Guarantor Home Loans in Australia: How It Works for Migrants (2026)

A guarantor home loan allows someone else to use the equity in their property as additional security for your loan. Done correctly, it enables you to purchase with a smaller deposit — sometimes as little as 5% — without paying Lenders Mortgage Insurance (LMI).

For migrants who may not yet have a 20% deposit saved, but have family members with property in Australia, a guarantor arrangement can be a viable path to homeownership earlier than otherwise possible.

What is a guarantor loan?

In a guarantor loan structure:

1. You (the borrower) take out a home loan for the property you want to buy
2. A guarantor (typically a parent or close family member) provides their own property as additional security
3. The lender treats the combined security (your property + guarantor’s property) as adequate — removing or reducing the LMI requirement
4. Once you have repaid enough of the loan to reach 80% LVR on your own property, the guarantor is released from their obligation

The guarantor does not contribute cash — they contribute equity (the unencumbered value) in their own property.

How does the LVR calculation work with a guarantor?

Without a guarantor, if your deposit is 10% on an $800,000 property:

• Loan: $720,000
• LVR: 90%
• LMI required: approximately $12,000–$18,000

With a guarantor providing $160,000 equity from their own property:

• Your property security: $800,000
• Guarantor security: $160,000
• Total security: $960,000
• Effective LVR against total security: $720,000 ÷ $960,000 = 75%
• LMI: not required

The guarantor’s equity fills the gap between your 10% deposit and the lender’s 80% threshold.

Who can be a guarantor?

Lenders have specific requirements for guarantors:

General requirements:

• Owns property in Australia with sufficient equity
• The property used as security must be free of encumbrances (or have enough clear equity beyond any existing mortgage)
• Has sufficient income to service their own existing debts (lenders assess guarantor’s financial position)
• Is of sound mind and not under financial duress
• Has received independent legal and financial advice before signing (most lenders require this)

Who typically qualifies:

• Parents who own their home outright or with significant equity
• Siblings or other family members with property equity (lender-dependent — some lenders restrict guarantors to parents only)

Who cannot be a guarantor:

• Overseas property owners (property must be in Australia)
• People with insufficient equity in their property
• Anyone whose own financial position would make them unable to meet the guarantee obligation if called upon

Guarantor loans for migrants: the specific challenge

For migrants, the guarantor structure has an important limitation: the guarantor typically needs to be an Australian citizen or PR with Australian property.

Most migrants’ parents or close family members are overseas. If your family’s property is in China, India, Singapore or elsewhere:

• That property cannot be used as guarantor security in Australia
• Your family members cannot serve as guarantors for Australian home loans

This means the guarantor option is most available to:

• Second-generation migrants whose parents have lived in Australia long enough to own property with equity
• Migrants whose Australian citizen or PR spouse has parents with Australian property
• Migrants who have been in Australia for some time and have built relationships with Australian property-owning family or (rarely) very close family friends

If none of these apply, the guarantor path may not be available — but there are alternatives (see below).

What the guarantor commits to

When someone acts as guarantor, they are agreeing that if you cannot repay your loan, the lender can:

• Pursue the guarantor for the outstanding amount
• In extreme cases, force the sale of the guarantor’s property to recover the debt

The guarantee is limited — the guarantor is typically only responsible for the guaranteed portion (the gap between your deposit and 20% LVR), not the entire loan. However, this is still a significant commitment.

Independent advice requirement: Most lenders require that the guarantor obtains independent legal advice from a solicitor (separately from the buyer’s solicitor). This is a consumer protection measure — the solicitor must confirm the guarantor understands what they are signing and is not under pressure.

How long does the guarantee last?

The guarantee remains in place until the borrower’s LVR (on their own property alone) drops below 80%.

This happens through a combination of:

• Loan repayments reducing the debt
• Property value increasing (improving LVR)

Once the 80% threshold is reached, the borrower can apply to have the guarantor released. This involves a valuation and a formal application to the lender.

There is no fixed timeline — depending on property values and repayment speed, the guarantee might be released in 3–7 years for a typical property.

Guarantor structure vs. other options

For migrants without accessible guarantors, the comparable alternatives are:

For migrants who do qualify for a guarantor arrangement, it is often the most efficient option — particularly when combined with the First Home Guarantee (if the guarantor removes the LMI issue, the HGS may also be relevant to check).

The release process: getting the guarantor off the loan

Releasing the guarantor is the borrower’s responsibility to initiate — it does not happen automatically when LVR reaches 80%.

The release process:

1. You (the borrower) confirm your current loan balance
2. You order a property valuation (lender may organise this)
3. If the valuation confirms LVR is at or below 80%, apply for guarantor release
4. Lender removes the second security (guarantor’s property) from the mortgage
5. