For many first home buyers, saving for a home deposit can be tough, which is why you might need a helping hand from your parents.

One way to do this is with a gifted deposit home loan.

A gifted deposit home loan is when your parents effectively give you the money needed for a home loan deposit. Most lenders require a 5 to 20 percent deposit to obtain finance, and it is possible to receive this money as a gift.

However, there are some important considerations that you must take into account.

What is a gifted deposit?

A gifted deposit is money given to you to help fund your home loan deposit. In most cases, the gift comes from parents or close family members.

The key point is that the money is intended to be a gift, not a loan. If the money needs to be repaid, the lender may treat it differently because it can affect your financial position and borrowing capacity.

A gifted deposit home loan is similar to a guarantor loan in that you are getting someone else, normally your parents, to help you get a loan. However, with a gifted deposit home loan, your parents are not putting up equity in their home. They are contributing cash.

This can be beneficial, as there is no risk to their own property should you not be able to make the required repayments with a gifted deposit home loan.

What lenders usually want to see

Lenders will often want written evidence that the money is from your parents or close family. They also want to know whether the money is a genuine gift and not a loan that needs to be repaid.

Lenders may ask for a gifted deposit letter. This usually confirms who is providing the money, their relationship to you, the amount being gifted and that the money does not need to be repaid. Some lenders have their own template, so it is worth checking the exact wording before your parents transfer the funds or sign anything.

Lenders are also very strict on who they will allow the gift to come from. The deposit will normally need to be from your parents or a close family member such as a sibling or grandparent.

Gifted deposit vs guarantor loan

A gifted deposit home loan and a guarantor loan can both help a buyer enter the property market sooner, but they work differently.

With a gifted deposit, your parents or family members give you cash to help with the deposit. Once the money is gifted, they are not usually providing security for the loan.

With a guarantor loan, your parents may use equity in their own property to support your borrowing. This can help reduce the deposit you need, but it can also expose their property if you cannot meet your loan obligations.

The main difference is risk. With a guarantor loan, your parents may be using their property as security. With a gifted deposit, they are contributing cash instead. That can be simpler from a security perspective, but it still has family and financial consequences because the money is leaving their control.

Grants, concessions and mortgage insurance

A gifted deposit can also interact with first home buyer grants, stamp duty concessions and lender mortgage insurance. The gift itself may help you reach the required deposit, but you still need to check whether you meet the rules for any government support.

Mortgage insurance may still apply if your deposit is below the lender’s required threshold. A gifted deposit can improve your position, but it does not automatically remove all lender costs or approval conditions.

Before relying on a gifted deposit, speak to your broker, lender or conveyancer early. The key questions are: who can provide the gift, what evidence is needed, when should the funds be transferred, whether genuine savings are required, and whether the gift affects your approval timeline.

Final takeaway

A gifted deposit can be a practical way for parents to help a first home buyer enter the market sooner. The important thing is to document it properly, confirm lender requirements early and make sure everyone understands that a genuine gift is different from a repayable family loan.