Updated: November 2026
Family support can help a first home buyer strengthen a deposit, cover eligible purchase costs or access a suitable home loan sooner. However, the way the assistance is structured matters.
A cash gift, repayable family loan, family guarantee and joint purchase are different arrangements. Each option can affect borrowing capacity, ownership rights, lender requirements and the financial position of the family member providing the assistance.
Before money is transferred or property is offered as security, everyone should understand whether the support is permanent, repayable or linked to an ownership interest.
If you are preparing to buy your first property, our First Home Buyer home loan service explains how CBM Mortgages can help you assess your deposit, borrowing capacity and suitable lender options.
How can family help a first home buyer?
Common forms of family assistance include:
- providing a non-repayable cash gift;
- lending money under a documented family-loan agreement;
- using property equity to support a family guarantee;
- buying the property jointly with the first home buyer;
- allowing the buyer to live at home while saving; and
- helping with specific purchase costs.
The appropriate option depends on the family’s finances, the amount required, whether the money must be repaid, the lender’s policy and the risks each person is prepared to accept.
Family-support options at a glance
| Form of assistance | How it works | Main consideration |
|---|---|---|
| Cash gift | Money is provided without any obligation to repay it. | The lender may require a signed gift letter and evidence of the source of funds. |
| Family loan | Money is provided with an expectation or legal obligation to repay it. | The debt or repayments may reduce the buyer’s borrowing capacity. |
| Family guarantee | A family member offers property equity as additional security. | The guarantor’s finances and property may be at risk if the borrower cannot repay the home loan. |
| Joint purchase | The family member and buyer purchase or borrow together. | Ownership, debt, tax, estate-planning and exit arrangements must be considered. |
| Living at home while saving | The buyer reduces housing expenses while accumulating a deposit. | The buyer must still satisfy the lender’s deposit, genuine-savings and borrowing requirements. |
Option 1: A cash gift towards the deposit
A cash gift is money provided without any expectation that the first home buyer will repay it.
The gift might be used towards:
- the property deposit;
- the buyer’s required contribution;
- transfer duty where payable;
- legal or conveyancing costs;
- building and pest inspections;
- Lenders Mortgage Insurance where applicable; or
- other eligible purchase and settlement costs.
The lender will generally want to understand where the money came from and whether it is genuinely non-repayable.
What is a gift letter?
A lender may request a signed gift letter or statutory declaration confirming:
- the amount being gifted;
- the identity and relationship of the person providing the money;
- that the money is an unconditional gift;
- that the money does not need to be repaid;
- that the person providing the gift will not claim an ownership interest in the property; and
- the date on which the money was or will be transferred.
The wording and supporting evidence vary between lenders. Buyers should use the selected lender’s required form or obtain appropriate legal advice rather than relying on a generic template.
Does a gifted deposit count as genuine savings?
Not always. A lender may accept gifted money towards the purchase while still requiring the buyer to demonstrate a separate amount of genuine savings.
Some lenders may treat gifted funds differently once the money has been held in the buyer’s account for the required period. Other lenders may accept rental history or another policy alternative.
Read our guide to what counts as genuine savings for a home loan for further information.
Option 2: A documented family loan
A family loan is different from a gift because the buyer is expected or legally required to repay the money.
A family-loan agreement may cover:
- the amount advanced;
- whether interest will be charged;
- the repayment amount and frequency;
- when the loan must be repaid;
- what happens if the property is sold or refinanced;
- whether the loan is secured;
- what happens if a party dies, separates or becomes unable to act; and
- how disputes will be handled.
The arrangement must be disclosed to the home loan lender. A repayable family contribution is a financial commitment and may reduce the buyer’s borrowing capacity.
Calling an advance a gift when repayment is expected can cause problems during the lender’s assessment and lead to family disputes later.
Each party should consider obtaining independent legal advice before entering a family-loan agreement.
Gift or family loan: what is the difference?
| Issue | Cash gift | Family loan |
|---|---|---|
| Repayment expected | No | Yes |
| May affect borrowing capacity | Usually not treated as a debt, subject to lender assessment | Potentially, because it creates a liability or repayment obligation |
| Typical documentation | Gift letter or statutory declaration | Formal loan agreement and supporting evidence |
| Ownership interest created automatically | No | No, unless a separate ownership arrangement applies |
| Family member can demand repayment | Not if it is a genuine unconditional gift | According to the agreed loan terms |
The family should decide which arrangement is intended before transferring the money.
Option 3: A family guarantee
A family guarantee generally involves a suitable family member offering part of the equity in a property as additional security for the buyer’s home loan.
Depending on the lender and structure, a guarantee might help the buyer:
- purchase with a smaller cash deposit;
- reduce or avoid Lenders Mortgage Insurance;
- meet the lender’s security requirements; or
- retain more savings for eligible purchase costs and a financial buffer.
A guarantee does not make the home loan more affordable and does not remove the lender’s normal income, expense, credit and servicing assessment.
What are the risks for the guarantor?
If the borrower cannot repay the home loan, the guarantor may become responsible for the guaranteed amount, interest, fees and enforcement costs, depending on the contract.
Potential consequences include:
- the lender seeking repayment from the guarantor;
- an asset used as security being at risk;
- the guarantee reducing the guarantor’s future borrowing capacity;
- damage to the guarantor’s credit position if the debt is not repaid;
- delays in selling, refinancing or using the guarantor’s property equity; and
- strain on family relationships.
A guarantor should receive the loan and guarantee documents early, understand whether the guarantee is limited or unlimited and obtain independent legal advice before signing.
Read our dedicated guide explaining how a family guarantee can support a home loan.
Option 4: Buying the property together
A parent, grandparent or other family member may consider purchasing the property jointly with the first home buyer.
