Gifted Deposit — Can Family Help With Your Home Deposit in Australia?
Yes — lenders in Australia accept gifted funds as part of a home deposit, provided certain conditions are met. Parents gifting money for a deposit is common, particularly in high-cost cities where accumulating a 10–20% deposit can take a decade on a typical income.
The key requirements: the gift must be genuine (not a loan), must be documented correctly, and most lenders require some portion of genuine savings from the borrower.
What Is a Gifted Deposit?
A gifted deposit is money received from a family member (most commonly parents) to use as part — or all — of a home deposit. The gift is non-repayable — the family member must not expect the money back. Lenders verify this through a statutory declaration or gift letter.
Most lenders will accept gifted funds from immediate family: parents, grandparents, siblings or de facto partners. Some lenders extend acceptance to broader family.
How Much Genuine Savings Do You Need?
Most lenders distinguish between genuine savings (funds accumulated by the borrower over time) and gifted funds.
| Deposit Amount | Typical Lender Requirement |
|---|---|
| 5% deposit (with LMI) | Lenders vary widely — some require 5% in genuine savings; others accept 100% gifted funds |
| 10% deposit (with LMI) | Many lenders require 5% in genuine savings; remainder can be gifted |
| 20% deposit (no LMI) | Genuine savings requirement is typically less restrictive |
Genuine savings include:
- Bank savings held for at least 3 months
- Term deposits held for 3+ months
- Equity in an existing property
- FHSS withdrawals (generally counted as genuine savings by lenders)
Not usually counted as genuine savings: Recent lump-sum gifts, tax refunds, gambling winnings, inheritance received in the last 3 months.
A mortgage broker can identify which lenders accept a higher proportion of gifted funds for your situation.
Lender Documentation Requirements
When using a gifted deposit, your lender will require:
- Gift letter / stat declaration — signed by the donor, confirming:
- The amount of the gift
- That it is a gift (not a loan to be repaid)
- The relationship of the donor to the borrower
- The donor’s name, address and signature
- Bank statement showing receipt — the gifted funds must appear in your account, typically held for at least 1–3 months before application
- Evidence that the donor can afford to gift — some lenders require a bank statement from the donor showing the funds were available
Your mortgage broker or solicitor can provide a standard gift letter template.
Tax Implications — Does the Receiver or Donor Pay Tax?
In Australia, cash gifts are not taxable income for the recipient. There is no gift tax in Australia.
For the donor (parent):
- Gifting cash from savings: no tax implications
- Gifting from the sale of shares or investments: the donor may trigger a capital gains tax (CGT) event on the sale of assets to fund the gift — the gift itself is not taxed, but the underlying disposal may be
Centrelink implications: if the donor is receiving Age Pension or other means-tested government benefits, gifting above the allowable threshold ($10,000/year, $30,000 over 5 years) can affect their Centrelink entitlements under the gifting rules.
Using a Guarantor vs a Gifted Deposit — Key Differences
| Feature | Gifted Deposit | Guarantor Loan |
|---|---|---|
| What it is | Cash transferred to you; your debt only | Parent’s property used as security — they are co-liable |
| Risk to parents | They lose the cash gift | They risk their property if you default |
| Effect on parent’s borrowing | No effect on their debt ratios | Reduces their borrowing capacity until guarantor released |
| Common for | Supplementing small deposits | Allowing purchase with zero or minimal deposit |
A guarantor arrangement is a more significant commitment for parents than a cash gift. See going guarantor on a home loan for detail on the risks.
First Home Guarantee and Gifted Deposits
The First Home Guarantee (FHBG) allows eligible first home buyers to purchase with a 5% deposit and no LMI. A gifted deposit can form part of the 5% — subject to the lender’s genuine savings policy.
Under the FHBG, many participating lenders accept gifted funds as part of the deposit, provided some genuine savings history is demonstrated. Requirements vary by lender — a broker familiar with the FHBG panel lenders can identify which have the most flexible gifted deposit policies.
How to Receive and Document a Gifted Deposit
- Have the donor transfer funds to your account as early as possible — ideally 3+ months before your loan application
- Do not transfer out and back in — keep the funds stable in your savings account
- Obtain a signed gift letter from the donor (your broker or solicitor can provide a template)
- Keep bank statements showing the receipt and ongoing balance
- Disclose the gift to your lender — omitting this information on a loan application is a serious matter
Frequently Asked Questions
Can I use a gifted deposit with a First Home Guarantee application? Yes — in most cases. Gifted funds can form part of the 5% deposit under the First Home Guarantee, subject to individual lender policies. Some lenders require a portion of genuine savings alongside the gift.
Do I need to pay the gift back if I sell the house? No — a genuine gift is non-repayable. If you have a formal agreement to repay, it is not a gift — it is a loan, and lenders treat it as a liability.
How much can parents gift for a house? There is no legal maximum for cash gifts in Australia (no gift tax). The practical limit is the deposit required and the donor’s financial capacity. Centrelink rules limit gifting for Age Pensioners to $10,000/year without affecting benefits.
Can grandparents gift money for a deposit? Yes — most lenders accept gifts from grandparents as well as parents. The same gift letter and documentation requirements apply.
Related Guides
- How Much Deposit Do I Need?
- Going Guarantor on a Home Loan — Risks
- Saving for a Deposit
- First Home Buyer Hub
This article provides general information only. Lender policies on gifted deposits vary. Tax and Centrelink implications depend on individual circumstances. For advice tailored to your situation, speak with a licensed mortgage broker or financial adviser. Find one through MoneySmart.