Your deposit is the money you save and provide upfront when buying a home. For most lenders and government schemes in 2025, this deposit usually needs to be at least 5% to 20% of the property value depending on eligibility and whether you pay Lenders Mortgage Insurance (LMI).

What can you use as your deposit?

• Money saved from your own funds: Cash savings in your bank account is the primary source for your deposit.
• Gifted money: Some lenders allow a deposit gift from family or friends, but usually with documentation.
• Sale of an existing property: The net proceeds from selling another home can count toward your deposit.
• First Home Owner Grant or government contributions: Any grants you qualify for can sometimes be used towards your deposit or upfront costs.
• Money from superannuation schemes: Under certain concessions like the First Home Super Saver Scheme, you can save in your super and withdraw it for a home deposit.

What can't count towards your deposit?

• Loan amounts or borrowed funds: The deposit must be your own money or gifted (with exceptions for some government schemes but not your loan itself).
• Non-liquid assets: Items like cars, investments, or valuables typically aren't counted as deposit funds.

Additional points about deposits:

• The Home Guarantee Scheme (starting Oct 1, 2025) lets eligible first home buyers buy with as low as 5% deposit with no LMI by having the government guarantee part of the loan.
• Lenders calculate the Loan-to-Value Ratio (LVR) based on the deposit and property valuation, affecting loan approval and costs.
• You must cover other upfront costs separately, such as stamp duty, legal fees, and conveyancing.
• Your lender may require proof and documentation to confirm the source of your deposit funds.

In essence, your deposit counts as your own money or approved gifted funds ready to be applied toward the purchase price. Various government schemes now can help reduce how much you need upfront. Consulting with your broker or lender about acceptable sources and documentation helps make the process smoother.

This info aligns closely with the newly expanded government schemes and lender requirements effective October 2025.

What is a Family-Backed Home Loan Guarantee?

A family-backed home loan guarantee allows a close family member – like a parent or sibling—to help you buy a home sooner by offering part of their property's value or savings as additional security for your loan.

Instead of gifting you money, your guarantor uses the equity in their home or a term deposit to support part of your loan, reducing the amount you need upfront and helping you avoid paying Lenders Mortgage Insurance (LMI).

Example:

Imagine you're buying your first home for $300,000 and want to borrow $270,000 (a 90% LVR). Normally, you'd pay LMI. But if your family member guarantees $40,000 using their home's equity, your effective LVR drops below 80%—which means no LMI is needed.

Why It's Great for First-Time Buyers

You're the Buyer:

• Avoid expensive LMI fees, which can save you thousands.
• Get into the property market faster—even with a small deposit.
• Borrow up to 100% of the purchase price (plus associated costs).
• Available for owner-occupiers, and in some cases, investors who don't already own property.

If You're the Guarantor:

• No need to provide cash—just use existing equity or a term deposit.
• Your exposure is limited (typically up to 50% of the loan).
• You'll be released from the guarantee once the buyer's equity grows enough (usually when the LVR drops below 80%).

Basic Requirements & Things to Know

Eligibility & Restrictions:

• Property must be for owner occupation (some lenders allow it for first-time investors).
• Family member must be an immediate relative (e.g. parent, child, sibling).
• The guarantee can't be used for cash-out, renovations, or debt consolidation.
• Minimum loan size usually starts around $150,000.
• The guarantor must get independent legal advice.

How It Compares to Government Guarantee Schemes

This type of guarantee is not part of a government program like the First Home Guarantee or Family Home Guarantee, but it works alongside them.

• Government schemes reduce your deposit requirement (as low as 2%).
• A family-backed guarantee reduces your LVR, avoiding LMI and increasing your borrowing power.
• You may be eligible for both—check with your lender or broker.

Important Considerations

• If you miss repayments, the lender may seek repayment from your guarantor.
• It can impact your guarantor's ability to borrow or refinance their own property.
• Make sure your income and budget can support your loan long term.

Summary: Family-Backed Guarantee at a Glance

Feature	Details
Who Can Help?	Immediate family (e.g. parents, siblings, adult children)
What's Required?	Equity in property or funds in a term deposit
Benefit to You	Avoid LMI, borrow more, enter market faster
Risk to Them	Partial liability if you default (limited to their guarantee amount)
Exit Strategy	Guarantor can be released once LVR drops below 80%

Given the upcoming October 1st, 2025 policy changes, the areas first home buyers in Australia should consider taking advantage of include:

Access to the expanded Home Guarantee Scheme starting October 1, 2025:

• No more place limits: All eligible first home buyers across Australia can access the scheme, removing previous caps.
• No income limits: Income caps ($125,000 individual / $200,000 joint) will be removed, allowing more buyers to qualify.
• Higher property price caps: Increases in property price limits will allow buyers to access higher-priced homes. For example, in Sydney's capital city and regional centers, the cap increases from $900,000 to $1,500,000, and in Brisbane from $700,000 to $1,000,000.
• Simpler access in regional areas with the regional guarantee merged into the First Home Guarantee.
• The scheme allows purchasing with as little as a 5% deposit and without lenders mortgage insurance (LMI) costs.

Take advantage of the early start of the 5% deposit scheme from October 1, 2025, which was originally planned for 2026:

• This accelerates the ability to buy with low deposit and avoid LMI, potentially saving tens of thousands of dollars.
• Aids in significantly reducing the time required to save for a deposit and get into a home.

Buy before October 1, 2025, if eligible and under current income or place caps to secure a spot:

• Buyers who meet the current income limits and place numbers might prefer applying before the changes take effect to avoid uncertainty or increased competition after the unlimited places open.

Consider the increased property price limits for the scheme to explore a wider range of homes in desired locations:

• These new caps reflect rising property prices, making the scheme more applicable to current market conditions.