More and more first home buyers are turning to the Bank of Mum and Dad for a helping hand. In fact, parental support is now one of the most common ways younger Australians get into the market.
So, how exactly can parents help? Let’s explore the most effective options — and what you need to know before taking the leap.
1. Cash Gifts or Loans from Parents
A lump sum gift from your parents can go straight towards your deposit or cover upfront costs like stamp duty, legal fees, and lender’s mortgage insurance (LMI). However, there are a few things to keep in mind:
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Lenders will usually require a “gift letter” to confirm the money doesn’t need to be repaid.
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Most banks like to see “genuine savings,” so if the money has just landed in your account, they may want it to sit there for 3+ months.
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If the money is a loan, the bank will need to see a formal loan agreement and may include repayments in your borrowing assessment.
Pro tip: Talk to a mortgage broker early — they can help structure this correctly so it works in your favour.
2. Guarantor Loans: Using Mum and Dad’s Equity
If your parents own their home or have significant equity, they may be able to act as guarantors for your loan. This means they use their property as security for part of your mortgage, usually covering up to 20% of the purchase price.
Benefits:
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You may avoid paying Lender’s Mortgage Insurance (LMI), which can save thousands.
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You could borrow up to 100% of the property price in some cases.
Considerations:
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Your parents take on some financial risk. If you default on your loan, the lender can claim against their property.
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A formal agreement and understanding of the risks are essential.
This strategy has helped many first home buyers get into the market faster, especially in high-cost areas.
3. Joint Purchase or Co-Ownership
Some parents go one step further and buy the property jointly with their child. This can help boost borrowing capacity and give parents a share in the investment.
However, this arrangement can affect your eligibility for first home buyer grants or stamp duty concessions, and there are tax implications if the property is later sold.
Tip: Speak to a mortgage broker and accountant before going down this path — it’s important to get the structure right from the start.
4. Providing Ongoing Financial Support
If a lump sum or guarantor role isn’t an option, some parents simply help with ongoing costs. This could include:
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Contributing to repayments for a period of time
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Helping with utility bills or living expenses to ease financial pressure
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Offering rent-free accommodation so you can save faster
While this support might not show up on your loan application, it can make a big difference in helping you get mortgage-ready.
The Importance of Honest Conversations
It’s easy to focus on the financial side of things — but emotional and relationship dynamics matter too. Supporting someone in buying a home is a big decision, and it’s important that everyone is clear on:
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Expectations around repayment (if it’s a loan)
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Ownership or future contributions
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What happens if circumstances change
Writing things down, even informally, can help avoid misunderstandings later.
A Mortgage Broker Can Guide You Through It
Whether your parents are giving a gift, offering equity, or just cheering you on, a broker can help you navigate the best path forward. We’ll assess your full situation, structure your loan correctly, and work with you and your family to make sure everything stacks up.
Ready to Explore Your Options?
At Dream Catchers Lending, we specialise in helping first home buyers unlock home ownership — with or without a little help from Mum and Dad. If you’d like tailored advice or want to know what’s possible based on your family’s situation, we’re here to help.
Get in touch today for a friendly, no-obligation chat. Let’s make your first home dream a reality.
Dream Catchers Lending is an MFAA-accredited member and a Certified Divorce Specialist. Feel free to book an obligation-free virtual appointment or leave us your details and we'll be in touch.