Using a gifted deposit – home loan comparison

Home buyers with generous relatives can use a cash gift a home deposit, but you still need to prove you can repay your lender.

We’re reader-supported and may be paid when you visit links to partner sites. We don’t compare all products in the market, but we’re working on it!

Most lenders are happy for immediate family members to give their children a gifted deposit – home loan deposits are hard to save for, and a non-refundable cash gift can be a massive boost a borrower's mortgage deposit.

But there are a few rules and criteria you need to know to make sure the cash gift meets the bank’s policies.

When money is gifted to a property buyer close to purchase time, a gift letter or statutory declaration needs to be signed by the family member, stating that the money is to be used for the purchase of property and that the loan is unconditional. The rules around non-refundable gifts state that it needs to be from an immediate family member, which includes de facto, siblings, grandparents and parents.

Learn more about gift letters for home loans

Mortgage Broker Daniel Corran from McCombe Finance says lenders often require that the gift be held in the account for a minimum of three months before purchase application approval.

This is especially the case, Corran says, when a potential home-buyer has less than a 20 per cent deposit saved up, as this is the minimum amount required under the bank’s mortgage lenders’ insurance policy, which protects the bank against the risk of a borrower defaulting on a loan.

Most borrowers also need to demonstrate their own minimum 5% of genuine savings. This means that if you're buying a property worth $500,000, the bank wants to see evidence of your own savings worth 5%, or $25,000. Your family member might then be willing to give you a cash gift worth $75,000, giving you a 20% deposit.

The bank will sometimes ask to see a person’s previous banking records as evidence that a person is able to save money over a continuous period and is therefore likely to be able to service a home loan.

Read the full guide to saving a home loan deposit

"The paperwork required regarding the gift differs between lenders,” Corran says. So it’s wise to get some help from a mortgage broker or do your research before submitting a loan application with a non-refundable gift included.

Corran says some families consider using their own home or an investment property as security in a “family-pledge” situation rather than gifting cash, however, if the borrower defaults on their mortgage, then the family member’s property is at risk when it is cross-secured. For this reason, Corran says non-refundable gifts are usually safer for families as there is no recourse against assets.

The final point Corran tells his clients when they’re considering giving a non-refundable gift to a family member is to make sure that it’s not self-sacrificing and that it doesn’t jeopardise the financial position of the gift-giver.

'The giftor should seek independent financial advice for themselves to ensure their viability to give the gift – to make sure it’s not going to significantly reduce the giftor’s standard of living or interrupt their cash flow,' he says.

Genuine savings explained

Maybe you were the beneficiary of an inheritance, or perhaps you've been gifted deposit money by your parents. Maybe, lucky you, you've won some money.

Regardless of how you come across it, it's certainly a nice windfall. But it doesn't mean you're guaranteed to get a loan. Even if you have money in the bank, most lenders require what's known as genuine savings. This means they want you to demonstrate an ability to save money. Saving money over a period of time shows financial discipline, and that's definitely a character trait lenders want in their home loan customers.

So in most cases, even if you come across a large sum of money, a lender will want you to hold it in your account for at least three months. For some lenders the time can be as long as six months.

But if you have at least 5% of the deposit in genuine savings (it's been in your account for three months) the rest can be a gift. Of course, every lender has its own lending criteria and some may accept the whole deposit as a gift.

Compare loans for first home buyers

$
years
Name Product Interest Rate (p.a.) Comp. Rate (p.a.) Fees Monthly Payment

HSBC Home Value Loan P&IHome≥ 10% Deposit

HSBC Home Value Loan
2.27%
2.28%
  • App: $0
  • Ongoing: $0 p.a.
$577
$3,288 refinance cashback offer
A competitive value home loan with no ongoing fee. Eligible refinancers borrowing $250,000 or more can get a $3,288 cashback. Terms and conditions apply.

loans.com.au Smart Booster Discount Variable Home Loan P&IHome≥ 20% Deposit

loans.com.au Smart Booster Discount Variable Home Loan
1.99%
2.47%
  • App: $0
  • Ongoing: $0 p.a.
$555
Home buyers can get a very low discounted variable rate for the first year. Requires a 20% deposit. Add an offset sub-account for an additional 0.10% on your interest rate. Get your loan processed fast and settle within 30 days.

UBank UHomeLoan Variable Rate P&IHome≥ 20% Deposit

UBank UHomeLoan Variable Rate
2.19%
2.19%
  • App: $0
  • Ongoing: $0 p.a.
$570
Enjoy flexible repayments, a redraw facility and the ability to split your loan. Plus, pay no application or ongoing fees.

HSBC Home Value Loan P&IHome≥ 30% Deposit

HSBC Home Value Loan
1.97%
1.98%
  • App: $0
  • Ongoing: $0 p.a.
$554
$3,288 refinance cashback offer
This competitive variable rate loan is available for borrowers with 30% deposits. Eligible refinancers borrowing $250,000 or more can get a $3,288 cashback. Terms and conditions apply.

Greater Bank Great Rate Fixed Home Loan P&IHome 1Y Fixed≥ -10% Deposit

Greater Bank Great Rate Fixed Home Loan
1.59%
2.15%
  • App: $0
  • Ongoing: $0 p.a.
$526
Get one of the lowest rates on the market with this fixed rate mortgage. NSW, QLD and ACT residents only.

loans.com.au Green Home Loan P&IHome≥ 10% Deposit

loans.com.au Green Home Loan
2.08%
2.36%
  • App: $0
  • Ongoing: $0 p.a.
$562
Buying an energy-efficient home to live in? Get a discounted rate and borrow up to 90%.

