Buying your first home after separation puts you in an unusual position. You're technically a first home buyer if you didn't own property during the relationship or if your name wasn't on title, but your financial starting point is different. You might have savings from a settlement, access to equity, or shared debts that affect what lenders will approve.
First Home Buyer Eligibility When You've Separated
You're generally eligible for first home buyer schemes if you've never owned property in Australia, regardless of whether your former partner has. In most states, eligibility hinges on your individual ownership history, not your relationship status. Queensland, South Australia and Western Australia require that your spouse or domestic partner also hasn't owned property, which can complicate things if you're still legally married but separated. In South Australia, for contracts from 13 February 2025, you're ineligible if your spouse or domestic partner owns or has previously owned residential property anywhere in Australia. The definition of spouse often includes de facto relationships, so check the specific state requirement before assuming you qualify.
Consider someone separating in Victoria who never held title to the family home. They're purchasing an established home valued at $580,000 with a 10% deposit from their settlement. They qualify for the full stamp duty exemption because the property is under $600,000 and they meet the residency requirements. The exemption saves roughly $30,000 in upfront costs, which means they can use settlement funds for furniture, minor repairs, or hold a larger buffer. They also access the Australian Government 5% Deposit Scheme using a 10% deposit instead of the minimum 5%, which gives them a slightly lower loan amount and more equity from day one.
How the 5% Deposit Scheme Works After Separation
The Australian Government 5% Deposit Scheme lets eligible first home buyers purchase with a 5% deposit without paying Lenders Mortgage Insurance. Housing Australia guarantees the gap between your deposit and 20% equity, so lenders treat the loan as if you put down a full 20%. There are no income caps and no annual limits on the number of places available. Applications go through participating lenders, not directly through Housing Australia.
Property price caps vary by state and location. In New South Wales, the cap is $1,500,000 for Sydney and regional centres but drops to $800,000 outside those areas. In Victoria, the cap is $950,000 for Melbourne and regional centres, $650,000 elsewhere. Queensland buyers face a $1,000,000 cap in Brisbane and regional centres, $700,000 in other areas. Western Australia applies an $850,000 cap in Perth and metro postcodes, $600,000 across the rest of the state. Check the postcode search tool at firsthomebuyers.gov.au to confirm which cap applies to your target suburb.
You can combine this scheme with state and territory stamp duty concessions and grants. You cannot combine it with Help to Buy. Loan features depend on your lender, so confirm whether offset accounts, redraws, and split loan structures are available before applying. Some participating lenders restrict features on loans under the scheme, which affects how you manage repayments and access to funds later.
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State Grants and Stamp Duty Concessions You Shouldn't Miss
New South Wales offers a $10,000 grant for new builds or substantially renovated homes under $600,000, or land and build packages under $750,000. The grant doesn't apply to established homes. The stamp duty exemption is more flexible: you pay no transfer duty on homes up to $800,000 and get a partial concession between $800,001 and $1,000,000, whether the home is new or established. You must move in within 12 months of settlement and live there for at least 12 continuous months.
Victoria provides a $10,000 grant for new homes valued up to $750,000. Stamp duty is fully exempt on properties valued up to $600,000, with a sliding concession up to $750,000. Both new and established homes qualify for the duty concession. Queensland offers a $15,000 grant for new homes under $750,000 for contracts from 1 July 2026. The stamp duty treatment differs depending on whether you're buying new or established. For established homes, you receive a concession that reduces duty but doesn't eliminate it entirely. The maximum concession deduction is $17,350 for properties under $709,999, phasing out at $800,000. For new homes and vacant land, you receive a full transfer duty concession with no price cap for contracts from 1 May 2025.
Western Australia removed the geographic distinction between Perth and regional areas from 7 May 2026. A single statewide threshold now applies. You pay no duty on homes valued up to $600,000, with a concessional rate between $600,001 and $800,000. Vacant land is exempt up to $450,000, with concessions extending to $550,000. The $10,000 grant applies to new homes valued under $800,000 south of the 26th parallel and under $1,000,000 to the north. From 7 May 2026, you can access the duty concession even if the property value exceeds the grant cap, which opens up more options in higher-priced suburbs.
South Australia provides a $15,000 grant and full stamp duty relief on new homes, with no price cap for contracts from 6 June 2024. Neither the grant nor the duty relief applies to established homes. Tasmania increased its grant to $20,000 for new homes from 1 July 2026, subject to final assent. The duty exemption for established homes that applied until 30 June 2026 has ended. The Australian Capital Territory removed both the property value limit and income threshold for the Home Buyer Concession from 1 July 2026, meaning eligible buyers are fully exempt from conveyance duty regardless of the home's value or household income. The Northern Territory offers a $50,000 grant for new homes purchased or built between 1 October 2024 and 30 September 2027, with no cap on purchase or build price.
Structuring Your Deposit When Funds Come From Settlement
Lenders treat settlement funds differently depending on how they were received and how long they've been in your account. Cash settlements held in your own account for three months or more are typically treated as genuine savings. Funds received more recently may still be accepted but require additional documentation, including a copy of your binding financial agreement, consent orders, or court order showing the amount and that it's been paid in full.
If you're receiving equity rather than cash, the timing becomes more complicated. You might need to sell the former family home or refinance to release your share before you can access funds for a deposit. Some lenders will consider an application before settlement if you can demonstrate the amount you'll receive and provide a confirmed settlement date, but most prefer to see funds in your account before issuing formal approval. If you're using a family member's gift to top up your deposit, lenders require a statutory declaration confirming the funds are a gift, not a loan, and that there's no obligation to repay.
