Do my parents risk their whole house if they go guarantor?

Generally no. Most family guarantees are limited, meaning your parents guarantee a set portion of your loan secured against their property, not the whole loan.

How much do parents guarantee on a guarantor loan?

Usually enough to cover around 20% of the purchase price plus costs like stamp duty, so you can borrow without lenders mortgage insurance. Lenders cap how much of the parents' property can be used.

What happens if I can't make the repayments on a guarantor loan?

The bank can ask your parents to cover the guaranteed portion, which is secured by their property. Their risk is capped at that guaranteed amount.

When can my parents come off as guarantor?

Once your loan is 80% or less of your property's value. You apply for the release, and the bank generally wants a fresh valuation and a clean repayment history.

Do all banks offer family guarantee loans?

No. Plenty of lenders don't offer them for new loans, and the ones that do set their own limits on how much can be guaranteed.

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Straight Answers · First home

If my parents go guarantor, what are they actually risking?

Bayley Clarke · Mortgage broker on the road · Last checked 16 October 2026 · 3 min read

The short answer

They're not putting their entire house on the line. It's generally a limited guarantee: your parents share a portion of their equity with you, so the bank treats you fairly even though you haven't got a deposit.

That guarantee generally stays in place for a couple of years, while your loan is more than 80% of what your property is worth. Once your loan drops to 80% of the value, you can apply to have your parents released and their property comes off.

The 60 second version, filmed from the driver's seat. The rest of this page is the detail underneath it.

It's a slice of their equity, not their whole house

The fear is that you're asking your poor parents to put their entire house on the line so you can get into the market. It doesn't work that way, generally. Most lenders that offer a family guarantee use a limited guarantee. Your parents guarantee a set portion of your loan, secured against their property, not the whole thing.

That portion is usually sized to cover the gap a deposit would normally fill: around 20% of the purchase price plus costs like stamp duty, so you can borrow without paying lenders mortgage insurance. Most lenders also cap how much of the parents' property can be used, so they keep a healthy amount of their own equity untouched.

What they're actually on the hook for

Here's the plain version. If everything goes to plan, your parents never pay a cent. You make the repayments, the loan comes down, your property generally goes up in value over time, and the guarantee comes off. For most families that's exactly how it plays out, and the guarantee ends up being a signature and a few years of patience.

If it doesn't go to plan and you can't pay, the bank can ask your parents to cover the guaranteed portion, and that's secured by their property. So the risk is real, but it's capped at that guaranteed amount, not the whole of your loan. That's the conversation worth having openly as a family before anyone signs.

How and when they come off

The guarantee is there while your loan is more than 80% of what your property is worth. Once your loan gets down to 80% of the value, through your repayments, extra repayments and any growth in the property's value, the guarantee is no longer needed.

At that point you apply to release your parents. The bank generally wants a fresh valuation, a clean repayment history and the loan sitting under its no-mortgage-insurance threshold on the day. It isn't automatic, so it's worth checking in every year or so to see whether you're there yet. Then the parents come off, their property is released, and happy days.

The honest bit: limited, but not risk free

A family guarantee is one of the best tools there is for getting in without a deposit, and for most families it works exactly as planned. But it isn't nothing. Your parents are taking on a real, capped risk, and their own plans can be affected while it's in place.

Also worth knowing: not every lender does family guarantees, and the ones that do set their limits differently. Picking the right one is half the job.

Thinking about asking your parents?

A 30 minute call, ideally with them on it. I explain exactly what they'd be guaranteeing, how much of their equity it uses, and when they'd likely come off.

Book a 30 minute call Call 0437 189 939

No cost to you. The bank pays me when a loan settles. · How I get paid

Next question

When do my parents come off as guarantor, and can they guarantee more than one kid?

The game plan: when your loan is 80% of what the property is worth, the guarantee gets released.