Can my parents be co-borrowers on my home loan?

They can, but generally only if they pass a substantial benefit test, and they'd usually need to be on the title too. The bank needs to see a real benefit for everyone on the loan.

What is the substantial benefit test?

It's the bank checking that everyone on a loan gets a genuine benefit from it, like owning a share of the property or earning rental income. Going on the loan just to boost your borrowing power doesn't count.

Can my parents go on the loan for a home I live in?

Generally it's hard, because your parents don't get much benefit from owning a share of a home they don't live in. A guarantee is usually the better fit for that situation.

Can my parents and I buy an investment property together?

Yes. If the three of you own it, are all on the loan and it's rented out, there's a much clearer benefit for everyone, so it's far more likely to pass.

What's the difference between a co-borrower and a guarantor?

A co-borrower is on the loan and usually the title, and owns part of the property. A guarantor backs part of your loan with their own property but isn't an owner, and can usually come off once you've built enough equity.

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Straight Answers · First home

Can my parents go on the loan with me instead of being guarantors?

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

The short answer

Yeah, they can, but they need to meet what's called a substantial benefit test. Just like the name says: is there a real benefit for everyone on the loan? And because they're on the loan and you're not their spouse, they'd generally need to be on the title as well, so they'd be owners of the property too.

What they can't do is go on the loan purely to help you borrow more. If the home is yours to live in and your parents get nothing out of owning a slice of it, you're probably not going to pass.

The 90 second version, filmed from the driver's seat. The rest of this page is the detail underneath it.

What the substantial benefit test is asking

Banks don't want anyone signing up for a debt they get nothing out of. So when someone who isn't your spouse wants to go on the loan with you, the bank asks a simple question: what's in it for them? If the answer is nothing except helping you get a bigger number, that's a red flag, because if things go wrong they're on the hook for a debt on a property they don't use.

That's why the bank generally wants your parents on the title as well as the loan. Being an owner is part of what gives them a benefit. They'd own a share of the property on paper, and the loan would be theirs to answer for alongside you.

A home you live in versus an investment

If you're buying a home to live in, what benefit do your parents get if they're not going to live in it? Not really much, right? They'd be on the loan and the title for a property that houses you, not them. That's a hard sell to most lenders, and generally you won't meet the test.

Flip it around. Say the three of you buy an investment property together, a third each, and put tenants in it. Now everyone on the loan owns a share of an asset that's earning rent, with the deductions that come with being an investor. That's a benefit you can actually point to, so we could probably argue there's a substantial benefit there.

If what you really need is help to borrow

If the real goal is getting into your own home sooner, a guarantee is usually the cleaner tool. Your parents use equity in their property to back part of your loan, but they're not on your title and they're not borrowing alongside you. The whole loan is in your name, and once it gets down to 80% of what the property's worth, we take them off.

Each structure carries different risks for your parents, and lenders draw the lines in different places, so it's worth laying them side by side before anyone signs anything.

The honest bit: this isn't a borrowing power hack

Putting your parents on the loan just to make the numbers work is the one version of this that doesn't fly. There needs to be a benefit for whoever is on the loan, and the bank will look for it.

Co-owning also means co-owning everything that comes later: selling, refinancing, a falling out. Make sure everyone's clear on that before you go in together.

Weighing up parents on the loan or as guarantors?

A 30 minute call. We look at what you're buying, what your parents are comfortable with, and which structure actually holds up with the bank.

Book a 30 minute call Call 0437 189 939

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Next question

How does a guarantor home loan actually work?

A guarantor home loan lets a parent put the equity in their own home behind your loan.