What are Home Loans for Buying Closer to Family?

What Home Loan Options Help You Buy Closer to Family?

The Australian Government 5% Deposit Scheme lets eligible first home buyers purchase with as little as 5% deposit, with no income caps and no annual place limits. Housing Australia provides a guarantee to the participating lender of up to 15% of the property value, enabling borrowers to reach a combined deposit and guarantee of 20% without paying LMI. This removes one of the biggest barriers for buyers trying to secure a home in suburbs where family already lives, particularly in Melbourne's middle and outer rings where property values have climbed.

Consider a buyer looking to purchase in Mount Waverley to be within walking distance of parents who can help with childcare. At the suburb's current median, saving a 20% deposit plus settlement costs would take years. With the 5% Deposit Scheme, that buyer could enter the market with around $30,000 in genuine savings, bypassing LMI entirely. The scheme applies across both new and established homes, and works with variable rate, fixed rate, and split loan structures depending on your lender.

Applications are made through a panel of participating lenders and cannot be made directly to Housing Australia. The panel expanded significantly in late 2025 and continues to grow, giving buyers more choice in rate and loan features. A broker can identify which lenders on the panel offer the most suitable home loan products for your situation, and whether you meet the eligibility criteria before you start looking at properties.

Can You Use Help to Buy if You're Buying Near Family?

The Help to Buy scheme allows the Australian Government to contribute up to 40% of the purchase price for a new home and up to 30% for an existing home in exchange for a proportional equity stake, with a minimum 2% deposit required. From 1 July 2026, income limits are $103,000 for individual applicants and $165,000 for joint applicants or single parents.

This option works particularly well for buyers targeting suburbs with strong family connections but higher median values. In a scenario like this, a couple earning a combined $150,000 could purchase an established home valued at $750,000 with a 2% deposit of $15,000 plus settlement costs, while the government contributes up to $225,000 in equity. The couple would hold a 32% share at settlement, with the government holding 30% and the remaining 38% funded by the home loan. Over time, buyers can purchase additional equity from the government or sell the property and split proceeds proportionally.

Property price caps vary by location and are available via the postcode search tool at firsthomebuyers.gov.au. Melbourne suburbs have varying caps depending on whether they're classified as capital city or regional centre zones, so checking eligibility early is important. Unlike the 5% Deposit Scheme, Help to Buy has annual place limits, and demand has been high since the scheme opened in December 2025. Applications are also made through participating lenders rather than directly to Housing Australia.

How Do Victorian Stamp Duty Concessions Work for First Home Buyers?

Stamp duty relief is available for first home buyers through a full exemption on properties valued up to $600,000 and a sliding scale concession on properties valued from $600,001 to $750,000. The exemption and concession apply to both new and established homes where the property will be the buyer's principal place of residence. At a purchase price of $650,000, a first home buyer would save roughly $34,000 in duty compared to a non-concessional buyer.

This relief stacks with federal schemes, meaning a buyer using the 5% Deposit Scheme to purchase a $700,000 established home in Oakleigh, for example, would also receive partial stamp duty relief and avoid LMI. The combined effect reduces upfront costs significantly and opens up suburbs that might otherwise feel out of reach. Buyers purchasing closer to family in areas like Glen Waverley, Wheelers Hill, or Mount Waverley should factor this concession into affordability calculations from the outset.

The buyer must move in within 12 months of settlement and reside there for at least 12 months. This occupancy requirement aligns naturally with buyers intending to live near family, as the property will be their principal place of residence rather than an investment.

What Loan Features Should You Prioritise When Buying Near Family?

An offset account can be particularly valuable when family members are contributing financially to help with a deposit or ongoing costs. Any funds sitting in the linked offset reduce the interest charged on the home loan without locking that money away. In our experience, buyers moving closer to family often receive intermittent financial support, whether through gifts, informal loans, or shared household contributions. An offset account gives flexibility to park those funds and reduce interest while keeping them accessible.

Split loan structures also deserve consideration. A portion of the loan can be fixed to lock in repayments for budgeting certainty, while the variable portion allows extra repayments and access to offset benefits. Buyers who anticipate help from parents or other relatives in the form of lump sum contributions can direct those payments to the variable portion without incurring break costs.

Some lenders also offer portable loans, which allow you to transfer your existing loan to a new property without reapplying or paying discharge fees. This can be useful if your family circumstances change and you need to move again within a few years, though it's not a feature every buyer will need immediately. When comparing home loan options, focus on the features that match how you'll actually use the loan rather than collecting every available feature.

Should You Consider a Guarantor Loan if a Parent Offers to Help?

Guarantor home loans allow a family member, usually a parent, to use the equity in their own property as additional security for your loan. This can eliminate the need for LMI and reduce or remove the deposit requirement entirely, depending on how much equity the guarantor has available. A parent with $150,000 in usable equity could guarantee that portion of the loan, allowing their child to borrow the full purchase price without needing to save a deposit.

