Thinking about asking your parents for help with a deposit? It’s more common than you think. 60% of first home buyers are getting some kind of financial help from family, with the average amount being around $74,000. 

The so-called Bank of Mum and Dad is now one of the biggest sources of home loan funding in the country. Some estimates put its total contribution at between $22 billion and $71 billion a year, and if it were an actual bank, it would rank among the biggest home lenders we’ve got. It’s not small and it’s not nothing. It’s become the differentiator for many first-time buyers.  

But what’s even more important than whether you borrow from parents, is how you do it. It can get messy if terms aren’t set out clearly or it’s not set up properly. Not because anyone did anything wrong, but because money and family are a tricky mix when things aren’t spelled out and it can impact your relationship for years. So, here are some things to consider before you borrow from the bank for Mum and Dad.  

The 4 ways parents usually help with a first home 

1. A gift. Cash, no expectation of it coming back. This is the most common option. Around three quarters of parents who help this way say they don’t expect to be repaid. 

2. A loan. Cash with an agreement to pay it back, often interest-free or at a much lower rate than a bank would charge. 

3. A guarantor. No cash moves. Parents use equity in their own home as extra security, which can help you avoid Lenders Mortgage Insurance or buy with a smaller deposit. 

4. Co-ownership. Parents and buyer own the property together, sharing the loan and the title. 

Know which one it is before anyone signs or does anything. A lot of families never actually agree on this out loud. One side thinks it’s a gift, the other thinks it’s a loan, and nobody finds out until it becomes a problem. 

What it’s actually like borrowing from parents 

On paper, it’s simple. Parents have some money or equity, you need a deposit, everyone wins. 

In real life, it can bring up a few things nobody warns you about. Even a genuine “no strings attached” gift can come with a bit of an unspoken layer. Maybe it’s an extra opinion about which suburb you buy in or how you’re spending your money. Maybe it’s a slight feeling of guilt or that you should check in more. On your parents’ side, there’s often quiet worry too, about whether they’ve done the right thing for their own future. 

None of this means you shouldn’t ask for or accept the help, if it’s available to you. It just means you need to be honest that it will likely come with emotional weight and potentially some strings.  

The risks of borrowing from parents for a home 

For you: 

• Even a “no strings attached” gift can quietly shape decisions for years. 

• If you have siblings, unequal help now can cause tension later, especially if it’s never acknowledged as an early inheritance. 

• If it’s not written down, people remember “gift” and “loan” very differently a few years down the track. Both sides can be completely convinced they remember it right. 

For your parents: 

• Money they give you is money that’s no longer working for their own retirement. It’s usually not something that can be easily undone. 

• If they’re on the Age Pension, gifting too much can reduce their payments. The safe limits are $10,000 per financial year, or $30,000 over a rolling 5 years. Go over that and it can count against them for 5 years, even though they no longer have the money. 

• If they’re your guarantor and you default on the loan, they could be legally on the hook for part of it, which puts their own home at risk. 

• If your parents are helping you specifically, and your relationship ends down the track, this money can get caught up in a property settlement if it’s not documented properly. Get it written down as being for you. It protects you if anything changes later, and it’s a lot less awkward to sort out now than after a breakup. 

Should you do it?  

The upside of borrowing from mum and dad is that you could skip Lenders Mortgage Insurance, borrow less, or get into the market years sooner than you would saving alone. Getting in earlier matters more than people think, because time in the market is what lets your equity grow.  

The trade-off, however, is that it puts financial risk on people who love you, and that risk isn’t always talked about clearly upfront. A gift can turn into an accidental gamble with someone’s retirement if nobody’s crunched the numbers. 

There’s no universally right way to do it. It depends on how much your parents can genuinely afford to give without risking their own security, and how comfortable everyone is being upfront about expectations. 

5 things to do before you borrow from parents 

1. Decide: gift or loan? Get it in writing either way, no matter how simple it feels. 

2. If it’s a loan, secure it properly. A simple registered agreement protects everyone and avoids confusion later. 

3. Talk to siblings early, if there are any, so nobody feels blindsided down the track. 

4. Get independent advice, separately for you and your parents, so both sides are properly looked after. 

5. Check the Centrelink and tax impact before your parents hand over any money, especially if they’re near or on the Age Pension. 

A few other options, if the bank of mum and dad isn’t the right fit (or even an option)  

Bank of Mum and Dad isn’t the only path. If your family can’t help, or you’d rather not ask, it’s worth knowing there are other ways to get into your first home sooner: 

• Government first home buyer schemes, including low-deposit guarantee schemes that reduce or remove the need for Lenders Mortgage Insurance. 

• The First Home Super Saver Scheme, which lets you save part of your deposit through your super with tax advantages. 

• State-based grants and stamp duty concessions, which vary depending on where you’re buying. 

A mortgage broker can quickly tell you which of these you actually qualify for.  

Who can help you sort it out 

• A mortgage broker works out the best structure and lender for your situation, family help or not. 

• A financial adviser checks what this means for your parents’ retirement before anything is finalised. 

• A conveyancer or solicitor puts the agreement in writing properly, so everyone’s protected. 

You don’t have to figure this out alone, and you definitely don’t need to have all the answers before you start the conversation with your parents. A quick chat with the right person first can save everyone a headache later, and make the whole thing feel a lot less overwhelming than it does right now. Find the right expert for where you are now in the Penny app.