $750,000 | $750,000 |
| NT | $600,000 | $600,000 |
*The capital city price thresholds apply to regional centres with a population over 250,000 (Newcastle & Lake Macquarie, Illawarra (Wollongong), Geelong, Gold Coast and Sunshine Coast), recognising that dwellings in regional centres can be significantly more expensive than other regional areas.
Stamp duty concessions
If you’re a first home buyer or your property is under a certain value, you may also be eligible for a stamp duty exemption - and reduce your upfront costs in the process.
The rules around stamp duty concessions vary between states and territories. However, our handy stamp duty calculator can provide an estimate on your stamp duty costs and exemptions.
Saving a home deposit as a single parent
Save your deposit via your super fund
The First Home Super Saver Scheme allows you to save for your first home faster by making extra contributions to your super fund. It works because your extra contributions are taxed at the concessionary super rate of 15% rather than the higher income tax rate. It’s also harder to access whenever you’re tempted to dip into your savings.
Once you’re ready, you can withdraw up to $15,000 worth of super deposits in one financial year and $30,000 in total. Like any government scheme, there are some additional terms and conditions, so check with the Australian Taxation Office (ATO) for full details.
Start a side hustle
To reach her deposit goal faster, Cindy got creative with a side hustle selling tarot cards. If you’re thinking about a side hustle of your own, Cindy’s top tip is to find something that you enjoy doing outside of work.
“You get home from a day’s work and don’t feel like doing anything, but when it’s something you that you enjoy and you’re able to monetise it… things tend to work out,” explains Cindy.
Boost your savings with The Boost
The Boost is one of our online banking tools that helps you top up your home deposit savings every time you spend. You simply set an amount between $0.01 and $5 to automatically transfer to your savings account whenever you use your Great Southern Bank Visa Debit card. Every time you buy groceries, fill up the car or treat yourself to a cup of coffee, you’ll be adding a little extra to your deposit. Every little bit adds up.
Reduce the temptation to dip into your savings
The Vault is a smart little tool that puts your savings account out of sight in online or mobile banking, while still keeping it accessible in an emergency.
Applying for a home loan as a single parent
As you start to save your deposit, it’s likely you’ll start wondering how much you can borrow. And importantly if the banks will even approve a loan for you. That’s where applying for conditional home loan approval, also known as a pre-approval, can really help.
If you’re eligible for the Family Home Guarantee (FHG), pre-approval can also help you secure your place and help streamline the home-buying process.
At Great Southern Bank, you can apply for pre-approval to find out the maximum amount you can borrow, making it easier to look for properties in your price range. While your application will still need to meet some conditions to progress to full approval, it can streamline the process, as you’ve already completed most of the paperwork.
Pre-approval normally lasts for up to 90 days and you can apply to renew your pre-approval if you haven’t found a property in that time. Best of all, it’s free and you’re under no obligation to take out the loan.
For Cindy, applying for pre-approval helped her move quickly on the property she wanted in a highly competitive market. When she found her perfect property, she’d already confirmed she was eligible for the FHG and had finance approved.
“It was such a big deal when I got the approval email. I was jumping around the house. Both the kids were hugging me and jumping around,” says Cindy.
Life as a homeowner
For Cindy, home ownership represents stability. “Once you’ve got the house, your kids don’t have to worry about moving places,” she says.
Cindy sums up her Great Australian Dream as having the freedom to make her home her own.
“The kids are excited to have their own bedrooms they can do whatever they want,” Cindy says.
“They can paint it if they want, put hooks in the walls and we don’t have to have an inspection every three months. I told them (we’re) still doing that and there will be eviction notices if rooms are not up to standard,” she jokes.
How Great Southern Bank can help
Are you a single parent and ready to start making your Great Australian Dream come true? Speak to a Home Loan Specialist about your next steps today.
Learn more about our Home Loans.
Important Information
1. Source: Australian Bureau of statistics.
2. Family Home Guarantee - Overview
Great Southern Bank, a business name of Credit Union Australia Ltd ABN 44 087 650 959, AFSL 238317. Conditions, fees, and charges apply. This is general information and does not take into account your objectives, financial situation or needs. Consider the appropriateness of the information, including the Terms and Conditions (T&Cs) booklet, before acting on it. The Financial Claims Scheme may apply to this product; refer to the T&Cs for more information.