Guarantor home loans
With a guarantor, a small deposit can be enough.
If you can afford the repayments but you're short on deposit, a family member's equity can cover the gap, so you buy with a small deposit and skip Lenders Mortgage Insurance. It's a genuine leg up for you, and a real commitment for them. We'll walk you both through it.
Book a Free Strategy Session15 to 30 minutes · no obligation · 30+ lenders
How it works
A family guarantee, in plain English.
A guarantor home loan lets someone close to you, usually a parent, use the equity in their own home as extra security for part of your loan. No money changes hands, and they don't go on your loan as a co-borrower. That security covers the gap below a 20% deposit, so the lender treats you like a 20% borrower: no LMI, and you can borrow more of the price. Their liability is capped at a set amount, not your whole mortgage.
You've got income, not deposit
You can handle the repayments, but you're short of a 20% deposit. Saving the rest could take years, and a smaller deposit usually means paying LMI.
A family member's equity
A parent or close family member offers equity in their own home as extra security for part of your loan. This is a limited guarantee, capped at a set amount, roughly the slice needed to lift you to a 20% position plus costs.
You're treated like a 20% buyer
Because that security covers the gap, the lender's risk drops to the equivalent of an 80% loan. You avoid LMI, which can run into the tens of thousands, and with some lenders you can borrow the full price plus costs.
Your guarantor comes off
As you pay down the loan and prices move, your balance falls toward 80% of your home's value. At that point your guarantor can apply to be released. It isn't automatic: the lender revalues the property and checks you can carry the loan on your own, so hitting 80% starts the conversation rather than ending it. Once it's approved, their home is no longer tied to yours.
Is it for you
Right for some buyers, wrong for others.
A guarantee is powerful when the income is there and the deposit is the only thing missing. It's the wrong tool when the repayments themselves would be a stretch, or when the guarantee would put your family somewhere they can't afford to be.
Maybe not the right fit if
- The repayments would stretch your budget on their own
- Your likely guarantor is retired and relying on their home
- No one in the family can take on the risk comfortably
- You'd rather not tie a loved one's home to your loan
Often a good fit if
- You can service the loan, but you're short on deposit
- You'd otherwise pay tens of thousands in LMI
- You have a parent or close family member willing to help
- You want to buy now rather than save for years
A guarantee is one way in, not the only one. If your income is strong in a field like medicine, a lender may waive LMI without a guarantor at all (see home loans for doctors). If family help isn't on the table, compare the other low-deposit routes, or start with the basics for first-home buyers.
The honest part
Going guarantor is a real commitment.
This is the part a good broker slows down on. A guarantee isn't just a favour and a signature, it's a legal obligation secured against your guarantor's home. Everyone should go in knowing exactly what that means.
What your guarantor is on the hook for. If you can't repay and the property sells for less than the debt, your guarantor is liable for the guaranteed amount, up to the limit they agreed to. Their own home is the security, so in the worst case that can mean paying from savings, borrowing against their home, or selling it.
A limited guarantee caps the risk. Most guarantees are limited to a set dollar figure, not your entire loan, so your guarantor knows their maximum exposure from the start. Lenders generally require them to get independent legal advice, and sometimes a signed declaration, before anything is locked in.
It can affect their plans too. While the guarantee is in place it can reduce how much your guarantor can borrow themselves, so it is worth thinking about their next move, not only yours.
General information only, not a substitute for legal or financial advice. MoneySmart (ASIC) covers going guarantor in detail, and every situation is assessed individually.
Coming off the loan: guarantor release
A guarantee does not have to last the life of the loan. Once your balance falls to around 80% of your home's value, through repayments, rising prices, or both, your guarantor can usually apply to be released. It is not automatic: the lender revalues the property and reassesses the loan first, then removes the guarantee if it stacks up. For a lot of buyers that is a few years down the track, and planning the exit from day one is part of doing this well.
Where we come in
We set a guarantee up to work for everyone.
A guarantor loan is only as good as the way it's structured. We handle that, so you get the upside and your family goes in with clear eyes.
Only guarantee what is needed
We size the guarantee to the actual gap, not a round number, so your guarantor pledges the least security required and caps their risk. A limited guarantee, never an open-ended one.
Your guarantor understands the deal
Before anyone signs, we walk your guarantor through what they're agreeing to, what they're liable for, and the independent legal advice lenders require. No surprises, on either side.
A release plan from day one
We map how and when your guarantor can come off, and favour a lender whose release terms suit you. The point is a guarantee that does its job and then ends.
A licensed broker on strategy · your guarantor walked through every step
Compare the market
Guarantor rules differ by lender. We know which is which.
Not every lender allows the same guarantors, the same guarantee size, or the same path to release. Some accept a grandparent or a sibling; some only a parent. Some make release straightforward; others make you work for it. We compare guarantor policies across 30+ lenders and match you to the one that suits your family, then a licensed broker makes the call.
Good to know
Not a shortcut on serviceability
You still need to afford the loan
A guarantee covers the deposit gap, not the repayments. You'll still need to show you can service the whole loan on your own income, the same as any borrower.
Honest about risk
A guarantee is a real obligation
We won't gloss over what your guarantor takes on. If it isn't right for your family, we'll say so, and look at the alternatives with you.
In your corner
Free to you, and on your side
We're paid by lenders for introducing loans. Under the Best Interests Duty we're legally bound to recommend what's right for you, not what pays us most.
Common questions
Guarantor home loans, answered.
- Does having a guarantor help get a home loan?
- Yes, in one specific way. The extra security covers the gap below a 20% deposit, so you avoid LMI and can borrow more of the price. It won't change whether you can afford the repayments, though: you still need to service the loan on your own income.
- How much can I borrow for a home loan with a guarantor?
- Often up to 100% of the purchase price, and with some lenders a little more to fold in costs like stamp duty, because the guarantee stands in for the deposit you'd normally bring. What you can actually borrow still comes down to your income, your expenses, and the lender's assessment.
- Can I borrow 100% of a home loan with a guarantor?
- Some lenders allow it with a family guarantee, since the guarantor's equity replaces your deposit, and a few will go slightly above 100% to cover purchase costs. It's assessed case by case, and you still have to qualify on your own income.
- Who can be a home loan guarantor?
- Usually a parent. Some lenders also accept grandparents, siblings, or other close family, though the rules vary. A guarantor generally needs to own property with enough equity, be in a stable financial position, and get independent legal advice before signing.
- What are the disadvantages of being a guarantor on a mortgage?
- The main one is real risk. If the borrower can't repay and the property sells for less than the debt, the guarantor is liable for the guaranteed amount, and their home is the security. A guarantee can also reduce how much the guarantor can borrow themselves while it's in place. A limited guarantee and good advice keep it contained, but it should never be signed lightly.
- Can a guarantor be removed from a home loan?
- Yes. Once the loan falls to around 80% of the property's value, through repayments, price growth, or both, your guarantor can usually apply to be released. The lender revalues the property and reassesses the loan before removing the guarantee, so it isn't automatic, but it's the normal end point.
Book a Free Strategy Session to see if a guarantor loan fits.
A licensed broker walks you and your guarantor through how a family guarantee would work for you. Nothing to prepare, no obligation.
15 to 30 minutes · no obligation · 30+ lenders