For a lot of first home buyers, the deposit — not the repayments — is the real wall. Prices rise faster than savings, and LMI adds thousands on top. A guarantor home loan can be the bridge: with family help, you can often buy now, with little or no deposit, and skip LMI entirely. It's a powerful option — and one that deserves to be explained honestly, risks and all.
How it works
A family member — usually a parent — uses the equity in their own property as additional security for your loan. That guarantee covers the gap your deposit would normally fill, which means you can borrow up to 100% of the purchase price and avoid LMI. The guarantor doesn't give you cash; they pledge a portion of their property's equity as backup security.
Why families do it
- Buy years sooner — no waiting to save a full 20% while prices climb.
- Skip LMI — saving many thousands of dollars.
- Keep savings intact — useful for moving costs and a buffer.
The risks — straight up
This is the part that matters most, and I never gloss over it. The guarantor is legally responsible for the guaranteed portion of the loan if you can't pay, and their property is on the line as security. That's serious — so it has to be structured carefully:
- Use a limited guarantee — covering only the amount needed (e.g. the deposit gap), not your whole loan.
- Independent legal advice for the guarantor is essential — most lenders require it.
- Have a release plan from day one (more on that below).
A guarantor loan is generous, not reckless — when it's structured with a limited guarantee, legal advice and a clear exit. That's the difference between helping family and putting them at risk.
Getting the guarantor released
The guarantee isn't forever. Once you've paid the loan down enough — and/or your property has grown in value — so that you owe 80% or less on your own, the guarantor can usually be released. We plan for this from the start, so everyone knows the path out.
Who can be a guarantor?
Usually an immediate family member (most often a parent) with enough equity and financial standing. Some lenders accept siblings or other close family. Each lender has its own rules — I'll match you to one that fits your family's situation.
Is it right for you?
A guarantor loan can be the single best way into the market for the right family — but only when everyone understands it fully. I'll sit down with you and your guarantor, explain every part in plain English, structure the limited guarantee properly, and make sure they get independent advice. If it's the right fit, it can change your timeline by years. Explore more on the first home buyer hub.