The Barefoot Investor has shared an urgent warning against using the 2.5 per cent home deposit scheme after a single mum opened up on her heartbreaking struggles. 

Fiona wrote in to Scott Pape saying she believed she had achieved the Australian dream when she snapped up her first apartment with the 2.5 per cent deposit under the federal government's low income single parent deposit scheme.

But that dream has quickly unravelled.

Crippling interest rate hikes, soaring strata fees and cost‑of‑living pressures have pushed her to breaking point, leaving her struggling to keep up with mortgage repayments and forcing her to live in a share house with her teenage daughter and work three jobs.

In a heartbreaking twist, her daughter has even taken on a retail job after school to help the family get by.

Pape said he was 'not surprised' by Fiona's plight, blasting the low‑deposit schemes as a political disaster he has long warned about, labelling it the political equivalent of a 'crap in a paper bag'.

'You know what really stinks. They knew it was a bad idea,' he said in his weekly column. 

'Behind closed doors these politicians wouldn't let their kids sign up to these schemes, but they were happy to let other people's kids do it if it meant a few more years being chauffeured around in cars with the little flags on the bonnet.

'I fought with both the Coalition who dreamt it up and Labor who gleefully expanded it. Yet instead of telling the truth, they pointed to Treasury modelling that somehow, miraculously, said exactly what they wanted it to say.'

Fiona told Pape she was drawn in by government messaging promising a leg‑up for struggling buyers, taking the leap with a tiny deposit and borrowing 97.5 per cent of the purchase price.

Now, she says the reality is crushing.

'With the rise in interest rates and cost of living I can no longer sustain my mortgage,' she wrote. 

'The strata and council rates have also since increased substantially, and my daughter and I can no longer afford to live there. We are trying to rent it out but it's been vacant for eight weeks.'

Pape said Fiona had been on her own since she was 18 and simply wanted a better life for her daughter after enduring a string of bad relationships. 

'Every signal in the country, right from the very top, was pointing her in the same direction, this is how you get security,' he said.

'The trouble was, what she bought wasn't security. It was debt.

'And debt and security are not the same thing. Not even close.'

He warned debt locks people into a relentless grind, where rising costs constantly tighten the screws.

Fiona is now working three jobs, while her daughter picks up shifts after school.

Although the unit is finally being rented out, the income barely touches the sides once repayments, strata and rates are deducted – forcing the pair into a share house.

'Fiona didn't have dreams of becoming rich,' Pape said.

'She just wanted to be safe and secure, and give her daughter a different life than she had.'

Fiona’s struggle is far from unique. 

Her story comes as fresh warnings emerge that thousands of recent buyers could be plunged into negative equity - where you owe more than the home is worth - if property prices fall.

The Commonwealth Bank now expects Sydney house prices to drop six per cent this year, with Melbourne tipped to fall seven per cent.

Analysis from Canstar suggests buyers who entered the market with a five per cent deposit could be left with almost no equity or even owe more than their home is worth within months.

In Melbourne, a seven per cent drop could wipe out a low‑deposit buyer’s buffer entirely, despite a year of repayments.

Data insights director Sally Tindall said falling prices may sound like good news for hopeful buyers but it carries serious risks for those who have only just entered the market.

'However, for those who only recently scraped together a deposit to get into the market, these declines could leave them dangerously close to negative equity,' she said.

'A buyer who purchased with a 5 per cent deposit at the start of this year has very little buffer against falling property prices. 

'If CBA's forecasts play out, some recent buyers in Melbourne could owe the bank more than their home is worth by the end of the year.

'Negative equity isn't necessarily a crisis if you plan to stay put and keep making repayments, but it can become a major problem if you're forced to sell or want to refinance.'