For buyers with family support

Family guarantee
home loans.

A family guarantee lets a parent use part of their home's equity as extra security — so you can buy sooner, often with a much smaller deposit and without Lenders' Mortgage Insurance. Here's exactly how it works, and what your family takes on.

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Deposit snapshot

What a guarantee can change.

Purchase price$700,000

Normally (20%)

$140,000

deposit to dodge LMI

With a guarantee

from $0

cash deposit possible

Indicative LMI avoided on this price: $19,285

Illustrative only. Actual deposit, guarantee amount and LMI depend on the lender, the guarantor's available equity, and your full circumstances.

The basics

What is a family guarantee?

A family guarantee — also called a family pledge, guarantor loan, or security guarantee — is an arrangement where a family member, usually a parent, offers part of the equity in their own property as additional security for your home loan.

Crucially, your guarantor doesn't hand over any cash. They're not gifting you a deposit. Instead, the lender takes a limited guarantee secured against their home, which closes the gap between your savings and the 20% deposit a lender normally wants to see. That's what lets you borrow more of the purchase price — sometimes all of it, plus costs — without paying Lenders' Mortgage Insurance.

The guarantee is limited to a specific dollar amount (not your whole loan), and it can usually be released later once you've paid the loan down or your home has grown in value. It is one of the most common ways first home buyers with a strong income but a thin deposit get into the market years earlier.

Step by step

How a family guarantee works.

It sounds complex, but the shape is simple. Four moving parts, and a broker handles the structuring so the guarantee is no larger than it needs to be.

01

You find a property

Say you want to buy a $700,000 home but have only saved $20,000 — well short of a 20% deposit. On your own, you'd face a high-LVR loan and a large LMI premium.

02

Your family provides a limited guarantee

A parent who owns their home offers a limited guarantee — often around 20% of the purchase price plus buying costs — secured against their property. They provide security, not cash.

03

The lender combines both securities

With your new home and the guaranteed portion of your parents' home as combined security, the effective LVR drops below 80%. You can borrow up to 100% of the price plus costs, and LMI falls away.

04

The guarantee is released later

As you repay the loan and your home's value rises, your standalone LVR drops. Once it's comfortably under 80%, the guarantee can be removed and your parents' home is fully released.

Both sides of it

The benefits — and the responsibilities.

A family guarantee is powerful, but it asks something real of your family. An honest broker walks both parties through it before anyone commits.

What it can unlock

Buy years sooner, without waiting to save a full 20% deposit.
Avoid Lenders' Mortgage Insurance, which can run to tens of thousands.
Borrow up to 100% of the price plus costs in many cases.
Keep more of your savings as a buffer for moving and emergencies.

What your family takes on

The guarantor is legally liable for the guaranteed portion if you can't pay.
Their home is used as security and is at risk in a worst-case default.
Guarantors should get independent legal and financial advice first.
It can affect the guarantor's own future borrowing until released.

Real client story

Stable income, almost no savings — in their own home anyway.

One of our clients had a steady, reliable income but, after years of paying rent, almost nothing saved for a deposit. On paper they could comfortably afford repayments — they just couldn't get over the deposit hurdle.

Their parents owned their own home and were willing to help. Using a family guarantee over a portion of their parents' equity, we structured a loan that covered the purchase price plus most of the buying costs — with no LMI and without waiting years to save a larger deposit.

We kept the guarantee limited to only what was needed, and mapped out how it could be released down the track as the loan reduced. Both the client and their parents understood exactly what they were taking on before anything was signed.

The above example is based on a real client scenario. Every application is subject to individual circumstances and lender approval. This is general information within Australian Credit Licence scope and is not financial advice — a guarantor should seek independent legal and financial advice before proceeding.

Keep readingFirst home buyer schemes, deposits & grants

Family guarantee FAQs

Questions, answered.

No. A family guarantee uses the equity in the guarantor's property as additional security — no cash changes hands. They are providing security, not gifting a deposit.

No. The guarantee is limited to a specific dollar amount — typically just enough to bring your effective LVR below 80% plus costs — not the full loan. A broker structures it so the guarantee is no larger than necessary.

Usually, yes. As you repay the loan and your property's value grows, your standalone LVR falls. Once it's comfortably below 80%, you can apply to release the guarantee and your guarantor's property is freed.

Most lenders require an immediate family member — usually a parent — who owns property with enough available equity. Some lenders extend this to siblings or grandparents. Eligibility varies by lender.

Generally, yes. By bringing your effective LVR below 80%, the arrangement removes the need for Lenders' Mortgage Insurance, which can save tens of thousands on a typical purchase.

If you can't meet your repayments, the guarantor is liable for the guaranteed portion, and their property is at risk in a worst-case default. This is why independent legal and financial advice for the guarantor is essential before signing.

Could a family guarantee
get you in sooner?

Ask a licensed broker whether a family guarantee suits your situation — and what it would mean for whoever helps you. No phone number, no obligation.

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