Home Loans for Single Mothers in Melbourne

Finding home loans for single mothers in Melbourne can feel overwhelming, especially when balancing the responsibilities of raising a family solo. These loans are designed to make homeownership more accessible for single mums, offering financial support and tailored solutions that ease the path toward building a stable future.

For many single parents, owning a home means security, independence, and a solid foundation for their kids. That’s where mortgage brokers from LM Connect step in—helping single mums in Melbourne explore the best options, compare lenders, and unlock deals that might not be available elsewhere. Working with a broker means having an expert on your side, saving time, money, and stress.

So, what should you know before taking that next step? Let’s dive in everything you need to know on how to take out a home loan as a single mother.

Melbourne Property Market in 2025: Insight Into Single Mums Homeownership

Melbourne’s property market continues to show resilience heading into 2025, offering promising opportunities for single mothers dreaming of homeownership. As of late 2024, Melbourne’s median house price sits around $934,000, while units average $614,000—making apartments a more affordable entry point for single mums. 

With property price growth predicted at 3-5% in 2025, Melbourne remains attractive for its diverse suburbs like Werribee, Cranbourne, and Frankston, known for affordable family homes, good schools, and essential amenities.

The city's reliable public transport, healthcare, and education systems make it an ideal spot for single mums to raise kids while investing in long-term stability. Plus, Melbourne’s vibrant job market adds another layer of security for families planning their future.

Eligibility Criteria for Single Mothers' Home Loans in Melbourne

Before applying for a home loan as a single mother in Melbourne, it's essential to understand the basic eligibility requirements lenders use to assess applications for home loans for single parents or single mothers. While each lender has unique requirements, most will look at the following factors:

1. Stable Income:  Proof of steady income, including salary, child support payments, and any government benefits like Family Tax Benefits.
2. Credit History:  A solid credit score is important, though some lenders may offer low-deposit loans even with a lower score.
3. Minimum Deposit:  Typically, a 5-10% deposit is required unless you qualify for programs like the Family Home Guarantee, which only needs a 2% deposit.
4. Employment Status: Full-time, part-time, or even self-employed single mothers can apply, but lenders often prefer those with a stable job history.
5. Eligibility for Government Schemes:  Programs like the First Home Owner Grant or Family Home Guarantee from Housing Australia may require that you need to be an Australian citizen or have permanent residency, along with income limits.
6. Property Price Cap: Government-backed schemes usually have maximum property price thresholds, like Melbourne's current cap of $800,000 under the Family Home Guarantee.

These requirements are the first step toward securing your dream of homeownership. Meeting them increases your chances of approval and getting the best loan terms available.

Types of Home Loans for Single Mothers with Broker Support

As a single mother in Melbourne, understanding the various home loan options available to you is key to making an informed decision about your financial future. 

Below are the different types of home loans that mortgage brokers can help single mums with. These are particularly relevant to single mothers, helping them secure a home without the added pressure of bank-specific offers.

1. Fixed-Rate Home Loan

A fixed-rate home loan locks in your interest rate for a set period, typically 1 to 5 years. This is ideal for single mothers who want to budget confidently, as your monthly mortgage repayments will stay the same during the fixed period, no matter how the market changes.

2. Variable-Rate Home Loan

With a variable-rate home loan, the interest rate can rise or fall based on market conditions, which means your repayments will fluctuate. This can be a good option for single mothers looking for flexibility, especially if you're comfortable with the possibility of lower repayments when interest rates fall.

3. Interest-Only Home Loan

An interest-only home loan allows you to pay only the interest for a set period (usually up to 5 years), meaning your repayments will be lower during that time. This can be beneficial for single mothers needing to keep their monthly expenses low in the short term, though you'll eventually need to start paying off the principal amount.

4. Offset Home Loan

An offset home loan links your mortgage to an offset account, where any savings you deposit are used to reduce the amount of interest you pay on your loan. This type of loan is perfect for single mothers who want to use their savings more effectively while still keeping access to those funds.

5. Low-Deposit Home Loan

A low-deposit home loan allows you to purchase a home with as little as 5% deposit or less. This is a great option for single mothers who haven’t had the time or means to save a large deposit. Government schemes like the Family Home Guarantee make this option even more accessible by reducing the Lenders Mortgage Insurance (LMI) requirement.

6. Split Loan (Fixed & Variable Combination)

A split loan combines both fixed and variable interest rates. Part of your loan has a fixed rate, giving you stability, while the rest has a variable rate, offering flexibility. This type of loan provides balance, especially for single mothers who want a blend of security and the chance to benefit from market interest rate drops.

7. Construction Loan

If you’re considering building your own home, a construction loan is tailored to finance the construction process. With this loan type, funds are released in stages as the construction progresses. This is ideal for single mothers who want to control their spending while building their dream home in Melbourne.