This is not simply deposit assistance. The arrangement can create ownership rights and legal, lending, taxation and estate-planning consequences.
Before purchasing jointly, the parties should consider:
- who will be shown on the property title;
- whether ownership will be held as joint tenants or tenants in common;
- each person’s ownership percentage;
- who will be responsible for the home loan and expenses;
- who may live in the property;
- what happens if one person wants to sell;
- how improvements and ongoing costs will be shared;
- what happens after death, incapacity, separation or bankruptcy;
- possible capital gains tax and transfer-duty consequences; and
- whether first home buyer concessions or scheme eligibility may be affected.
Joint purchasers should obtain independent legal and tax advice before signing a contract.
Can family pay only the purchase costs?
Yes, subject to the lender’s requirements. Family support does not need to cover the entire deposit.
A family contribution might help with:
- conveyancing or legal fees;
- building and pest inspections;
- transfer duty where applicable;
- moving costs;
- insurance;
- essential repairs; or
- retaining a financial buffer after settlement.
The buyer must still demonstrate sufficient funds to complete the purchase and satisfy any lender contribution or genuine-savings rules.
Review our guide to the upfront costs of buying a first home in Sydney when preparing the purchase budget.
How family support can affect borrowing capacity
The effect depends on the structure.
- Cash gift: may increase available funds without creating a repayment obligation, provided it is genuinely non-repayable.
- Family loan: may reduce borrowing capacity because the buyer has an additional debt or repayment commitment.
- Guarantee: may improve the lender’s security position but does not increase the buyer’s income or repayment capacity.
- Joint borrowing: may add income to the application, but each borrower may become liable for the entire home loan.
The lender will still assess income, debts, expenses, credit history, the proposed property and the buyer’s ability to meet repayments.
Can family help be combined with a low-deposit pathway?
Potentially. Family assistance may be used alongside an eligible low-deposit option, depending on the lender and program rules.
Examples may include:
- a cash gift combined with the buyer’s own savings;
- a family gift used towards costs while the buyer provides the required deposit;
- family assistance used with the Australian Government 5% Deposit Scheme, subject to participating-lender requirements;
- a guarantee used instead of paying Lenders Mortgage Insurance under an eligible lender structure; or
- a family loan combined with the buyer’s contribution, subject to servicing and disclosure.
Read our guide to buying a home with less than a 20% deposit for a comparison of LMI, government-backed and family-supported pathways.
Could a gift affect the family member’s Centrelink payment?
Potentially. Services Australia applies gifting rules when assessing certain means-tested payments.
The current gifting free areas are:
- $10,000 in one financial year; and
- $30,000 over five financial years, with no more than $10,000 counted within the free area in any single financial year.
If gifts exceed the relevant free areas, the excess may continue to be counted under the assets test and deeming rules for five years.
The rules apply to the person providing the gift and may affect retirement or benefit planning. Check the current Services Australia gifting rules and obtain advice appropriate to the person’s circumstances.
Protecting the supporting family member
Family support should not compromise the supporting person’s housing, retirement or ability to meet future costs.
Before providing money or security, consider:
- retirement income and savings;
- future medical and aged-care costs;
- the need for an emergency fund;
- existing debts and future borrowing plans;
- possible Centrelink implications;
- the effect on wills and estate planning;
- fairness between family members;
- what happens if the buyer’s relationship ends;
- whether the money might be needed back unexpectedly; and
- the consequences if the property falls in value.
The supporting family member should make the decision freely and should not proceed because of family pressure.
Documents the lender may request
Depending on the arrangement, the lender may request:
- a gift letter or statutory declaration;
- bank statements showing the source and transfer of funds;
- evidence of the relationship between the parties;
- a formal family-loan agreement;
- details of repayments required under a family loan;
- property and home loan statements for a guarantor;
- independent legal-advice certificates;
- identification and financial documents from a joint borrower; and
- evidence that sufficient purchase funds remain available.
Requirements vary between lenders. Confirm the required documents before transferring money or exchanging contracts.
Questions families should answer first
- Is the assistance a gift, loan, guarantee or ownership contribution?
- Does the money need to be repaid?
- Will the family member receive interest or ownership rights?
- What evidence will the lender require?
- How will the arrangement affect borrowing capacity?
- Could the assistance affect Centrelink, tax, retirement or estate planning?
- What happens if the property is sold, refinanced or falls in value?
- What happens if the buyer cannot meet repayments?
- Has each party received appropriate independent advice?
- Is the arrangement documented before money or security is provided?
How CBM Mortgages can help
CBM Mortgages can help first home buyers compare lender requirements when family assistance forms part of the purchase.
We can help you:
- estimate the deposit and total funds required;
- explain how a lender may treat a gift, family loan or guarantee;
- review the likely effect on borrowing capacity;
- compare suitable lender and low-deposit pathways;
- identify the lender documents likely to be required;
- calculate the indicative LVR and repayments; and
- prepare for pre-approval and the property search.
CBM Mortgages does not provide legal, tax, Centrelink or financial-planning advice. Family members should obtain independent advice where the arrangement could affect property rights, retirement, tax, benefits or estate planning.
Planning to use family assistance for a first home purchase? Visit our First Home Buyer home loan service or contact CBM Mortgages to discuss the proposed deposit and home loan structure.
Frequently asked questions
Need help structuring family support?CBM Mortgages can help you understand how a cash gift, family loan or guarantee may fit with your deposit and home loan application. |
Disclaimer: This article provides general information only and does not constitute personal financial, legal, tax, Centrelink or credit advice. Lender policies and government rules can change. Each party should consider obtaining independent advice appropriate to their circumstances before providing or accepting family assistance.
