By teaming up with your parents to buy a house, you make yourself a low-risk borrower in the eyes of the banks and can avoid saving a big deposit. But there are risks.
Australia's high property prices have pushed many first home buyers to get help from their parents. Some parents gift their children money towards a deposit.
And some take the step of buying a house jointly with their children. According to Finder research, parents give their kids an average of $33,278 to help with a house deposit
Buying a house with your parents can boost a buyer's borrowing power and increase their chances of getting a loan approved. But mixing relationships and money can be tricky.
How can I buy a house with my parents?
There are 3 ways you can buy a house with your parents.
Buying the property together
If you are buying a house jointly with your parents, both you and your parents will be listed on the property title.
You and your parents must decide the ownership split and the ownership structure. And you will all be responsible for repaying the home loan. If either you or your parents fall behind on repayments, the other party is responsible for covering their share.
Help with the deposit
Your parents may have savings they can add to your deposit, or they might borrow some of the equity in their home to cover the cost.
In this scenario your parents are agreeing to provide you with funds to buy the house. But they likely won't be co-owners of the property. It's up to you to repay the mortgage.
Home loan guarantor
In this scenario you may have saved the deposit yourself and you'll be the sole owner of the property.
But your parents will use their own property (or other assets) to effectively guarantee or co-sign your home loan.
As guarantors, your parents may be responsible for repaying all or part of your home loan if you can't repay it.
Which bank? The bank of mum and dad
More than 60% of Australian first home buyers relied on some kind of financial help from their parents, based on Finder research from 2023. The so-called "bank of mum and dad" is worth an estimated $35 billion. Parents give their kids an average of $33,278 to help with their deposit.
What are the pros and cons of joint property ownership?
Pros
Enter the property market faster. In Australia’s expensive property market, co-buying with your parents may be the only way that some young Australians can realise their property dreams.
Increase your buying power. By using the equity in your parents’ home and sharing the repayments, you can afford to think bigger when choosing your first home.
Borrow less. By teaming up with your parents you could borrow less money, shrinking your loan size and making repayments more affordable.
Share the responsibility. Sharing the responsibility of loan repayments with your parents takes some of the anxiety out of the situation and means that you have a safety net if you get into financial difficulty.
Cons
Circumstances change. While you and your parents might be on the same page about buying a property now, will that still be the case in a few years’ time? As people’s lives change, so do their financial goals.
You and your parents are both liable for the loan. If you take out a joint loan for $500,000, you and your parents are both liable for the full $500,000 loan amount.
Your future borrowing power is reduced. If you find a partner and decide to buy a house together, the loan you already share with your parents could reduce your borrowing power.
The importance of ownership structure
Having a clear agreement in place is essential for all parties in a co-buying arrangement. Understanding how property titles work is also essential.
Tenants-in-common. This is the more popular arrangement and allows you and your parents to divide ownership of the property in whatever way you like, such as 60:40 or 70:30. Under this ownership structure, if one party dies, their share of the property is passed on according to the terms of their will.
Joint tenants. Under a joint tenancy arrangement, all owners on the title own the property completely. This is typically how married couples own a property. You can't simply sell your share of the property because you own it together.
Talk to a conveyancer before agreeing to buy a property with family members.
Did you know?
Our latest State of Women's Wealth Report reveals a clear gender gap in home ownership. Gen Z men are twice as likely to own a home outright compared to Gen Z women (18% vs 9%), and millennial men are 50% more likely to have paid off their homes (15% vs 10%). Overall, 46% of women say they're behind in their journey to home ownership, compared to 33% of men.
Get professional advice. Before you enter into a co-ownership agreement, make sure you get advice from a solicitor or conveyancer. This will ensure that you know exactly what you’re getting yourself into and what you need to do to protect yourself from potential risk.
Draw up a co-ownership agreement. It’s essential that you and your parents get a co-ownership agreement drawn up before you join forces. This agreement can outline how to split costs between parties, what happens if one party defaults on their repayments and what happens if the loan needs to be refinanced.
Have an exit strategy. Before signing on the dotted line, make sure you and your parents both have an exit strategy. How long do you plan on holding the property for? If one of you wants to sell up and move on, how will this situation be handled?
Update your will. If you select a tenants-in-common ownership arrangement, make sure you update your will.
Joint ownership won't work for me – are there any other options?
