Low Income Home Loans For Single Mothers

Low income home loans for single mothers could be the stepping stone you need to get into the property market.

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, updated on August 8th, 2023       

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The property market can be difficult to navigate even with a healthy pay packet. But luckily there are home loan products available for single mothers earning a low income, allowing them to break into the property market.

Find out everything you need to know about these loans and what you need to do to get one.

What are low income home loans for single mothers?

Low income home loans for single mothers are offered by lenders so that you can get a mortgage to help purchase a home for you and your family.

They are a great solution to get you into the property market and set yourself up for long term financial security.

Even if you are earning the minimum wage you will be eligible to get a home loan. Family tax benefit (A or B), Centrelink payments, child support and a number of other income streams will also be accepted by lenders.

In conjunction with these home loan products, there are government assistance schemes available to help you get into a new home.

How do single mothers on low income apply for a home loan?

Applying for a home loan as a single parent can be a confusing process. But to make things easier for you, it has been mapped out here:

Before applying 

Before you apply for a home loan, you should be looking to do two things:

  • Put yourself in the best position as a borrower.
  • Assess the lender market and the assistance program(s) relevant to you. 

Pre-approval 

After finding your lender you should apply to receive pre-approval. In the pre-approval or conditional approval process, your chosen lender will assess your ability to make repayments on your home loan.

To do this they will request the following documentation:

  • Multiple forms of identification.
  • Recent payslips or any proof of other income.
  • Proof of genuine savings.
  • A statement of any outstanding debts or credit.

Your lender will also assess your credit history and rating during the pre-approval process.

If your pre-approval request is denied, you will be able to reapply. It would be best to correct the issue that led to your denial before applying again.

Once granted, your pre-approval will last between three and six months.

Find your new home 

The most important part of the entire home loan process is finding your new home. Be sure to search the entire market for a home that’s perfect for you and your children with your price range in mind.

Remember that your pre-approval will only last for three to six months. Don’t stress if finding a house takes longer than this as you will be able to re-apply.

Property valuation 

After you have found your home, it will need to be assessed by your lender to ensure that it meets their lending criteria.

A property valuation can take anywhere between one and seven days depending on the method of valuation chosen by your lender.

Formal approval 

Once the valuation has been completed you will then be subject to a formal approval from your lender.

Since you have already received pre-approval, it is likely you will receive formal approval quite soon after applying. However, if your financial situation has changed, your formal approval could be denied. This financial situation change could include:

  • An income decrease.
  • Losing your job or moving to another.
  • You have taken on more debt.
  • Your living expenses have grown.

Contract of sale and settlement 

Once your formal approval has come through, you will be sent the contract of sale and home loan contract. It is very important to check through the contents of these documents closely to ensure you understand what it is you are agreeing to and signing.

It may be worth enlisting the help of a mortgage broker or legal representative as they will be able to explain these documents to you clearly and give you a better understanding of them.

Once these contracts have been signed, you will be able to negotiate a date of settlement with your vendor and before you know it, you and your children will be in your brand new home.

How to prepare yourself to secure a home loan as a single mother

Assess your income

You need to work out every single detail of your income. Income does not only have to be in the form of payment from an employer, it can also come through:

Work out your living costs

It is important in the process of applying for a low income home loan that you understand exactly where every piece your income is going to.

After working all of this out, arguably the hardest part comes in finding ways to cut back on these costs. This may be difficult with children, but it could be a major difference in whether or not you receive the home loan you want.

Prepare a budget

This budget could be weekly, fortnightly or even monthly. It would allow you to have control over your income and how far you can stretch it.

If you are unsure about how to prepare a budget, there are many resources online that can help you.

Clean up your credit history

Lenders will have a close look at your credit history. A bad credit history means you will have less leverage with lenders and be classified as a high risk borrower.

If you have any outstanding debts, you should be definitely looking to clean those up as soon as possible.

Still have questions about low income home loans for single mothers?

How much can I borrow with a low income?

Depending on your income and situation, how much you can borrow for a home loan is a sliding scale. To get an estimate on this, use Savvy’s borrowing calculator.

If I have bad credit can I still get one of these loans?

If you are a single mother with bad credit you may still be able to receive a low income home loan. However, it may be a good idea to research bad credit home loans. 

What benefits does buying a house get me as a single mother?

Purchasing a house is a great way of working towards long term financial stability. While at times it may be difficult to make your home loan repayments, owning a home is a far better financial decision over the long term in most cases than living in rentals.

Are there any lenders that specialise in low income home loans for single mothers?

No lender necessarily specialises in this category, but there are many that can offer impressive terms. Each of the Big Four banks offer these, as well as many other smaller lenders.

Would a mortgage broker help my situation?

A mortgage broker could certainly help you find the right deal. Many will charge far less than what you would expect with some even charging nothing at all.

You should do considerable research on a mortgage broker before using them. It would be best to find one who has worked with people in a similar situation to you.

Should I be looking for any particular type of house?

It depends on your situation and how many children/other family members you are supporting. However, many people on low income find success in the unit/townhouse market and also regional areas.

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