Can my parents lend me money for a house deposit?

Yes. But because you have to pay it back, the bank counts the repayments as an ongoing commitment, and that reduces how much you can borrow.

What's the difference between a gifted deposit and a loaned deposit?

A gift is non-refundable and non-repayable, usually backed by a signed gift letter. A loan has to be paid back, so the bank treats it as a debt and factors it into your borrowing power.

Will a family loan reduce how much I can borrow?

Generally, yes. The repayments are added to your monthly commitments, which leaves less room for your home loan repayments in the bank's calculation.

Can I just say the loan from my parents is a gift?

No. A gift letter is a declaration that the money never has to be paid back. If it does have to be paid back, it's a loan and needs to be declared as one.

Is a guarantor better than borrowing the deposit from my parents?

It can be. With a guarantee your parents' property backs part of your loan, no cash changes hands, and there's no family loan repayment for the bank to count. It does put their property on the line, so it's a bigger conversation.

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Straight Answers · First home

Can my parents lend me the deposit instead of gifting it to me?

Bayley Clarke · Mortgage broker on the road · Last checked 1 November 2026 · 3 min read

The short answer

Of course they can. But because they're lending it to you on the premise that you'll pay it back, it isn't non-refundable and it isn't non-repayable, which is what a gift is. So the bank treats it as a debt.

That debt gets included as an ongoing commitment when the bank works out how much you can borrow. So yes, you can do it that way. It will just shrink the loan the bank is willing to give you.

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

Gift or loan: why the bank cares

When your parents hand you money for a deposit, the bank wants to know one thing: does it ever have to go back? A gift is money that's non-refundable and non-repayable. Your parents sign a letter saying so, and from the bank's perspective that money is yours. A loan is the opposite. There's an expectation you'll pay it back, even if it's mum and dad and even if there's no fixed date on it.

That difference matters because the bank isn't just checking you've got the deposit. It's checking you can afford everything you owe once you've got the keys. If part of the deposit is borrowed, you owe it to someone, and the bank has to count that.

How a family loan hits your borrowing power

So what happens is the bank takes the repayments on that family loan and adds them to your monthly commitments, the same way it would a car loan or a personal loan. Every dollar going back to your parents each month is a dollar the bank can't count towards your home loan repayments, and depending on the size of the loan and your income, that can be the difference between the place you want and the one you can actually get.

How each lender treats a family loan varies, so this is one I check before we pick a bank. What doesn't vary is the honesty part. Calling a loan a gift on a signed letter isn't a workaround, it's a false declaration, and it's not something I'll do with you.

Lend or gift: which one works better

If your parents are comfortable gifting it, a gift generally gives you the most borrowing power because there's nothing to pay back. If they'd rather it come back to them one day, a loan still works, you'll just borrow less. There's also a third option some families use: a guarantee, where your parents' property backs part of your loan and no cash changes hands at all.

Whichever way you go, the right answer comes down to the numbers. Run your borrowing power both ways, with the family loan in as a commitment and without it, and you'll see exactly what the difference costs you. That takes maybe five, ten minutes.

The honest bit: a loan from family is still a loan

It's tempting to treat mum and dad's money as not really a debt. The bank won't see it that way, and neither should you. If you've agreed to pay it back, it has to be declared, and it will come off what you can borrow.

Get the arrangement clear between you and your parents before you apply. Whether it's a gift or a loan changes the paperwork, the bank's numbers, and the conversation at the family dinner table if things change later.

Want to know what a family loan does to your borrowing power?

A 30 minute call. We run your numbers with the family loan in and out, so you can see the difference before anyone moves any money.

Book a 30 minute call Call 0437 189 939

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Next question

My parents are gifting me the deposit. Does that count as genuine savings?

For most banks, no: a lump sum from mum and dad isn't money you saved.