In situations where you're separating and buying at the same time, consider someone who's entitled to $90,000 from the sale of a jointly owned property. The sale won't settle for another six weeks, but they've found a home they want to purchase. They apply for pre-approval and provide a copy of the signed contract of sale and settlement statement showing their entitlement. The lender issues conditional approval based on the expected deposit amount, with final approval subject to the funds being received and verified before their purchase settles. They use a 60-day settlement period on their purchase contract to allow time for their sale to complete and funds to clear.
Fixed or Variable Rate Structures for First Home Buyers
A fixed rate locks your repayment amount for a set period, usually between one and five years. You'll know exactly what you're paying regardless of whether the Reserve Bank moves rates up or down. The limitation is that most fixed loans restrict additional repayments, don't offer offset accounts, and charge break costs if you need to refinance or sell before the fixed term ends.
A variable rate moves with the market. Your repayments can increase or decrease depending on lender rate changes. You generally have access to an offset account, can make unlimited extra repayments without penalty, and can refinance or sell without break costs. If you're rebuilding savings or expect irregular income while transitioning from joint to single finances, the flexibility of a variable loan often outweighs the certainty of a fixed rate.
Some buyers split their loan, fixing part for stability and keeping part variable for flexibility. You might fix 50% or 60% to protect against rate rises and leave the rest variable so you can make extra repayments or use an offset account. The approach works well when you want some certainty but expect to receive lump sums from settlement, tax returns, or bonuses that you'd like to put toward the loan. Just confirm with your lender how the split affects offset account functionality, as some lenders only link the offset to the variable portion.
Using the First Home Super Saver Scheme to Boost Your Deposit
The FHSS Scheme lets you make voluntary contributions into your superannuation fund and later withdraw eligible amounts to use as a home deposit. Concessional contributions are taxed at 15% instead of your marginal tax rate, which creates a tax saving if you're earning above the tax-free threshold. You can release up to $15,000 of contributions from any single financial year, with a total cap of $50,000 across all years.
You need to apply to the ATO for a determination before you sign a purchase contract. The determination tells you how much you're eligible to release. Once you have a signed contract, you apply to the ATO to release the funds. The amount released includes your contributions plus associated earnings, minus a withdrawal tax. The process takes several weeks, so factor that into your timeline.
This approach works well if you've been making extra super contributions during the separation process or if you have time to build up contributions before you're ready to buy. It's less useful if you need to access your deposit immediately or if you've already received a cash settlement that exceeds what you could accumulate through super contributions in a reasonable timeframe. Speak with a financial adviser or accountant to confirm whether the tax benefit justifies the timing and liquidity constraints, particularly if you're managing other financial commitments from the separation.
What Lenders Actually Assess on Your Application
Lenders assess your income, your existing debts, and your living expenses to determine how much you can borrow. If you're separating, they'll want to see that any shared debts have been split or refinanced and that you're no longer liable for your former partner's commitments. Joint debts still appearing on your credit file can reduce your borrowing capacity even if your separation agreement says your former partner is responsible.
If you're receiving child support or spousal maintenance, most lenders will include that as income, but they often discount it or require evidence that payments are being made consistently. Bank statements showing regular deposits over at least three months are usually required. If you're paying child support or maintenance, lenders deduct that amount from your available income before calculating what you can afford to borrow.
Your employment history and income stability matter more when you're applying solo. Lenders prefer to see at least three to six months in your current role if you're a permanent employee, or two full years of tax returns if you're self-employed or on a contract. If you've recently changed jobs as part of relocating after separation, some lenders are flexible if you're in the same industry and your income has increased or stayed consistent. Documentation becomes more detailed when your circumstances don't fit the standard employee profile, so gather payslips, tax returns, and employment contracts before starting your home loan application.
Call one of our team or book an appointment at a time that works for you. We'll walk through your separation agreement, your deposit structure, and which state or federal schemes apply to your situation so you know exactly what you're eligible for before you start looking at properties.
Frequently Asked Questions
Can I use first home buyer schemes if I'm separated but my ex-partner owned property?
In most states, your eligibility depends on your individual ownership history, not your former partner's. However, Queensland, South Australia and Western Australia require that your spouse or domestic partner also hasn't owned property, which can affect you if you're still legally married but separated.
How do lenders treat deposit funds from a separation settlement?
Cash settlements held in your account for three months or more are typically treated as genuine savings. Funds received more recently are usually accepted but require documentation such as a binding financial agreement, consent orders, or court order showing the amount and that it's been paid in full.
Can I combine the 5% Deposit Scheme with state stamp duty concessions?
Yes, you can combine the Australian Government 5% Deposit Scheme with state and territory stamp duty concessions and grants. You cannot combine it with Help to Buy, but most other state schemes can be used alongside it.
Do joint debts from my relationship affect how much I can borrow?
Yes, joint debts still appearing on your credit file can reduce your borrowing capacity even if your separation agreement says your former partner is responsible. Lenders assess all debts listed under your name when calculating what you can afford to borrow.
Should I choose a fixed or variable rate for my first home loan after separating?
A variable rate usually offers more flexibility if you're rebuilding savings or expect irregular income, as it allows unlimited extra repayments and access to an offset account. A fixed rate provides certainty but restricts additional repayments and charges break costs if you need to refinance early.
