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Single parents and the 2% deposit

Under the Australian Government 5% Deposit Scheme, someone raising at least one dependent child on their own, as a parent or a legal guardian, can buy a home with a deposit of at least 2%, with no income cap and no lenders mortgage insurance. The Government gives the lender a guarantee that lets the buyer borrow up to 98% of the property’s value; the scheme’s guide for single parents still carries the older name, Family Home Guarantee.

The published conditions

These are the conditions as the scheme’s single parent page and guide set them out in October 2026. A Participating Lender confirms whether they are met; the scheme’s eligibility tool is only a guide.

  • Single, with a dependent childYou are single, and at least one dependent child is yours as parent or as legal guardian.
  • Citizen or permanent residentOn the Home Loan Date, the date you sign the loan agreement. A temporary resident, or someone approved for citizenship or residency who has not yet received the certificate or visa, does not meet this.
  • At least 2%, and less than 20%A deposit of at least 2% of the property value. With 20% or more saved after costs such as stamp duty and legal fees, the loan is not eligible, and you are expected to use as much of your savings as possible.
  • No other property, once the new home settlesThe details are in stop 4.
  • Living thereMoving in within 6 months of settlement (or of the occupancy certificate for a new build) and living there while the loan is covered. Renting the home out is not allowed during the guarantee.
  • 18 or olderOn the Home Loan Date.
  • Applying aloneNo joint applications.
  • Within the price capBoth the purchase price and the value the lender assesses must be at or below the cap for the location; for land with a separate build contract, the two together.
  • The right kind of loanA Participating Lender’s loan for a home you live in, repaying principal and interest over a term of 30 years at most; a new build can add up to 3 years, and those build years may be interest only.

Someone who qualifies both as a first home buyer and as a single parent must apply as a single parent.

Who counts as single

Single means having no spouse or de facto partner. Being separated is not enough: someone separated but not divorced is not considered single for the scheme.

The parent can be a natural parent, an adoptive parent or a legal guardian. The guide defines a legal guardian as one appointed by a court, with court documents such as a guardianship order.

Who counts as a dependent child

The definition comes from the Social Security Act 1991, and section 2.2.2 of the single parent guide sets it out. In every case the child lives with you; what else is needed turns on age.

  • Under 16: you carry legal responsibility, whether shared or full, for the child’s daily care and wellbeing.
  • 16 to 22: the young person relies on you wholly or substantially, and earns no more than $14,672.35 (effective 1 January 2026) in a financial year.
  • 16 and over, on a disability support pension: the young person counts as a dependent child.

The same section lists exclusions too; one is a young person who is paid a social security pension or benefit.

Property you already hold

This is the condition most shaped by separation. Section 2.5 of the guide names three kinds of interest that count: owning land outright (freehold), a long lease of 50 years or more, and company title.

Holding one of them is not the end of the matter. It is acceptable if you will let it go by the time the new home settles, or if it is a shared interest in the same home the loan is for and the loan makes you the only owner. That second route is how buying out a co-owner, such as a former partner, fits.

Section 2.5 casts the net wide: an interest counts wherever it is in Australia, whatever the property is used for, and whether or not you hold it alone.

A worked example

Example, figures invented

A single parent is buying a home the lender values at $600,000, within the cap for the area.

The usual 20% deposit
$120,000
The scheme’s minimum 2% deposit
$12,000
Loan at 98% of the value
$588,000
Most the guarantee could cover (18% of value)
$108,000

The guarantee’s limit is up to 18% of the property value, set during the application from the loan amount and the value. Under the guide, every cost of the loan stays with the buyer, repayments included, and so do stamp duty, the bank’s fees and legal costs.

What the guarantee leaves with you

The guarantee protects the lender, not the buyer. It is not a payment to you or a deposit; it lets the lender claim a shortfall, up to the agreed limit, if the loan defaults and selling the home does not cover what is owed.

The guide is direct about borrowing with 2%: more interest over the life of the loan, a bigger effect if rates rise, less equity at the start, and the chance of owing more than the home is worth if its value falls. A valuation below the price can mean a larger deposit or a smaller loan, and the scheme does not protect against changes in value. Building adds its own risks, such as delays, cost increases and a builder’s insolvency.

If the ongoing conditions stop being met, the guarantee may no longer apply and the lender may require lenders mortgage insurance or other costs. Help to Buy, the shared equity scheme on platform 3, cannot be used together with this scheme.