The Family Guarantee Explained
The Problem First Home Buyers Face in 2026
Buying your first home is tough right now. You find a house you love, but someone else buys it because they have more money. This happens all the time to people buying their first home.
The biggest problem? Saving enough money for a deposit. Most banks want you to save 20% of the home’s price. If you don’t have that much saved, you have to pay something called Lender’s Mortgage Insurance (LMI). This can cost you $10,000 to $30,000 extra!
But here’s some good news. Your family can help you buy a home without giving you cash. It’s called a family guarantee home loan, and it could save you thousands of dollars.
What Is a Family Guarantee?
A first home buyer family guarantee is when your parents or grandparents use their home to help you get a loan. They don’t give you money. Instead, they use part of the value in their house as backup for your loan.
Think of it like this: The bank feels safer lending you money because your family’s house is backing you up. This means you can buy a home without 20% deposit, and you won’t have to pay LMI.
Here’s How It Works
Let’s look at an example:
You want to buy a home for $600,000. You’ve saved $30,000 (that’s 5%). Normally, you’d borrow $570,000, which is 95% of the home’s price. At this level, you’d have to pay around $20,000 in LMI.
But if your parents agree to provide a first home buyer family guarantee for $90,000, the bank sees things differently. They count your $30,000 plus the $90,000 guarantee. That brings you up to 20% security.
This family guarantee removes LMI cost, which means:
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- You avoid paying lenders mortgage insurance (saving about $20,000)
- You can buy your home sooner
- Your parents don’t give you cash
The Good Things About Family Guarantees
For you, a family guarantee home loan means you can avoid paying lenders mortgage insurance, saving thousands. You stop paying rent and build wealth. You can buy a home without 20% deposit.
For your family, they help without giving cash. They usually guarantee 20% or less, and the family guarantee removes LMI cost for you. The guarantee is removed once you’ve paid down enough.
Different Types of Help Available
Bank Family Guarantees: Most banks offer a first home buyer family guarantee where family members can guarantee part of your loan. This helps you avoid paying lenders mortgage insurance. The guarantee is removed once you’ve paid your loan to 80% of the property’s value.
Government Family Home Guarantee: From October 2025, this program has unlimited places with no income limit. It’s for single parents with kids who can buy with just a 2% deposit.
Things to Think About Carefully
Being a guarantor is a big deal. Your family member needs to know they’re responsible if you can’t make payments, and it might affect their borrowing. They must talk to a lawyer before signing, as their house could be at risk.
How to Get Started
Talk to Your Family: Have an open chat about whether they’re comfortable helping with a family guarantee home loan.
Talk to a Mortgage Broker: We can check if you qualify for a first home buyer family guarantee, compare banks, and work out how much you’ll save when you avoid paying lenders mortgage insurance.
Get Your Documents Ready: You’ll need payslips, tax returns, ID, bank statements, and debt details.
Get Legal Advice: Both you and your guarantor need to talk to lawyers for protection.
Apply: We work with many banks and will help you find the right loan so you can buy a home without 20% deposit.
Why Using a Broker Helps
Using a mortgage broker means comparing loans from many banks. We must put your needs first by law and get you better rates.
Tips for Success
Before applying, work out what you can pay monthly and keep emergency savings. When comparing loans, check fees and features, not just rates. Pay extra when possible and work towards removing the guarantee.
Your Next Steps
Buying your first home is a big goal. At Awesome Lending Solutions, we’ll understand your situation and find the right loan. With the right plan and professional help, owning a home is more possible than you think.
Contact Awesome Lending Solutions Today
Ready to see if a family guarantee home loan could work for you?
Get in touch for free home loan checks, expert advice on how to avoid paying lenders mortgage insurance, and support through your home buying journey.
Let’s work together to help you buy a home without 20% deposit.
