Skip The 20% Deposit on your Home Loan
In today’s market, saving 20% can feel impossible. With rising house prices, rent increases, and the cost of living going up, it’s no wonder so many buyers feel stuck on the sidelines. But there’s another way — and it doesn’t involve draining your savings or waiting what feels like a lifetime to save up.
If you’ve got a steady income but not quite enough deposit, a Family Guarantor Home Loan could be your ticket in. It’s a smart strategy that lets you lean on family equity (not cash!) to buy your home sooner — with less stress and more savings.
It’s a practical way to fast-track your path into the property market — whether you’re buying your first-home or building your investment portfolio, and especially if your income’s solid but your savings aren’t quite there yet.
Here’s how it works.
What Are the Benefits of a Family Guarantor Home Loan?
The benefits of a Family Guarantor Home Loan go far beyond just getting a bit of help from your parents — it can completely change how quickly and easily you get into the market.
Get into the market faster
Saving a 20% deposit on today’s property prices can take years — and in that time, prices may continue to rise. With a guarantor, you can skip the waiting game and buy sooner, even with little or no deposit.
Borrow up to 105% of the purchase price
That means you could borrow not just the cost of the home, but also extra to cover expenses like stamp duty, legal fees, and moving costs. This makes it possible to buy with minimal upfront cash.
Avoid Lenders Mortgage Insurance (LMI)
Normally, if your deposit is under 20%, lenders charge LMI — which can cost tens of thousands of dollars. With a guarantor, you may not need to pay it at all, saving you a huge chunk of money right from the start.
Hold onto your savings
Instead of pouring every cent into your deposit, you can keep some savings as a buffer. That means less financial pressure after settlement, and more flexibility if unexpected costs come up.
Access better interest rates
With a guarantor reducing the risk for the lender, you’re more likely to qualify for competitive rates — which could mean lower repayments over the life of your loan.
In short, it’s a flexible way to take control of your home-buying journey without relying on perfect timing, government schemes, or chasing an ever-growing deposit.
Is It Just for First Homes?
Not at all. While Family Guarantor Loans are popular with first-home buyers, they’re not limited to first homes. You can also use this type of loan to:
- Buy an investment property
- Purchase a second home
- Help adult children start or grow a property portfolio
- Get into the market if you earn well but haven’t saved a large deposit
It’s especially helpful if you’ve got a strong income and can afford the repayments, but don’t meet the usual deposit requirements. For young investors or families wanting to build long-term wealth, this strategy can open doors that would otherwise stay closed.
Are There Any Risks?
Like any home loan, you’re responsible for making the repayments.
If something unexpected happens — for example, you can’t keep up with the loan and the property is sold for less than what’s owed — your guarantor may need to cover part of the gap.
While this situation is rare, it’s important to be aware of it. The guarantee can also affect your guarantor’s ability to borrow for other things (like a new loan or refinance) until their part of the loan is released.
That’s why it’s important for both you and your guarantor to understand how it works and feel confident before moving ahead. Getting the right advice and having a clear plan in place makes all the difference.
What Does a Guarantor Actually Do?
Their role is to offer a portion of their equity as added security. This reduces the lender’s risk and makes it easier for the borrower to qualify for the loan on more favourable terms.
A guarantor:
- Doesn’t provide cash
- Doesn’t co-own the property
- Isn’t on the loan or title
- Doesn’t make repayments
Can a Guarantor Be Released?
Yes — and for many borrowers, it happens within a few years.
Once you’ve built up enough equity in your home you can refinance and remove the guarantor from the loan. As long as you meet the lender’s criteria on your own, the guarantee can be released.
It’s not a lifelong commitment — just a temporary way to help you get into the market sooner.
Who Can Be a Guarantor?
Most lenders require your guarantor to be an immediate family member — like a parent, grandparent, or sibling. They’ll need to:
- Own property in Australia
- Have enough equity to support the loan
- Be in a stable financial position
- Understand and accept the risks involved
Every lender has slightly different rules, but parents are by far the most common guarantors.
How Does It Compare to Government Schemes?
Government schemes like the First Home Guarantee can be helpful, but they come with strict conditions that not everyone can meet:
- Income limits — You can’t earn above a certain amount to qualify
- Property price caps — The home you’re buying must be under a set value
- Limited spots — Only a set number of places are available each year
Family Guarantor Loans don’t have these restrictions. They offer:
- No income or property value caps
- No limit on how many people can apply
- Available for both owner-occupiers and investors
- Greater flexibility and control over your loan structure
If you’re not eligible for government support — or want more options — a Family Guarantor Loan could be a more flexible alternative.
Final Thoughts
If you’re tired of watching property prices rise while you keep saving, a Family Guarantor Home Loan might be the edge you need.
With the right support and the right lender, you could be holding the keys to your new home sooner than you thought — without the stress of a huge deposit or costly LMI.
At QPF, we’ll walk you through the details and help you decide if it’s the right move for your situation. Ready to explore your options? Get in touch today!
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.