If you’re considering a divorce, one of the concerns you’re likely to have is how your property assets will be divided and where you are both going to live in the short, medium and longer term. We’ve helped an increasing amount of new and existing clients navigate separation and divorce and no one situation is the same. While you are no doubt going through an emotionally and mentally taxing time, we are here to help you workshop practical solutions based on your unique circumstances, with a compassionate, patient and sensitive approach.
What are my options for buying a home after divorce?
The right path forward for buying a home after divorce depends on your personal circumstances, your borrowing power, and whether you’re eligible for government support.
Here, we’ll break down the main options available to Australians looking to buy a home after divorce, including the Family Home Guarantee, refinancing strategies, and considerations to strengthen your chances of loan approval.
How Divorce Affects Your Borrowing Power
When you apply for a loan after separation, lenders look closely at your new financial position. Some of the biggest factors include:
- Division of assets – property settlements may affect how much equity or cash you walk away with
- Ongoing commitments – child support or spousal maintenance payments reduce your borrowing capacity
- Income – lenders will look at your employment stability and income streams
- Credit history – if joint debts weren’t managed well during the separation, your credit score may take a hit
- Existing loans or liabilities – any remaining joint loans (car loans, credit cards, personal loans) may also be factored in.
The good news? Lenders assess you as an individual once your financial separation is finalised – meaning you get a fresh start, provided your documentation is in order.
Option 1: Buying Out Your Ex-Partner’s Share of the Family Home
For many people, staying in the family home is the preferred option – especially if children are involved. In this case, you may be able to buy out your ex-partner’s share through refinancing.
How it works:
- You refinance the home loan into your name only
- The settlement payout to your ex is funded by either your equity in the property or additional borrowing
- The bank reassesses your ability to service the loan on your income alone
This option works best if:
- You have enough equity built up in the property
- Your income supports the refinanced loan and;
- You have a clean repayment history.
Option 2: Purchasing a New Property on Your Own
If keeping the family home isn’t possible or desirable, your next option is buying a new property independently.
- Deposit source: You may use funds from the property settlement, savings, or even a guarantor arrangement.
- Borrowing power: Your loan size will depend on your income, liabilities, and ongoing commitments
- Timing: Many people wait until the financial settlement is complete before applying, as lenders want to see finalised agreements.
Family Home Guarantee
The Family Home Guarantee (FHG) allows eligible single parents with at least one dependent child to buy a home with as little as a 2% deposit, without paying Lenders Mortgage Insurance (LMI).
Key points:
- Available to both first home buyers and previous homeowners (provided you don’t currently own property).
- Must be an Australian citizen or permanent resident
- Income cap applies ($125,000 per annum for singles, excluding child support payments)
- Applies to both new and existing homes
- Price caps vary across state and territories and differ depending on whether a buyer is purchasing in a capital city, regional centre, or elsewhere. For Perth the current threshold is $600,000 and $450,000 in other areas in WA. (The federal Labor Government committed to increasing price thresholds as part of its 2025 election campaign, but for now the above remains in place.)
For many recently divorced parents, this scheme can make a big difference – enabling them to buy sooner rather than later.
Option 4: Co-Ownership Arrangements
Another path to home ownership after divorce is buying with someone else, such as a family member, close friend, or even a new partner. In some situations, we have also seen co-ownership arrangements set up with the ex-partner as an ongoing arrangement.
- Benefits: Shared deposit, combined borrowing power, and shared expenses
- Considerations: Legal agreements should be in place to outline ownership shares, exit strategies, and responsibilities.
This option isn’t right for everyone, but it can provide a stepping stone into the property market if going solo isn’t immediately viable.
Practical Tips to Improve Your Home Loan Approval Chances
Get your finances in order
- Close joint accounts and loans where possible
- Maintain a strong repayment history during and after separation.
Show stable income
- Lenders want to see consistent employment or reliable income sources.
Understand how child support is treated
- Some lenders have different policies around how child support is treated as income, and will likely want to see it being paid for 6 months. It will also depend on the age of the dependent(s). A good mortgage broker can walk you through the nuances of this.
Save as much deposit as you can
- Even with schemes like the Family Home Guarantee, additional savings strengthen your application.
Seek pre-approval
- It helps you to understand your budget shows sellers you’re a serious buyer.
Be open to all possibilities
You may need to think outside the square, or what you had originally planned. Do you need to stay in the same area, or could you move to a more affordable suburb? Could we workshop some alternative ideas that will allow you to live more comfortably with a long term plan in place to get back where you want to be financially – rather than taking on a large mortgage.
How a Mortgage Broker Can Help
Buying a home after divorce can feel daunting – but you don’t have to figure it out alone. An experienced mortgage broker can:
- Assess your borrowing power post divorce
- Explain how lenders view things like child support and property settlements
- Help you access schemes like the Family Home Guarantee
- Compare dozens of lenders to find the right fit for your new circumstances
- Guide you through pre-approval, refinancing, or buying fresh.
Starting over after divorce isn’t easy, but owning a home again is achievable with the right strategy. Whether you want to stay in the family home, buy something new, or take advantage of government support, there are clear pathways available.
Every situation is unique, so the best next step is to seek advice tailored to your circumstances.
👉 If you’re navigating property decisions after divorce and want to explore your borrowing options, Base Home Loans is a Perth based mortgage broker that can help you find the right solution for your fresh start. Get in touch with us today to get started.
Disclaimer: The information provided on this blog is for general informational purposes only and does not constitute financial or professional advice. While we strive to provide accurate and up-to-date information, mortgage laws and regulations can change, and individual circumstances may vary. We recommend consulting with a qualified financial advisor or mortgage broker to assess your specific situation and needs. Base Home Loans is not responsible for any actions taken based on the content of this blog. Always conduct your own research and consider seeking professional advice before making financial decisions.
