Family Help & Guarantor
Helping your kids buy: from lower-impact options to guarantor, in order
Help your kids buy in order of risk: government schemes and grants first, a cash gift second, a family guarantee last. Going guarantor puts a registered mortgage on your own home, and it only solves a missing deposit. It never fixes serviceability, which is whether your child's income can support the repayments in the lender's calculations.
There is a ladder of ways to help your kids buy a home. The lower-impact options come first. Most families start at the wrong end.
·
In short
Help your kids in this order. Government schemes and grants first. A cash gift second. Your own property on the line last. Going guarantor means you let your own property back part of your child's loan. A guarantee fixes a missing deposit. It never fixes serviceability - whether your child's income can support the repayments in the lender's maths. And it puts a registered mortgage on your home.
Step one: start with available schemes and concessions
Before any family money moves, check what the government will do. Under the federal 5% Deposit Scheme, eligible first home buyers can buy with just a 5% deposit. They also pay no LMI (lenders mortgage insurance - the fee banks charge buyers with small deposits). There are no income caps and no limits on places. Participating lenders and property price caps do apply. Housing Australia and firsthomebuyers.gov.au have the detail. In Queensland, the $30,000 First Home Owner Grant applies to new builds under $750,000. First home stamp duty concessions cut the upfront bill further - stamp duty is the state tax you pay when you buy. The Queensland Revenue Office publishes the thresholds.
The First Home Super Saver Scheme lets your kids build a deposit inside super, with tax advantages. Eligible single parents and guardians may buy with as little as a 2% deposit under the Family Home Guarantee. Help to Buy is a shared equity scheme. That means the government can contribute up to 40% of a new build's price and own that share, so your kids borrow less. Income caps are $103,000 for singles and $165,000 for couples.
Say your daughter has $35,000 saved and wants a $550,000 home. A 5% deposit is $27,500. If she is eligible and the price cap fits, her own savings could cover it under the 5% scheme - no LMI, no family money at risk.
I have seen parents sign guarantees for purchases that could have worked under the 5% scheme with without putting family property at risk. Nobody checked. Check this layer first.
Step two: a cash gift, done the way lenders want it
Lenders have a settled routine for gifted deposits. The written-policy pattern is consistent. The gift must be genuinely non-repayable - money your child never has to pay back. Most lenders want that confirmed by a statutory declaration, which is a short signed legal statement. And on loans that carry lenders mortgage insurance, most lenders want the gift to come from immediate family. They also want evidence the money actually landed in your child's account.
The catch people miss is called genuine savings. Lenders look at the LVR - how much of the property's value you are borrowing. At higher LVRs, many lenders still want around 5% of the price saved or held by the borrower over a period of months. A gifted lump sum does not always tick that box. There is a useful pattern here. A clean rental payment history can substitute for a savings record at a number of lenders. So a kid who has rented reliably, plus a gifted deposit, can be a workable file - at the right lender.
The practical rule: gift early, let the money sit, and keep the paper trail boring and complete.
Not sure which of these applies to you? That is exactly what an initial conversation can clarify.
Ask John how this applies to my situation or call 0451 389 800Step three: the family guarantee - what it actually does
Sometimes the deposit is the only missing piece and the schemes do not fit. Then the heavy tool is a family guarantee - some lenders call it a family pledge or parent equity. You promise to cover part of your child's loan, and you back that promise with a mortgage over your own property. Structured well, it can let your kids borrow the full purchase price. At some lenders, the buying costs can go on top.
Written policy is blunt about three things. First, the guarantee is limited, not open-ended. It is sized around the gap - roughly the deposit shortfall plus costs. Second, lenders cap how much of your property can be tied up. So a parent home that already carries a big loan usually rules the structure out. Third is the one families get wrong: a guarantee fixes deposit, not income. Every policy I have read requires the borrower to service the entire debt on their own numbers - meaning their income alone must support the repayments in the lender's maths. Several policies say outright that a guarantee cannot be used to make an otherwise declined loan work.
There are usage rules too. It is typically for a first or only property. One guaranteed loan per family is a common cap. And while the guarantee stands, many lenders will not allow cash-out or top-ups on that loan - so your kids cannot borrow extra against the property in the meantime.
| Structure | What it is | Effect on the loan | The main risk to weigh |
|---|---|---|---|
| Cash gift | Money given with no repayment expected, usually with a signed gift letter | Boosts deposit directly; lenders may ask where it came from and whether any of it is repayable | Once given, it is gone — and a gift that is secretly a loan can undermine the application |
| Family loan | Documented loan from parents, sometimes with interest or repayment terms | Lenders generally treat repayments as a liability, which can reduce borrowing power | Needs real documentation; undocumented "loans" create problems in both directions |
| Family guarantee | Parents’ property secures part of the loan — no cash changes hands | Can remove the deposit gap and LMI; the guarantee is usually released once equity targets are met | The guarantor’s property is genuinely on the line for the guaranteed portion — independent legal advice is standard for good reason |
General patterns only — each lender writes its own rules for gifts, family loans and guarantees, and the right structure depends on both generations’ positions. John checks the written policy before anyone commits. Not legal or financial advice.
