Family Guarantee Loans in South West Sydney: The 2026 Guide
This article is by Infinity Mortgage Brokers, just contact us here if you need home loan help.
Family guarantee loans are giving South West Sydney buyers a genuine pathway to homeownership without the traditional 20% deposit barrier. If your parents own their home outright or have substantial equity, they can guarantee part of your loan, letting you buy with as little as 5% deposit and no lenders mortgage insurance (LMI).
Whether you're looking in Moorebank- Revesby or Padstow across South West Sydney, a family guarantee can bridge the gap between your current deposit and what you need to buy. The structure protects both generations while giving you access to the property market years earlier than saving alone would allow.
Infinity Mortgage Brokers helps families across South West Sydney structure family guarantee loans that work for everyone involved, completely free of charge.
Here's what you need to know about how family guarantees work, what lenders look for, and how to structure one that protects your family's interests.
Key takeaways
- A family guarantee lets you buy with a 5% deposit and zero LMI.
- Your parents' equity secures the guarantee; their income is not assessed.
- Guarantees are typically removed within 2 to 5 years once equity builds.
How does a family guarantee loan work?
A family guarantee loan lets your parents use their home's equity as security for part of your loan, removing the need for you to save a full 20% deposit or pay LMI. Your parents guarantee the portion you can't cover, typically 15 to 20% of the purchase price, while you're responsible for the main loan and all repayments. The guarantee only kicks in if you default, which means your parents' property is at risk only in that scenario, not for day-to-day repayments.
What government schemes work with family guarantees in South West Sydney?
Several schemes can stack with a family guarantee to reduce what you need upfront. The combination available to you depends on your deposit, purchase price, and whether you've owned property before.
- › First Home Guarantee: can be combined with a family guarantee for maximum benefit. With 5% your own deposit, a 15% government guarantee and a 5% family guarantee, you reach 100% finance with no LMI. The price cap for Sydney metro is $1,500,000, covering all 25 approved suburbs, and there are no income caps or place limits following the October 2025 changes.
- › First Home Owner Grant: $10,000 for newly built homes under $600,000 or house-and-land packages under $750,000. The price cap makes this largely inapplicable for established homes in South West Sydney where all house medians exceed $1,000,000, but it may apply to off-the-plan apartments or outer estate builds such as Edmondson Park.
- › Stamp duty concessions: full exemption for purchases up to $800,000 under the NSW First Home Buyers Assistance Scheme. Relevant for units, where Bankstown sits at a $580,000 median and Liverpool at $520,000, but not applicable to houses in this market where all medians exceed $1,000,000. Always confirm your specific purchase price with Revenue NSW.
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How do mortgage brokers help families structure guarantee loans in South West Sydney?
Not every lender offers family guarantee products, and the ones that do have different rules about guarantee amounts, exit strategies, and borrower requirements. We compare your options across our 40+ lender panel to find the structure that works best for your family's situation.
Step 1: Talk to us
Get in touch and we'll assess your deposit, your parents' equity position, and which family guarantee structures are available across our lender panel.
Step 2: Review your parents' position
We work out how much equity your parents have available and what guarantee amount gives you the best borrowing outcome without overcommitting their security.
Step 3: Compare lender policies
We identify which lenders offer the most flexible guarantee terms, the clearest exit strategies, and the strongest rates for your combined profile.
Step 4: Structure the guarantee
We coordinate the loan structure so both properties are properly secured, all parties understand their obligations, and the legal documentation protects everyone involved.
Step 5: Arrange independent legal advice
We ensure your parents receive independent legal advice as required by law, and coordinate with their solicitor to make the guarantee process as smooth as possible.
Step 6: Plan the exit strategy
We build in a clear path for removing the guarantee once you've gained enough equity, typically through property value growth or loan payments over 2 to 5 years.
What mistakes do families make with guarantee loans?
The biggest mistake families make is not planning the exit strategy upfront. Your parents don't want to be guarantors forever, and you don't want them tied to your loan indefinitely. The best guarantee structures include a clear timeline and trigger points for removing the guarantee, usually when your property value growth plus loan repayments gets you to 80% loan-to-value ratio.
The second mistake is not getting independent legal advice. Lenders require your parents to receive independent legal advice before signing a guarantee, but some families treat this as a formality rather than a genuine protection. Your parents need to understand exactly what they're signing and what happens in different scenarios.
How do family guarantees affect borrowing capacity?
Your borrowing capacity is based on your income alone. Your parents' income doesn't count toward serviceability, and their existing debts don't reduce what you can borrow. The guarantee only affects the security side of the equation by reducing your required deposit and eliminating LMI.
This is different from joint borrowing, where everyone's income and debts are combined. With a family guarantee, you're the sole borrower responsible for all repayments, while your parents provide additional security without taking on the debt.
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Local experts
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Prefer to talk now? Call 0426 955 190 |
Frequently Asked Questions
Do my parents need to earn income to be guarantors for a family guarantee loan?
No, your parents don't need ongoing income to provide a guarantee. The guarantee is based on their property equity, not their ability to service the loan, which is assessed entirely on your income.
How much can my parents guarantee on a family guarantee loan?
Typically up to 20% of your purchase price, though this depends on how much equity they have available and the lender's maximum guarantee policies. Most lenders want your parents to retain at least 20% equity in their own home after providing the guarantee.
Can I combine a family guarantee with the First Home Guarantee in South West Sydney?
Yes. You can use 5% your own deposit, a 15% government guarantee and a 5% family guarantee to achieve 100% finance with no LMI. The Sydney metro price cap is $1,500,000, and income caps were removed in October 2025, making this one of the strongest combinations available for first home buyers.
What happens if property values fall after I use a family guarantee?
Your parents remain liable for the guaranteed amount even if your property value drops below the loan balance. This is why the exit strategy and conservative guarantee amounts are important. We structure guarantees to minimise this risk from the outset.
How long does a family guarantee typically last?
Until you formally remove it, which typically happens when your loan-to-value ratio reaches 80% through property value growth and loan repayments. Most guarantees are removed within 2 to 5 years if property values perform reasonably.
Should I use a mortgage broker or go directly to my bank for a family guarantee loan?
A mortgage broker, every time. Family guarantee policies vary significantly between lenders. Some offer more flexible guarantee amounts, others have better exit terms, and rates can differ meaningfully. A broker compares all options across 40+ lenders to find the best structure for your family.
What documents do my parents need to provide for a family guarantee?
A property valuation of their home, proof of their existing mortgage balance if any, and evidence of their identity. They'll also need to receive independent legal advice before signing the guarantee documents.
Your Next Steps
Getting a family guarantee structure right protects both generations and sets you up for a smooth exit strategy down the track. The difference between lenders can affect your guarantee amount, your exit timeline, and your overall borrowing outcome, which is exactly what a broker comparison is designed to find for you.
Ready to find out which lenders offer the best family guarantee terms for your situation? Contact the Infinity Mortgage Brokers team for a free consultation or call 0426 955 190. We'll assess your family's position across our 40+ lender panel and find the most suitable guarantee structure for you.
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External Resources
Infinity Mortgage Brokers · 25 Restwell St, Bankstown NSW 2200 · ABN 15 612 794 457 · Authorised Credit Representative 488432 of Connective Credit Services Pty Ltd (Australian Credit Licence 389328) · Bankstown and South West Sydney · General information only - this article does not constitute financial advice. Please consider your own circumstances and seek professional advice before making any financial decisions. · Last updated 8 July 2026