8. Guarantor Home Loan

A guarantor home loan allows a family member, such as your parents, to use the equity in their property to help secure your loan. This can be especially helpful for single mothers who may not have a large deposit but have family members willing to assist.

9. Family Home Guarantee (Government Scheme)

The Family Home Guarantee is a government-backed initiative that helps single mothers and single parents purchase a home with as little as a 2% deposit, without the need for Lenders Mortgage Insurance (LMI). It’s available for both first-time home buyers and those who’ve previously owned property but no longer hold any real estate.

10. First Home Owner Grant (FHOG)

The First Home Owner Grant (FHOG) is a one-time payment available to first-time home buyers, including single mothers. In Victoria, eligible buyers can receive up to $10,000 towards purchasing or building a new home, which can significantly reduce the upfront costs.

11. Shared Equity Schemes

A shared equity scheme, such as the Victorian Homebuyer Fund, allows you to buy a home with a co-investor, typically the government, taking a share of the equity in the property. This scheme allows eligible single mothers to borrow up to 25% of the property’s value, reducing the mortgage amount needed and making the property more affordable.

12. Rent-to-Buy (Lease Option Agreements)

With a rent-to-buy scheme, single mothers can move into their desired home and pay rent with an option to buy it later. A portion of the rent goes towards the future purchase price, allowing single mothers to save for a deposit while living in the home.

13. First Home Super Saver Scheme (FHSSS)

The First Home Super Saver Scheme (FHSSS) allows single mothers to save for a home deposit within their superannuation fund, benefitting from the lower tax rates on super contributions. This can help speed up the savings process, especially if your income is modest.

14. Downsizer Contribution Scheme

If you're a single mother who has previously owned property and is over 55 years old, the Downsizer Contribution Scheme allows you to sell your current home and contribute up to $300,000 of the sale proceeds into your super fund. This can free up cash to either buy a smaller, more affordable home or boost your retirement savings.

Case Study: Sarah’s Journey to Homeownership

Sarah, a single mother of two, was struggling to find a home loan on her part-time income of $70,000 per year. After researching her options, she discovered the Family Home Guarantee and applied for a loan with a 5% deposit. 

With the help of her broker at LM Connect, Sarah purchased a land package in Melbourne's western suburbs for $700,000. By using the Family Home Guarantee, she avoided paying Lenders Mortgage Insurance, saving her over $20,000. 

Today, Sarah is a proud homeowner and continues to build her financial stability.

FAQs

Can I get a home loan as a single mother?

Absolutely! Single mothers in Melbourne can apply for parent home loans designed for eligible applicants, often supported by a government initiative or grants to help buy a residential property or even vacant land.

What is the best home loan for a single mother?

The best loan products depend on your financial circumstances, but options like low-loan deposit loans, fixed rates, or first-home buyer schemes are common. A mortgage broker can help find a deal that keeps your monthly repayments manageable.

What is the 2% deposit scheme in Victoria?

The Victorian Homebuyer Fund is a government initiative allowing eligible home buyers, including single mums, to purchase a residential property with just a 2% loan deposit, while the state covers up to 25%. This setup reduces the overall loan repayments and avoids Lenders Mortgage Insurance (LMI).

Can a person on Centrelink get a home loan?

Yes, some lenders include Centrelink payments in your income assessment, making it possible to enter the housing market. A broker can guide you to lenders open to these types of loan agreements.

Can a single mum use super to buy a house?

Yes, under the First Home Super Saver Scheme (FHSSS), single mothers can use voluntary super contributions (up to $50,000) towards a loan deposit on their first residential property. Just remember, this applies to eligible applicants buying their first home.

How do single parents afford a mortgage?

Single mums often rely on government initiatives like the Family Home Guarantee or First Home Owner Grant to reduce loan deposit requirements and avoid LMI. Lenders may also factor in other income like child support or Family Tax Benefits when calculating monthly repayments.

How much can I borrow for home loans for single parents?

Borrowing power usually ranges from 3 to 5 times your annual income, based on your financial circumstances. Some schemes and having a guarantor can boost your ability to invest in residential property or investment property.

Is there an income requirement for single mums to avail of a home loan?

Yes, most loan products require proof of stable income, and schemes like the Family Home Guarantee set an income limit of $125,000 per year for eligible applicants. Lenders assess all income, including government support, when reviewing the loan agreement and potential loan repayments

Final Thoughts

Becoming a homeowner as a single mother in Melbourne is possible with the right information and loan options tailored to your needs. By exploring government schemes, flexible loan types, and alternative pathways, you can take that crucial first step toward owning your own home. 

If you’re ready to explore your options, reach out to the experienced team at LM Connect. We’re here to help you find the best solution to make your homeownership dreams a reality. Call us today at 0423 713 362 or visit LM Connect for personalised advice!