For a growing share of first-home buyers, the deposit no longer comes from years of saving alone. It comes, in part, from a parent. That help increasingly decides who gets into the market and who keeps waiting.
The classic first-home buyer story, years of disciplined saving until the deposit is finally there, now fits fewer and fewer people. For a growing number, the deposit arrives with help from a parent: a cash gift, a private loan, or the quiet backing of the family home as security. Family financial support has shifted from the exception to a structural feature of how Australians buy their first place.
How common the help has become
Finder's 2025 First-Home Buyer Report found 17% of the first-home buyers and intending buyers it surveyed had received money from their parents to help save a deposit, up from 11% in 2022.
Estimates of the total sum vary widely. Martin North of Digital Finance Analytics told ABC News in May 2021 that the Bank of Mum and Dad had become Australia's ninth biggest home lender, the most recent such ranking on the public record. Mozo's 2025 survey of parents put the average amount gifted towards a deposit at $74,040, up from $69,907 in 2021.
The exact numbers vary by survey and are best read as estimates, but the direction is not in dispute: family money is now a major force in the deposit market.
The main ways families help
Family support takes a few distinct forms, and they are not equal in risk or effect.
A gifted deposit. The simplest route: parents give money towards the deposit outright. Lenders usually require a "gift letter" confirming the money is a genuine gift and not a loan to be repaid, because a repayable loan changes how much the buyer can borrow.
A guarantor loan, sometimes called a family pledge. Instead of cash, a parent offers the equity in their own home as additional security. No money changes hands and the parent does not go on the title, but their property backs part of the loan. More on this below.
Other arrangements. Some families lend money on proper terms, buy a property jointly with the child, or simply let an adult child live at home rent-free for a few years so they can save faster. Each shifts the deposit maths in a different way.
How a guarantor loan actually works
A guarantor loan lets a first-home buyer borrow with a small deposit, or sometimes none, by using a parent's property equity as extra security. The lender counts that security when working out the loan-to-value ratio, which can bring the effective ratio to 80% or below. That matters because it can remove the need for Lenders Mortgage Insurance, which protects the lender rather than the borrower, and is the premium a borrower normally pays when they borrow more than 80% of a property's value. Avoiding LMI can save a first-home buyer around $8,000 on a $500,000 purchase with a 10% deposit, rising to more than $35,000 on a median-priced home with a 5% deposit.
Most guarantor arrangements today are limited guarantees, where the parent's liability is capped rather than covering the whole loan. The cap is the amount needed to bring the combined security to 80%, which is usually more than the headline deposit gap, and at some lenders it includes purchase costs such as stamp duty. CBA, for example, caps its guarantee at 27% of the borrower's property value. A full guarantee over the entire loan is rare.
The parent makes no repayments and has no day-to-day involvement. Their exposure bites hardest if the borrower defaults, at which point the guaranteed portion, and potentially their own home, is at risk. It also reduces their own borrowing capacity from the day they sign.
The risks worth weighing before anyone signs
Family help is not free of consequences, and most of the risk sits with the parent. A guarantor is putting real assets behind someone else's loan, and a default can reach their home or their retirement savings. The major lenders generally require guarantors to get independent legal advice before signing. CBA and Westpac make it mandatory, though it is not a legal requirement. The Banking Code of Practice requires banks to tell guarantors they should seek advice, and to wait three days before accepting a guarantee unless the guarantor confirms they have had it.
There are quieter risks too. Money assumed to be a gift, then later treated as a loan when circumstances change, can strain a family relationship or complicate a separation or estate. Funds drawn from a parent's retirement savings may be hard to rebuild. None of this rules out family help. It is a reason to document clearly whether the money is a gift or a loan, and to take independent legal and financial advice rather than settle it on a handshake.
What it means for the market
The rise of family help is really two stories. For those who have it, it can cut years off the path to a first-home and remove tens of thousands in LMI. For those who do not, it widens a gap that has little to do with their own income or discipline: a well-paid saver without family backing can be outbid by someone earning less but standing on a parent's equity. That is quietly reshaping who buys first, and where.
It also ties the market more tightly to existing property wealth. When the deposit increasingly comes from equity in the previous generation's homes, home ownership tracks family wealth more closely than before, which is part of why the trend draws the attention of economists watching long-run affordability. For buyers, the practical point is narrower: family help is now common enough to plan around, but gift, loan and guarantee carry very different risks, and each should be set up with proper advice.
This article is general information, not financial or legal advice. Loan features, LMI costs and guarantor rules vary by lender and change over time. Anyone considering a gift, loan or guarantor arrangement should seek independent legal and financial advice and confirm current terms with their lender.
