Grants, Schemes and LMI Options After Separation

Buying a home after a separation usually means doing it on one income, often while the previous property is still being settled, and that changes which schemes and grants apply. The RBA raised the cash rate by 0.25 percentage points to 4.85% on 3 November, and the ABS reported annual inflation of 4.3% in the year to September. Grants, concessions and LMI options can reduce the cash and insurance you need upfront, and this guide covers what is available to separated or divorced buyers.

Key takeaways

• The 5% Deposit Scheme has no income caps, no place limits and no LMI, so check it first.
• Every state and territory has its own grant, stamp duty concession or both, and most favour new homes, so check your state revenue office for current details.
• There is no LMI waiver based on separation or divorce, but some lenders offer no-LMI products with no occupation test.
• Single parents and guardians can buy with a 2% deposit, even if they have owned before, as long as they apply alone and hold no other property interest when the new home settles.
• You can often combine a grant, a concession and a super release, so check each one's conditions.

Federal help: deposit schemes and super

Three federal options matter most: the 5% Deposit Scheme, Help to Buy and the First Home Super Saver Scheme. You may have owned a home before, so check each scheme's prior ownership rules. It is also worth speaking with a family lawyer about your property settlement, as that sits outside what a broker can advise on.

5% Deposit Scheme

The 5% Deposit Scheme lets you buy with a deposit as low as 5%, or 2% for single parents and legal guardians, with no LMI. The government backs part of the loan instead. It has had no income caps and no limit on places since 1 October 2025, and Treasury advised that property price caps rose at the same time.

First home buyers and people who haven't bought in the last 10 years can use it. Single parents and guardians with a dependent can use the 2% stream even if they have owned before, as long as they apply alone and hold no other property interest when the new home settles.

You apply through a Participating Lender as part of a home loan application, not directly. Price caps vary by location, so check the price cap tool. You must live in the home as an owner-occupier, or the lender may require LMI or other costs.

Help to Buy

Help to Buy is shared equity: the government owns a share of your home alongside you. It contributes up to 30% of an existing home's price, or up to 40% of a new home's, and you need a deposit of at least 2%. When you sell or buy out the government's share, it shares in any gain or loss in proportion to its contribution.

The income caps from 1 July 2026 to 30 June 2027 are:

• $103,000 for a single applicant
• $165,000 for single parents and joint applicants

Applicants must be Australian citizens aged 18 or over who don't own property in Australia or overseas, and must live in the home. It can't generally be combined with other government help for the purchase, such as another shared equity scheme or a state or territory loan, but stamp duty concessions and grants are still allowed. Single parents who co-own a home can use it to buy out the other person's share, within the $165,000 cap.

First Home Super Saver Scheme

The ATO's First Home Super Saver Scheme lets you release voluntary super contributions of up to $15,000 a year, to a total of $50,000, for a first home. Non-concessional contributions release in full and concessional contributions release at 85%, both with associated earnings. The assessable amount goes in your tax return with a 30% tax offset, so speak with an accountant about the effect for you.

Release requests have timing rules that depend on your contract date, so request your release early and confirm the timing with the ATO before you sign a contract. You must move in as soon as practicable and live there for at least 6 of the first 12 months. Eligibility is individual, so each partner can use their own contributions for the same property.

State and territory grants and stamp duty

Every state and territory offers something, the rules differ, and most grants are for new homes only. Amounts, price caps and dates change often, so confirm current details with your state or territory revenue office before you rely on any figure.

Prior ownership rules matter more than most buyers expect. Several states exclude you if you or your partner have owned a home before, and that can catch people who held a share in a home before a separation. A share in a former home that is still being sold or settled may count, so check each rule against your situation.

Five ways to avoid or reduce LMI

Lenders mortgage insurance (LMI) usually applies when your loan is more than 80% of the property's value, known as the loan-to-value ratio (LVR). It protects the lender, not you, and at 20% equity it generally doesn't apply. There are five ways to avoid or reduce it:

1. Use the 5% Deposit Scheme, which removes LMI on a deposit as low as 5%, subject to price caps and a Participating Lender.
2. Qualify for a profession LMI waiver, where LMI isn't charged because of your job (most go up to 90% LVR).
3. Choose lender-paid LMI, where the loan is still insured but the lender pays the premium, which shows up in the pricing.
4. Pick a no-LMI product, which some lenders offer to any borrower at up to 85% or 90% LVR.
5. Save a larger deposit.

A waiver saves the LMI cost, but compare the rate, fees and features too. Risk fees, lender-paid LMI and different pricing can sometimes cost more over time than paying LMI. Lender criteria change often and all lending is subject to credit approval.

Can separated or divorced buyers avoid paying LMI?

There's no LMI waiver based on separation or divorce. Some lenders offer no-LMI products with no occupation test, so they're open to you. Others offer lender-paid LMI, where the loan is still insured but the lender pays the premium, which is reflected in the pricing. Other lenders may also have options, so ask a broker to check.

How to compare them

• Eligibility differs, so check each lender's income, registration, work history and employment conditions against your situation.
• If your own profession has an LMI waiver, ask a broker whether it applies to you.
• A waiver saves the LMI cost, but compare the rate, fees and features too, and weigh it against the 5% Deposit Scheme on total cost.

Lender criteria change often, and a broker can check which options you qualify for. All lending is subject to credit approval.

How to combine the options

You can often layer these options in a set order. Rules, caps and dates change and apply on the contract date, so confirm each step before you sign.

1. Check federal eligibility first: the 5% Deposit Scheme and Help to Buy suit different buyers, and Help to Buy can't generally be used alongside other government help for the purchase.
2. Add your state or territory support: the grant, the stamp duty concession and whether the home needs to be new.
3. Start a super release early: contributions are made in advance, and the ATO timing rules depend on your contract date, so check them before you sign.
4. Match your situation to an LMI option and compare it against the 5% Deposit Scheme on total cost, not just on LMI.
5. Check prior ownership and residency rules: the First Home Super Saver Scheme requires you to live in the home for at least 6 of the first 12 months, the 5% Deposit Scheme and Help to Buy require you to live in the home, and several programs exclude people who have owned before. Prior ownership can include a share in a home that is being sold or settled, so check each program.

Price caps and income caps decide more outcomes than the headline amounts, so confirm them for the exact property and your income before you sign a contract. If this is your first purchase since the split, our first home after divorce page walks through the wider process.

Frequently asked questions

Can I use the 5% Deposit Scheme if I owned a home before?

Single parents and guardians with a dependent can use the 2% stream even if they have owned before, as long as they apply alone and hold no other property interest when the new home settles. Others need to meet the 10 year rule.

Does a share in a former home count as prior ownership?

It can. Several state programs exclude anyone who has owned before, so check each rule.

Can Help to Buy help me buy out my former partner?

Single parents who co-own a home can use it to buy out the other person's share, with an income cap of $165,000.

Small steps taken early can give you more options later. [Book an appointment] at a time that suits you, and bring recent payslips, details of any child support or maintenance, your settlement documents and your savings records.

This article is general information only and doesn't consider your personal circumstances. Grants, concessions and lender policies change, and all lending, including any LMI waiver, is subject to lender criteria and credit approval. Speak with your accountant about tax.

Frequently Asked Questions