Considerations on buying your first home with a single income

Don’t be put off from buying a home on a single income. In fact, it could be one of the best things you can do for your financial future. While buying a home solo can be a little more challenging than purchasing a property as a duo, it’s entirely possible if you play your cards right.

So, if you’re looking to buy your first home on a single income, we’ve pulled together some key considerations to keep in mind when buying a home solo.

Can a single income person buy a house?

Absolutely! The process of buying a home solo is much the same as purchasing a property as a couple. That said, it can be a little more difficult buying with one income instead of two. To begin with, you’ll need to stump up the deposit yourself. And there’s also the possibility that your borrowing power will be lower than dual-income applicants. But there’s also the freedom that comes with buying a home solo.

As a solo buyer, you have complete control over the home-buying process. From choosing the location to settling on the type of property you’d like to purchase, it’s entirely up to you. There’s no need to compromise or negotiate with your partner. Instead, you’re in the driver's seat from start to finish.

Considerations for solo first home buyers

As a solo buyer, there are a few key factors worth considering when buying your first property.

Get your finances in order

When it comes to your finances, there are three key areas you’ll need to consider: your budget, your deposit and your credit score.

Before you start looking at properties, it’s worth spending a bit of time reviewing your budget. Assess your income and expenses to determine how much you can afford to spend on a mortgage. You can use a borrowing power calculator to work out your budget based on your income. Make sure you include the ongoing costs that come with owning a home, like loan repayments, council rates, utilities, maintenance and potential body corporate fees.

Before you buy a home, you’ll need to save up a deposit. Ideally, a 20% deposit is a good place to start, but this can be difficult on a single income. You can still get into the property market with a smaller deposit, but you’ll be charged lender’s mortgage insurance (LMI) to cover the extra risk to your lender. While your deposit is one of the biggest expenses that come with buying a home, don’t forget about the other upfront costs, like stamp duty, conveyancing fees and mortgage registration fees, to name a few. You’ll need to make sure you’ve got enough in the kitty to cover these costs too. You can use our stamp duty calculator to get an estimate of what these upfront costs could look like.

Lastly, take a moment to check your credit score. If it’s not up to scratch, you can buy yourself a bit of extra time to work on improving your score. As one of the main factors that lenders consider when assessing your loan, it’s essential to have a good credit score to support your application.

Check out your loan options

Once your finances are in order, you can start looking around for a loan product that suits your needs. With so many different lenders and home loans, it’s important to find a loan that aligns with your financial goals. From variable and fixed-rate loans to offset accounts and redraw facilities, there are plenty of options out there. Check out our blog on the different types of mortgages to learn more.

Once you’ve settled on a lender and a mortgage, it can be worth applying for pre-approval. Pre-approval outlines exactly how much your lender is willing to loan you, which can help you in your property search. Plus, it also indicates to real estate agents and sellers that you’re a serious contender.  

Finding the right property

Once you begin the property search, it’s essential to consider the location and the type of property. When it comes to location, you’ll need to find a balance between affordable suburbs and those closer to work or amenities. It can also be worth doing a bit of research to find areas with greater potential for property value appreciation and future growth.

You’ll also need to consider what type of property best suits your needs and budget. From stand-alone houses to townhouses and apartments, different types of properties offer different advantages and drawbacks. For example, if you’re set on buying a house, you might need to look at suburbs a little further out to find a property that fits your budget.

Check for government assistance

Not everyone can rely on financial assistance from their family when buying a home. Luckily, the government offers several schemes and programs designed to help first-time home buyers purchase a property sooner.

The First Home Owner Grant (FHOG) was introduced to offset the effect of the GST on home ownership. It is a national scheme funded by the states and territories and administered under their own legislation.

The Home Guarantee Scheme (HGS) is designed to help first-home buyers buy or build their home sooner. Housing Australia manages the Scheme on behalf of the Australian Government.

Buying your first home is no easy feat, especially when you’re doing it on a single income. That said, it’s still entirely possible to purchase a home as a solo buyer. If you’re looking for a loan to help you get there, check out what’s on offer with Unloan. From competitive interest rates to annual discounts and no Unloan fees*, we’ve designed a loan that’s simple to understand and easier to live with.

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This content has been created for educational purposes only. Unloan may not provide all features discussed. Visit our product page here to learn more about our home loan features.  

This article is intended to provide general information only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product advice. Please consider seeking financial advice before making any decision based on this information.‍

Unloan is a division of Commonwealth Bank of Australia.

Applications are subject to credit approval, satisfactory security and you must have a minimum 20% equity in the property. Minimum loan amount $10,000, maximum loan amount $10,000,000, and total borrowings per customer across all Unloan loans is $10,000,000. (For purchase loans a minimum 10% equity is required - however a Lenders Mortgage Insurance (LMI) premium and higher interest rate apply. In some cases, depending on the property’s location or type, an LMI premium may also be required for LVR between 70.01% to 80%). For loans with Lenders Mortgage Insurance (LMI) the minimum loan amount is $10,000, maximum loan amount is $3,000,000 and total borrowings per customer across all Unloan loans is limited to $3,000,000).

Unloan offers a 0.01% per annum discount on the Unloan Live-In rate or Unloan Invest rate upon settlement. On each anniversary of your loan’s settlement date (or the day prior to the anniversary of your loan’s settlement date if your loan settled on 29th February and it is a leap year) the margin discount will increase by a further 0.01% per annum up to a maximum discount of 0.30% per annum. Unloan may withdraw this discount at any time. The discount is applied for each loan you have with Unloan.

*At Unloan, we do not charge any annual, application, banking, account, transaction, late or exit fees. In certain circumstances you may be required to pay a Lenders Mortgage Insurance (LMI) premium. Learn more about why this is applied and how it works. Government fees may also apply. Learn more about government fees here. Your current lender may charge an exit fee when refinancing.