IMB Budget Home Loan P&IHome≥ 5% Deposit

IMB Budget Home Loan
2.68%
2.74%
  • App: $449
  • Ongoing: $0 p.a.
$608
You can get an interest rate discount for a limited time with this competitive variable mortgage.

Newcastle Permanent Building Society Premium Plus Package Fixed Rate P&IHome 1Y Fixed≥ 5% Deposit

Newcastle Permanent Building Society  Premium Plus Package Fixed Rate
2.39%
3.85%
  • App: $0
  • Ongoing: $395 p.a.
$586
$2,000 refinance cashback
Enjoy a competitive rate with no application fee for this package loan. $2,000 cashback for eligible refinancers borrowing $250,000 or more.

loans.com.au Smart Booster Discount Investor Variable Home Loan P&IInvestment≥ 20% Deposit

loans.com.au Smart Booster Discount Investor Variable Home Loan
1.99%
2.71%
  • App: $0
  • Ongoing: $0 p.a.
$555
If you have an owner occupier loan with loans.com.au you can also get this very low rate variable mortgage for your investment property. Principal and interest repayments. Add an offset sub-account for an additional 0.10% on your interest rate. Get your loan processed fast and settle within 30 days.

IMB Budget Home Loan P&IHome≥ 10% Deposit

IMB Budget Home Loan
2.43%
2.49%
  • App: $449
  • Ongoing: $0 p.a.
$589
A competitive variable rate for borrowers with 20% deposits saved.

UBank UHomeLoan Fixed P&IInvestment 3Y Fixed≥ 20% Deposit

UBank UHomeLoan Fixed
2.64%
2.44%
  • App: $0
  • Ongoing: $0 p.a.
$605
Pay no ongoing fees on this competitive investment loan and fix your rate for 3 years.

Well Home Loans Balanced Variable P&IHome≥ 20% Deposit

Well Home Loans Balanced Variable
1.85%
1.88%
  • App: $250
  • Ongoing: $0 p.a.
$545
A very low interest rate for home buyers with 20% deposits saved. Add an offset account for a small fee.

IMB Fixed Rate Home Loan P&IHome 2Y Fixed≥ 5% Deposit

IMB Fixed Rate Home Loan
2.27%
2.93%
  • App: $449
  • Ongoing: $6 per month
$577
Lock in a low fixed rate for two years. Available with a 5% deposit.

Newcastle Permanent Building Society Premium Plus Package Home Loan P&IHome≥ 20% Deposit

Newcastle Permanent Building Society Premium Plus Package Home Loan
2.69%
3.10%
  • App: $0
  • Ongoing: $395 p.a.
$609
$2,000 refinance cashback
New borrowers or refinancers can get a discounted rate with this package loan. $2,000 cashback for eligible refinancers borrowing $250,000 or more.

HSBC Fixed Rate Home Loan Package P&IHome 2Y Fixed≥ 20% Deposit

HSBC Fixed Rate Home Loan Package
1.88%
2.65%
  • App: $0
  • Ongoing: $390 p.a.
$547
Lock in a low fixed rate for 2 years and buy your home with a 20% deposit. This loan also lets you make extra repayments.

Well Home Loans Balanced Fixed Home Loan P&IHome 3Y Fixed≥ 10% Deposit

Well Home Loans Balanced Fixed Home Loan
2.35%
2%
  • App: $250
  • Ongoing: $0 p.a.
$583
A low 3 year fixed rate for home buyers. Add a 100% offset account with a $10 monthly fee. Not available for construction purposes.

IMB Fixed Rate Home Loan P&IInvestment 3Y Fixed≥ 10% Deposit

IMB Fixed Rate Home Loan
2.54%
3.37%
  • App: $449
  • Ongoing: $6 per month
$597
A 3 years fixed rate investor which allows extra repayments to be made.

UBank UHomeLoan Fixed IOInvestment 3Y Fixed≥ 20% Deposit

UBank UHomeLoan Fixed
2.79%
2.47%
  • App: $0
  • Ongoing: $0 p.a.
$617
Pay no ongoing fees on this investment loan fixed for 3 years.

Newcastle Permanent Building Society Premium Plus Package Fixed Rate P&IHome 3Y Fixed≥ 5% Deposit

Newcastle Permanent Building Society  Premium Plus Package Fixed Rate
2.89%
3.78%
  • App: $0
  • Ongoing: $395 p.a.
$625
$2,000 refinance cashback
A two year fixed rate home loan with no application fees. $2,000 cashback for eligible refinancers borrowing $250,000 or more.

homeloans.com.au Low Rate Home Loan with Offset P&IInvestment≥ 10% Deposit

homeloans.com.au Low Rate Home Loan with Offset
2.74%
2.74%
  • App: $0
  • Ongoing: $0 p.a.
$613
Access a fee-free offset account and a special interest rate for investors. This loan is not available for construction.
loading

Compare up to 4 providers

Image: Shutterstock

More guides on Finder

Home Loan Offers

Important Information*

Find the right home loan now

Ask an Expert

You are about to post a question on finder.com.au:

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • finder.com.au is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder only provides general advice and factual information, so consider your own circumstances, or seek advice before you decide to act on our content. By submitting a question, you're accepting our Terms of Use, Disclaimer & Privacy Policy and Privacy & Cookies Policy.
Go to site