For many first home buyers, saving for a home deposit can be tough, which is why you might need a helping hand from your parents.

One way to do this is with a gifted deposit home loan.

A gifted deposit home loan is when your parents effectively give you the money needed for a home loan deposit. Most lenders require a 5-20% deposit to obtain finance and it is possible to receive this money as a gift.

However, there are some considerations that you must take into account.

Lenders will often want written evidence that the money is from your parents. They also want to know if the money is a genuine gift and not a loan that needs to be repaid.

Some lenders might also want to know that you are able to manage repayments effectively and will likely want to see some evidence of this through a rental history or genuine savings.

Lenders are also very strict on who they will allow the gift to come from. The deposit will normally need to be from your parents or a close family member such as a sibling or grandparent.

A gifted deposit home loan is similar to a guarantor loan in that you are getting someone else, normally your parents, to help you get a loan. However, with a gifted deposit home loan, your parents are not putting up equity in their home but are using cash.

This can be beneficial, as there is no risk to their own property should you not be able to make the required repayments with a gifted deposit home loan.

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