Top Tips to Buy a Two-Bedroom Home After Divorce

Eligible single parents can buy with a 2% deposit under the Australian Government 5% Deposit Scheme. They do not need to be first home buyers, but they cannot own or hold any interest in another property once the new home settles.

If you have recently divorced and have kids to house, a two-bedroom place can be a sensible, manageable place to start again. The hard part is usually not finding the home. It is working out which scheme suits your situation and in what order to do things. Here is how I would talk it through with a friend.

Which Federal Scheme Suits a Single Parent Buying Alone?

Two federal schemes can help a single parent buy. The 5% Deposit Scheme lowers the deposit you need, while Help to Buy has the government share the purchase price with you.

The 5% Deposit Scheme is covered in more detail on our page about the 5% Deposit Scheme, and the shared equity option is explained on our Help to Buy scheme page. Help to Buy participants cannot receive other Australian Government or state loan backing or shared equity support, and the 5% Deposit Scheme is Australian Government loan backing. Confirm with a participating lender or Housing Australia before choosing a path.

How Does the 2% Deposit for Single Parents Work?

Under the Australian Government 5% Deposit Scheme, an eligible single parent or legal guardian can buy with a 2% deposit, and no Lenders Mortgage Insurance (LMI) is payable. Housing Australia backs the lender for the part of the loan between your deposit and 20% of the property value.

There are no income caps. You must be single, meaning no spouse or de facto partner, and you must be the parent or legal guardian of at least one dependent child. You apply as an individual, you do not need to be a first home buyer, and you cannot own another property or hold any interest in one once the new home settles.

The trade-offs matter. The backing protects the lender, not you, so you still pay all the loan costs, including stamp duty and legal fees. You must move in within six months of settlement and keep living there while the backing is active, or the lender may require you to pay LMI. Both the purchase price and the lender's valuation must sit at or under the price cap for the suburb, which you can check in Housing Australia's postcode search tool. You can only apply through a participating lender.

Help to Buy for Single Parents: Income Limit and Trade-Offs

Help to Buy lets the Australian Government contribute 5% to 30% of the price of an existing home, in return for a matching share of the property. For single parent applicants, the income threshold is $165,000 from 1 July 2026, based on the taxable income on your most recent Notice of Assessment.

You must contribute the deposit the lender assesses you can afford, and it must be at least 2% of the price from savings. Child support payments are not counted in the taxable income used for the threshold. You also do not make monthly repayments or pay interest to the government on its share.

There are costs and risks. The government's share rises and falls with the home's value. If your taxable income goes over the threshold for two financial years in a row, you may be asked to repay some or all of its share, but only once you can afford to. You cannot rent out any part of the home, including a room, without written approval. The scheme also does not cover stamp duty, legal fees or building insurance.

Example: Buying a Two-Bedroom Home While the Old One Is Still for Sale

A single parent can still use Help to Buy if the former family home has not sold yet, as long as the rules about selling or buying out the other owner are met.

Consider a parent with one child who is divorced but still on the title of the former family home, with a sale under way. Help to Buy does not allow you to own property, but a single parent who owns jointly may still qualify if they plan to buy out the other person's share, or if they sell within four weeks of settling on the new home.

In this scenario, the parent gets conditional approval from a participating lender and Housing Australia before bidding or paying a deposit. They then time the sale of the old home to fall within the four weeks after settlement. The aim is to buy the two-bedroom home without waiting for the old sale to complete, although the timing has to work and the lender must be satisfied. If the old home does not sell within four weeks of settlement, Housing Australia may extend the period only in hardship or compassionate circumstances. An extension is not certain, so the parent should not rely on a slow sale being forgiven.

The 5% Deposit Scheme is stricter here, because you cannot hold any property interest once the new home settles.

Do State Grants and Stamp Duty Concessions Still Apply After Divorce?

State first home buyer concessions depend on your history of owning property, so a past marital home can rule you out. In New South Wales, for example, neither the buyer nor their spouse or partner can have ever owned or co-owned residential property in Australia to receive the first home buyers scheme concession.

Grants are often limited to new homes. The New South Wales and Queensland first home owner grants, for instance, are not available for established homes. Help to Buy participants can still receive first home owner grants and stamp duty concessions, so check your state revenue office before you commit to a property. If you are still working through your settlement, our first home after divorce page explains how a first home buyer is treated after separation.

Why Get Pre-Approval Before You Inspect Two-Bedroom Homes?

Pre-approval tells you how much a lender will let you borrow before you fall for a particular home. It helps you shop within a realistic range. Lenders look at your income, debts and living costs, so it helps to know your borrowing capacity early.

If you are using Help to Buy, Housing Australia says not to put a deposit down or bid at auction without conditional approval from a participating lender and Housing Australia. Our guide to getting loan pre-approval explains how the process works. The trade-off is that pre-approval is not a final offer, and a lender can change its decision if your circumstances change before settlement.

If you would like to talk through your options, call one of our team or book an appointment at a time that works for you. We will look at your situation, explain which scheme fits and help you plan your next move. You can also see our low deposit loans page, then book an appointment when you are ready.

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