If you don't want to buy a property together, your parents could guarantee your mortgage or give you some money towards the deposit.
But there are other options.
Lending you some money. If you have sufficient income to manage home loan repayments but you don’t have enough money for a deposit, you might consider asking your parents to lend you some money. However, that some lenders won’t classify borrowed money as a legitimate deposit until it's been in your account for a few months.
“Gifting” you some money. If your mum and dad decide to give you some money as a gift, they can avoid the pitfalls of going guarantor on a loan. This can increase your borrowing capacity and help you buy the home you want.
Buying the property and then renting it out to you. Another option is for your parents to buy an investment property which you then rent from them. The downside here is that you’re still no closer to owning your own home, but if you can negotiate cheaper rent with your parents, you could be able to put more money aside each week to save for a deposit on your own property.
Frequently Asked Questions
There's a number of things to consider before you enter such a big agreement with your parents, including the financial implications and the consequences if one of your needs change the property needs to be sold. It's a good idea to get legal advice and to structure the agreement in the best way from a legal perspective, including clear guidelines and next steps if someone changes their mind.
Yes, you can use your parent's equity as a security or to use as part of your deposit to buy a house. This is generally done through a guarantor loan, where the equity in their home supports your loan.
Your parents can help you get a home loan by acting as a guarantor or providing financial assistance, such as gifting money for a deposit. If they gift you a deposit, the bank still want to see evidence of "genuine savings" to demonstrate you have developed good habits with managing money.
To use your parents as a guarantor, they will need to offer their home equity as security for your loan. This can help you secure a loan with a smaller deposit but carries risks for them if you default. You can speak to your bank or lender about the process of getting a guarantor loan.
Richard Whitten is Finder’s Senior Money Editor, with over eight years of experience in home loans, property, credit cards and personal finance. His insights appear in top media outlets like Yahoo Finance, Money Magazine, and the Herald Sun, and he frequently offers expert commentary on television and radio, helping Australians navigate mortgages and property ownership. Richard started his career in education and textbook publishing in South Korea. He holds multiple industry certifications, including a Certificate IV in Mortgage Broking (RG 206) and Tier 1 and Tier 2 certifications (RG 146), as well as a Bachelor of Education from the University of Sydney and a Graduate Certificate in Communications from Deakin University.
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My daughter and partners income is not enough to get a loan in their name, the option is for my wife and I to go in with them to help them as even with us as guarantors they still can’t get a loan.
What are the rules regarding Capital gains tax when they sell? Does it affect my wife and I or just the property?
Does it reduce after so many years they have lived there?
Finder
AngusFebruary 20, 2025Finder
Hi Glenn, This would depend on how the loan and title are set up. In a broad sense, since you’re not the resident, you might be liable for capital gains on your share of the property value if the house was ever sold. But you would need to seek specific legal advice on this point.
AmyJune 12, 2024
Thank you for this article. I wanted to find out about options to purchase a property with my parents – they are retired so will sell their current property to buy something more suitable. If I decide to contribute to the purchase with them, I am wondering how it would work regarding it being a PPOR for them but an IP for me. Would I charge a portion rent?
Finder
SarahJuly 2, 2024Finder
Hi Amy,
You would need to work out these arrangements with your parents and purchase the property as a joint venture. The specifics will depend on what you all agree is fair. For instance, you might decide that their contribution is a bigger deposit, and your contribution is payment of the remaining weekly mortgage, while all parties split the cost of insurance and rates.
Or, you might decide upon an amount of rent they pay you each week, and you take care of all the ongoing maintenance costs.
It would be a good idea to speak to an accountant, as the arrangement you come to will have tax implications; the property must be income-producing for you to claim property investment tax deductions, for instance.
Whatever you decide, it would also be worth engaging a solicitor to draw up a legal document that outlines who is responsible for what.
Hope this helps!
FledgeJanuary 30, 2024
Hi team – loved this article. I have talked to so many friends about buying with their parents and it still feels like a taboo topic. If you were buying with your parents where would you go to get information? Is there anywhere that’s a good one-stop-shop resource?
Because of my own experience, I started a community for people in this exact situation, so we can learn from one another and talk to experts as we’re going through the buying process. If anyone is interested it’s at: hello.fledge.au
JohnNovember 3, 2022
My parents would like to gift me a house (buying with cash so no finance needed). I’m just wondering if they are able to buy it, but put it in my name and if there are any implications in doing this. For example tax etc.?
