Budget 2021: Single parents can buy house with just 2pc deposit

Single parents will need a deposit of only 2 per cent to buy a house through a federal budget strategy designed to get more people into their own homes.

Single parents will be big winners in the federal budget on Tuesday, with the government to introduce a scheme that will get them into the property market with just a 2 per cent deposit.

The government will on Saturday release a three-pronged strategy to boost home ownership rates, with a focus on getting more single mums into their own homes.

Single mum Leanne Pierce — with her children James, Adam, Connor and Ava — says the new budget measures could be life-changing for families likes hers. Picture: Richard Dobson

From July, single parents with dependent children will be able to buy a home with as little as 2 per cent of a deposit with the federal government guaranteeing the remaining 18 per cent.

The scheme, to be called the Family Home Guarantee, is based on the successful First Home Loan Deposit Scheme (FHLDS), which helps first-homebuyers who have saved a deposit of 5 per cent, and will be limited to 10,000 people.

But the government is hinting it will be expanded when those loans are exhausted, because it estimates there are 125,000 single parents with dependent children who are eligible, of which more than 80 per cent are women.

Other measures to boost home ownership rates to be announced on Saturday include lifting from $30,000 to $50,000 the amount that can be released under the First Home Super Saver Scheme, and adding another 10,000 places to the FHLDS to be called the New Home Guarantee, which will be confined to new builds.

Treasurer Josh Frydenberg said housing would be a centrepiece of Tuesday’s budget.

“This budget is about more homes for more people to support families and increase their quality of life,” he said.

Treasurer Josh Frydenberg says he will deliver a ‘pandemic budget’ on Tuesday. Picture: Gary Ramage

Mr Frydenberg said the ­initial 10,000 loans were a “first step” and the government would evaluate what further support was needed based on demand and the implementation of the program.

“This is giving an opportunity to single parents with dependants with a household income under $125,000 to get into home ownership,” he said. “We will go further based on the success of this ­program.”

The Family Home Guarantee will have identical price caps to the FHLDS, which ­restricts the amount purchasers can spend on a property, depending on its location.

In Sydney and regional centres in NSW single parents will be able to buy a property worth up to $700,000, or $450,000 in the rest of the state.

To qualify for the scheme a single parent will be allowed to earn up $125,000 a year — excluding child support payments — and can apply until their child turns 21, as long as they are wholly or substantially dependent on their parent and earn less than $6403.

Lucy Good, founder of single mums support service Beanstalk Mums, described the new scheme as “a really good thing”.

She said many of the women she dealt with had good jobs and reasonable ­incomes “but stretching that across a whole family is really difficult on one income”.

“This is really going to help those mums who have got the job but obviously haven’t got the mortgage and that’s going to be brilliant for them,” she said.

Mr Frydenberg said he would deliver “a pandemic budget” on Tuesday, focused on cutting unemployment.

“There’s a lot of uncertainty out there — India, the statewide lockdown in Western Australia recently, monetary policy is constrained — so we can’t take the recovery we’ve seen to date for granted, we’ve got to lock in those gains, we’ve got to secure the recovery and we have a historic opportunity to drive the unemployment rate not just to where it was pre-pandemic but even lower,” he said.

“The last time we had sustained unemployment un­der 5 per cent was between 2006 and 2008, before that you’d have to go back to the 1970s.”

Single mum of four and nursing student Leanne Pierce rents and has been trying to save for a house for two years.

Ms Pierce, 36, would be able to afford mortgage repayments but said she was “struggling” to save enough for a housing deposit in the current million-dollar market. She said the government guarantee would be life changing.

“It’s been really stressful trying to save, the current housing market is so high-priced and as the sole parent it’s impossible to afford,” Ms Pierce said. “I’ve done the maths, repayments would be lower than my rent right now, but with house prices so high it would take me five years to save enough for a deposit.

“At the moment, it just feels ­impossible.”

Housing Minister Michael Sukkar said the scheme offered “an unprecedented level of ­assistance to first-homebuyers and single parents to get them over the deposit hurdle”.

The price caps in the New Home Guarantee scheme will be higher than under the ­existing FHLDS.