The guarantor is not responsible for the entire loan, only the guaranteed portion, and that portion can be released once the buyer builds enough equity through repayments and capital growth. Most guarantor arrangements are released within a few years. The guarantor's property remains their own, they continue living in it, and they retain control. They're simply offering their equity as security rather than as a cash gift.

This option works particularly well when family members want to help but don't have liquid savings to contribute. It also keeps the buyer's borrowing capacity intact, as they're not receiving a cash gift that needs to be declared and explained to the lender. The risks sit with the guarantor, so clear communication and legal advice for all parties is essential before proceeding. Guarantor loans are structured carefully to protect both buyer and guarantor, and the terms are set out in a formal guarantee document at settlement.

What Happens If You Need More Deposit Than You've Saved?

First home buyers with a smaller deposit sometimes explore using the First Home Super Saver Scheme to increase their available funds. The FHSS Scheme allows first home buyers to make voluntary concessional and non-concessional contributions into their superannuation fund and apply to release eligible amounts toward a home deposit, with up to $15,000 of personal contributions from any one financial year able to be released, and a total cap of $50,000. Concessional contributions are taxed at 15% rather than at marginal income tax rates.

This can be particularly useful for buyers who have been earning for a few years but haven't been able to save aggressively due to rent or other costs. If both members of a couple have been making voluntary contributions, they could collectively access up to $100,000 from super to use as a deposit. The withdrawal is subject to tax when released, but the effective rate is still lower than the income tax that would have been paid on those earnings.

Buyers generally need to obtain a determination from the ATO before signing a purchase contract. Timing matters, as the determination and release process can take several weeks. Planning this in advance, rather than discovering the scheme during a bidding campaign, makes the process far less stressful.

Can You Combine Government Schemes with Family Gifted Deposits?

Gifted deposits from family members are generally acceptable to lenders when using the 5% Deposit Scheme or Help to Buy, provided the gift is genuine and doesn't need to be repaid. Lenders require a signed statutory declaration from the person giving the gift, confirming it's not a loan. This allows buyers to combine their own savings with financial help from parents or other relatives to meet the deposit requirement.

In a scenario where a buyer has saved $20,000 and receives a $15,000 gift from parents, that combined $35,000 could be used as a 5% deposit on a property valued at $700,000, with the scheme covering the LMI that would otherwise apply. The buyer's genuine savings must still meet the lender's requirements, which typically means at least 5% of the purchase price needs to come from the buyer's own verified savings or equity, but this varies between lenders.

Some lenders are more flexible with gifted deposits than others, particularly when the buyer can demonstrate a solid savings history even if the total saved amount is below the full deposit. A broker can identify which lenders on the scheme panel will accept your specific mix of saved and gifted funds, avoiding situations where you're declined due to policy rather than affordability.

How Does Serviceability Work If You're Earning Less But Have Family Support?

APRA requires all ADIs to assess new borrowers' capacity to service a home loan at an interest rate that is at least 3.0 percentage points above the loan product rate. This serviceability buffer means your income needs to support repayments at a rate well above what you'll actually pay. For buyers with modest incomes, this can limit borrowing capacity even when family support makes the purchase financially viable in practice.

Lenders assess serviceability based on your declared income, existing debts, and living expenses. Informal support from family, such as help with groceries or childcare, generally can't be included in income calculations. However, formal arrangements such as rental income from a family member living with you, or documented ongoing financial contributions, may be considered depending on the lender's policy.

If serviceability is tight, reducing existing debts before applying can improve your borrowing capacity significantly. Paying off a car loan or personal loan, or even closing unused credit cards, increases how much lenders will allow you to borrow. Buyers often underestimate how much impact a $10,000 car loan or a $5,000 credit card limit has on serviceability. Clearing those commitments can add tens of thousands to your maximum loan amount. You can explore your current position using our borrowing capacity calculator before speaking to a lender.

Can You Use These Schemes to Buy Investment Property Near Family?

Both the 5% Deposit Scheme and Help to Buy apply only to owner-occupied home loans, not investment properties. The home must be your principal place of residence, and you're required to move in within a set timeframe and live there for a minimum period. Buying an investment property near family to generate rental income while you continue renting elsewhere doesn't qualify.

However, once you've purchased your first home under one of these schemes and met the residency requirements, you can later refinance or purchase an investment property using the equity you've built. Many buyers start with a home near family as their principal residence, build equity over a few years, then keep that property and purchase another home or investment elsewhere. This approach allows you to benefit from the schemes initially while still building a property portfolio over time. Refinancing your home loan to access equity is one of the most common ways buyers fund a second purchase.

Melbourne buyers often start in one suburb to be near family, build equity, then retain that property as an investment while purchasing in a different location for lifestyle or work reasons. The first property continues generating capital growth and can provide rental income, while the second property becomes the new principal residence.

Call one of our team or book an appointment at a time that works for you. We'll walk through which scheme fits your situation, how much you can borrow, and which suburbs near your family are within reach based on current property values and your deposit. Whether you're moving closer to parents in the eastern suburbs or looking at areas near siblings in the south-east, we can structure a loan that gets you there without waiting years to save a 20% deposit.

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