Thanks!
Finder
RebeccaNovember 11, 2022Finder
Hi John,
Yes, your parents can purchase a property in your name. If you’re still a minor, they simply need to put proper notations on the title. When you turn 18, they need to present a copy of your birth certificate and evidence that you’re still alive to the relevant government department who will then make the necessary title changes. There will be no stamp duty or capital gains tax on this title change in this scenario.
For other circumstances, stamp duty may be applied when buying a property. The exact amount and exemptions depend on the state or territory you live in and the price of the property purchased. You may utilize your state government’s stamp duty calculator to have an idea of how much it would cost. You can also consult a tax advisor.
I plan to buy a property with my son using the Joint tenants method. My intention is once I die the property is automatically passed to my son, my only concern is whether he need to pay extra stamp duty for the new 50% ownership? Thank you.
Finder
RichardMay 5, 2022Finder
Hi Sarah,
If a joint tenant passes away, the other tenant/owner retains ownership of the whole property. So there is no stamp duty because you both own 100% equally, not 50% each if that makes sense?
If you are concerned or have more legal questions, you should definitely consult your conveyancer.
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My daughter and partners income is not enough to get a loan in their name, the option is for my wife and I to go in with them to help them as even with us as guarantors they still can’t get a loan.
What are the rules regarding Capital gains tax when they sell? Does it affect my wife and I or just the property?
Does it reduce after so many years they have lived there?
Hi Glenn, This would depend on how the loan and title are set up. In a broad sense, since you’re not the resident, you might be liable for capital gains on your share of the property value if the house was ever sold. But you would need to seek specific legal advice on this point.
Thank you for this article. I wanted to find out about options to purchase a property with my parents – they are retired so will sell their current property to buy something more suitable. If I decide to contribute to the purchase with them, I am wondering how it would work regarding it being a PPOR for them but an IP for me. Would I charge a portion rent?
Hi Amy,
You would need to work out these arrangements with your parents and purchase the property as a joint venture. The specifics will depend on what you all agree is fair. For instance, you might decide that their contribution is a bigger deposit, and your contribution is payment of the remaining weekly mortgage, while all parties split the cost of insurance and rates.
Or, you might decide upon an amount of rent they pay you each week, and you take care of all the ongoing maintenance costs.
It would be a good idea to speak to an accountant, as the arrangement you come to will have tax implications; the property must be income-producing for you to claim property investment tax deductions, for instance.
Whatever you decide, it would also be worth engaging a solicitor to draw up a legal document that outlines who is responsible for what.
Hope this helps!
Hi team – loved this article. I have talked to so many friends about buying with their parents and it still feels like a taboo topic. If you were buying with your parents where would you go to get information? Is there anywhere that’s a good one-stop-shop resource?
Because of my own experience, I started a community for people in this exact situation, so we can learn from one another and talk to experts as we’re going through the buying process. If anyone is interested it’s at: hello.fledge.au
My parents would like to gift me a house (buying with cash so no finance needed). I’m just wondering if they are able to buy it, but put it in my name and if there are any implications in doing this. For example tax etc.?
Thanks!
Hi John,
Yes, your parents can purchase a property in your name. If you’re still a minor, they simply need to put proper notations on the title. When you turn 18, they need to present a copy of your birth certificate and evidence that you’re still alive to the relevant government department who will then make the necessary title changes. There will be no stamp duty or capital gains tax on this title change in this scenario.
For other circumstances, stamp duty may be applied when buying a property. The exact amount and exemptions depend on the state or territory you live in and the price of the property purchased. You may utilize your state government’s stamp duty calculator to have an idea of how much it would cost. You can also consult a tax advisor.
Refer to our relevant guide on gifting property here.
Kind regards,
Rebecca
I plan to buy a property with my son using the Joint tenants method. My intention is once I die the property is automatically passed to my son, my only concern is whether he need to pay extra stamp duty for the new 50% ownership? Thank you.
Hi Sarah,
If a joint tenant passes away, the other tenant/owner retains ownership of the whole property. So there is no stamp duty because you both own 100% equally, not 50% each if that makes sense?
If you are concerned or have more legal questions, you should definitely consult your conveyancer.
I hope this helps.
Regards,
Richard