Guarantor home loans for first home buyers: how a family guarantee works in Australia

A guarantor offers extra security for your home loan. If you cannot repay, the lender can recover the guaranteed amount from the guarantor, including by selling the property used as security.

Lenders usually charge lenders mortgage insuranceHome Loans / Loan decisionsLVR and LMI explainedUse this when a guide mentions loan-to-value ratio, lenders mortgage insurance, or low-deposit trade-offs.Open page when you borrow more than 80% of a property's value. MoneySmart describes LMI as a one-off fee that protects the lender if you cannot repay the loan, not you or your family. A guarantee adds security from outside the property you are buying, so the lender's exposure can drop to the equivalent of an 80% loan.

No money changes hands. Westpac says its guarantor will not need to give any funds directly to the borrower, and ANZ describes the guarantor as someone who offers their property as additional security rather than cash. The lender takes security over part of the guarantor's equity. CBA's guarantor information sheet says the bank first seeks to recover from the borrower before turning to the guarantor's security.

Banks often call this a family guarantee, a family security guarantee or a family pledge. The names differ, but the mechanism is the same: your family member's security stands behind part of your debt.

Lenders set their own rules on who can be a guarantor, what security they accept and when a guarantee ends. The table summarises each bank's own public page as read on 11 November 2026.

Two policies stand out. Westpac lets a guarantor secure the guarantee with cash, such as savings or a term deposit, as well as home equityRefinance / Review goalsUse equity carefullyCheck usable equity, borrowing capacity, purpose, risk, and lender policy before increasing debt.Open page , and it requires the guarantor to get independent legal advice. Bankwest requires the guarantor's home loan to be with Bankwest, or moved there, and lists the widest range of relatives, including a spouse or de facto partner.

None of these pages is a promise of approval. You still need to meet the lender's credit and serviceability assessment on your own income, and the guarantor's security has to meet the lender's valuation and policy.

A family guarantee is one of three common ways to buy with less than a 20% deposit. Each has a different cost and a different person carrying the risk.

Under the Australian Government 5% DepositHome Loans / Start hereLow deposit home loansCheck lower-deposit pathways, LMI assumptions, scheme fit, and lender policy before relying on a price range.Open page Scheme, eligible first home buyersHome Loans / Start hereFirst home buyersStart with deposit, upfront costs, scheme questions, documents, and pre-approval timing.Open page can buy with a minimum 5% deposit, and eligible single parents or legal guardians with 2%, without paying LMIHome Loans / Loan decisionsLVR and LMI explainedUse this when a guide mentions loan-to-value ratio, lenders mortgage insurance, or low-deposit trade-offs.Open page . Housing Australia provides a guarantee to the participating lender instead of your family. From 1 October 2025 the scheme has had no income caps or limits on places, but property price caps apply, such as $1.0 million in Brisbane and Queensland regional centres including the Gold Coast, and $1.5 million in Sydney and NSW regional centres, under the 1 July 2026 information guide.

Paying LMIHome Loans / Loan decisionsLVR and LMI explainedUse this when a guide mentions loan-to-value ratio, lenders mortgage insurance, or low-deposit trade-offs.Open page keeps your family out of the loan, but adds a premium. A family guarantee avoids LMI and the scheme's price caps, but puts your guarantor's property at risk. The official scheme guides do not say whether a private guarantor can be combined with the scheme, so ask the participating lender.

Buying costsHome Loans / Loan decisionsDeposit and buying costsSeparate saved deposit, stamp duty, legal costs, lender fees, moving costs, and settlement cash.Open page sit outside all three options. Stamp duty, conveyancing, inspections and moving costs still need cash, and state first home buyerHome Loans / Start hereFirst home buyersStart with deposit, upfront costs, scheme questions, documents, and pre-approval timing.Open page concessions are separate from the federal scheme.

There is no complete national data. The Productivity Commission's 2021 wealth transfers paper said there is no comprehensive data on the bank of mum and dad.

Bank data supplied to the Commission showed parental guarantee loans made up a small share of settled loans: on average about 2.5% at CBA since 2017 and 4.6% at Westpac since 2016. Private estimates of total family lending vary widely and are based on small samples.

In a November 2024 speech, RBA Assistant Governor Christopher Kent said the bank of mum and dad may have increasingly helped many first home buyersHome Loans / Start hereFirst home buyersStart with deposit, upfront costs, scheme questions, documents, and pre-approval timing.Open page . He did not give a figure.