I earn $120,000 as a single mum. Could I buy a home on my own?

You earn $120,000 a year.

You have one child.

You’ve built up some savings.

And lately you’ve started wondering:

Could I buy a home on my own?

Maybe you've even plugged your salary into an online borrowing calculator.

It spat out a number.

Then you changed one expense and suddenly the number dropped by $80,000.

Very reassuring.

The truth is, your salary alone can't answer this question.

If you came to me and said, “Eshanee, I earn $120k. How much can I borrow?”, I'd want to know a lot more about your life before giving you an answer.

Because two single mums earning exactly the same salary can have completely different borrowing capacities.

Let's say you're earning $120,000:

For this example, let's imagine you're:

• earning $120,000 before tax
• employed full-time
• raising one child
• renting
• saving towards a home
• carrying no major personal debt.

On paper, that might sound fairly straightforward.

But now I want to know:

• How old is your child?
• Are you paying childcare?
• Do you have a HECS/HELP debt?
• Do you have a credit card?
• Are you making car repayments?
• Do you receive child support?
• How much do you spend each month?
• And how much have you saved?

That's when the picture starts to become much clearer.

Your child matters to your borrowing capacity.

Lenders don't simply look at your $120,000 salary and calculate a loan from there.

Your dependants and household expenses form part of the lender's assessment of whether you can afford the proposed loan.

And when you're buying on one income, there isn't another salary sitting beside yours to absorb those costs.

That doesn't mean being a single parent stops you from buying.

It means we need to work with your real numbers.

Not a hypothetical borrower who apparently doesn't buy groceries, have subscriptions or occasionally spend $14 on a sandwich.

Childcare can make a big difference. This is a particularly important one.

If you're paying $2,000 or $3,000 a month in childcare, that's a significant ongoing household expense.

And yes, it can affect how much you're able to borrow.

Does childcare affect how much I can borrow for a home loan?

Yes.

But I'd also want to understand whether those costs are likely to change.

A three-year-old in childcare today may be at school in a couple of years.

• Your working arrangements could change.
• Your income could change.
• Your costs could change.

Your mortgage needs to work for the life you're living not just get through a lender's servicing calculator.

What about child support?

Tell me about it. Don't automatically assume income you receive won't matter, or that every lender will treat it exactly the same way.

Different lenders can have different policies around acceptable income and the evidence required to verify it.

That's one reason I wouldn't try to reverse-engineer your borrowing capacity from a generic online calculator.

As your broker, I'd look at your whole position and then compare suitable lender policies.

Your deposit might not be the problem you think it is.

This is particularly relevant for single parents.

Eligible single parents and single legal guardians may be able to purchase with a minimum 2% deposit through the single-parent stream of the Australian Government 5% Deposit Scheme.

There are currently no income caps or waiting lists, and eligible buyers can avoid Lenders Mortgage Insurance because the Australian Government provides a guarantee to the participating lender.

I've explained the scheme properly in this guide: “I'm a single mum. Can I buy a home with a 2% deposit?”

You can also check the eligibility requirements directly through the Australian Government's official information: Australian Government 5% Deposit Scheme — Single Parents

The important distinction, though, is this:

A smaller deposit requirement doesn't magically create borrowing capacity.

You still have to qualify for the loan.

Participating lenders apply their own lending criteria and need to assess whether you can service the debt. The government guarantee doesn't override that.

That's why I'd look at deposit and borrowing capacity separately.

You could have enough savings to satisfy the minimum deposit requirement but not enough borrowing capacity for the property you want.

Or you could have strong borrowing capacity but need more time to build the cash required for your purchase and associated costs.

We don't know until we run the numbers.

Let's talk about HELP/HECS, credit cards and car loans.

This is where seemingly small things can start changing the numbers.

You might earn $120,000 but also have:

• a HECS/HELP debt,
• a $10,000 credit-card limit,
• a $700 monthly car repayment,
• and childcare.

Another woman earning the same $120,000 might have none of those things.

They're not necessarily going to be able to borrow the same amount.

Sometimes changing a liability can materially improve your position.

Sometimes it barely moves the needle.

I'd rather know which one we're dealing with before you start reorganising your entire financial life.

Then there's the number I care about more.

Let's say a lender is prepared to lend you $600,000.

Great.

My next question isn't:

“How quickly can we get pre-approved?”

It's: “Would you feel comfortable owing $600,000?”

Because you're the person making those repayments every month.

• You still want to take your child away.
• You still want dinners out.
• You still need an emergency fund.
• You still want to buy something occasionally without calculating its impact on your mortgage amortisation schedule.

And there will inevitably be some ridiculous expense that appears at precisely the wrong time.

That's life.

The maximum a lender will approve and the mortgage you feel comfortable living with don't have to be the same number.

So, can you buy a home on $120,000?

Possibly.

But I can't responsibly tell you “yes, you can borrow $X” from your salary alone.

And neither can an Instagram post.

I'd want to see your:

income + savings + dependants + debts + childcare + living expenses + available schemes + buying costs.

Then we can work backwards.

Maybe buying in the suburb you originally wanted isn't comfortable.

Maybe an apartment is.

Maybe another area opens up.

Maybe you're six months away.

Or maybe you've spent the last two years assuming home ownership isn't possible when you're already in a position to start looking.

That's the answer worth finding out.

You don't need to have it all figured out before speaking to a broker.

This is probably the bit I'd want you to take away from this article.

You don't need to come to me knowing:

“I need a $642,000 loan with this lender and this government scheme.”

That's my job.

You can come to me and say:

“I'm a single mum. I earn $120k. I've saved $25k. Do I have any options?"

We can start there.

I'll look at the numbers, explain your options and tell you what's do-able.

And if you're not ready? At least you'll leave knowing what needs to happen next, rather than continuing to wonder.

Click here to chat to Eshanee about buying your first home

Any information or advice contained on the April Six Pty Ltd website is general in nature only and has been prepared without considering your individual personal objectives, financial situation or requirements. Before acting or relying on this information, you must consider the appropriateness of this information with regard to your individual circumstances and objectives.

April Six Pty Ltd is a Credit Representative of Astute Financial Management Pty Ltd | Australian Credit Licence 364253

© April Six Pty Ltd | ACN: 667183735 | Credit Representative Number 554762

Eshanee Collins is the founder of April Six, a Sydney-based mortgage broker for first home buyers and first-time property investors across Australia.

📱 0488 471 888 | @eshanee_thebroker | aprilsix.com.au