The honest costs of going guarantor
A guarantee is not just a signature. It is a mortgage over your home. While it stands, your own options shrink. Refinancing - moving your own loan to a different lender or deal - is constrained. So is releasing equity, which means borrowing against the part of your home you own outright. If the loan fails badly, the lender can call on your property, up to the guaranteed amount. That is the deal. Price it into the family conversation.
The friction lenders add is deliberate protection. Independent legal advice is usually required. Some lenders interview the guarantor separately, with a gap of several days before signing. Your own credit history is checked too. A parent with a recent hardship arrangement, or messy repayment conduct, can sink the structure even when the kids are clean.
Two alternatives sit nearby. If you would genuinely benefit from the purchase, lenders may prefer you as a co-borrower rather than a guarantor. That means you go on the loan itself. Lenders actively test for substantial benefit and for financial abuse now, which is a good thing. And deposit-boost style second-mortgage structures can close a deposit gap without putting parental property in - at a higher cost. They belong near the bottom of the list.
The order, and what makes any file stronger
My working order runs like this. Schemes and grants first. Then the super saver scheme and stamp duty concessions. Then a seasoned cash gift with clean paperwork - seasoned means the money has sat in the account for a while. Then Help to Buy, if eligible. Then a family guarantee, sized as small as possible, with a release plan agreed up front. Only then the higher-cost structures. Each rung down costs or risks more. Earn your way down - do not jump.
Whatever rung you land on, the same things widen the lender field. Stable employment helps - casual income often needs around six months in the role before lenders use it in full. Clean conduct helps too. Small, paid, explained credit blips can be considered. But hardship arrangements or larger defaults inside the last couple of years shut most mainstream doors. Keep total debt sensible against income, and keep a few months of tidy bank statements. None of that costs a dollar. It is often the difference between needing a guarantee and not.
Questions parents ask me
Do my kids need a 20% deposit before they can buy?
No. The federal 5% Deposit Scheme lets eligible first home buyers purchase with a 5% deposit and no lenders mortgage insurance - the fee banks charge buyers with small deposits. Participating lenders and property price caps apply. Eligible single parents and guardians may buy with as little as 2% under the Family Home Guarantee. A family guarantee can cut the cash deposit further again, where the structure fits. Twenty percent is a preference, not a rule.
Will going guarantor fix my child's low income?
No. A guarantee fixes a missing deposit, not serviceability - whether your child's income can support the repayments in the lender's maths. The written lender policies I work with all require the borrower to service the full loan on their own numbers. Lenders will not use a guarantee to approve a loan that would otherwise be declined. If income is the problem, the fixes are different: reducing other debts, adding a co-borrower who genuinely benefits, or waiting.
When do we get released from a family guarantee?
Typically when the loan balance falls far enough that the property supports the debt on its own at the lender's standard level. That can happen through repayments, property value growth, or both. Some lenders release the guarantee once the guaranteed portion has been repaid. Set a target and a repayment plan on day one. Do not treat release as something that happens by itself.
Is gifting the deposit better than going guarantor?
Often, yes. A gift caps your exposure at the amount you hand over. It usually needs a statutory declaration - a short signed legal statement - confirming it is non-repayable, and it leaves your own property untouched. Some lenders still want the borrower to show a savings pattern of their own at higher loan-to-value ratios, meaning when they borrow most of the property's value. A clean rental history can substitute at several lenders. A guarantee tends to suit families who have equity - value in their home they own outright - but not spare cash.
Official sources
Sources checked 10 July 2026. These support the general regulatory, scheme and consumer-information points in this guide. Lender policy and personal eligibility still need a current assessment.
- Australian Government 5% Deposit Scheme - FAQs
- Australian Government - Help to Buy
- Moneysmart - Going guarantor on a loan
- ATO - First Home Super Saver scheme
General information only, not credit advice. Your circumstances, lender criteria and responsible lending requirements apply. John Carson-Zangor is an authorised credit representative (Credit Representative Number 537545) of QED Credit Services Pty Ltd (Australian Credit Licence Number 387856).
Plan before the offer
Buying feels easier when the order is clear
Deposit, repayments, documents, property checks and contract timing can be worked through one step at a time.
John Carson-ZangorDirect help from a residential mortgage broker based in Bethania, Logan.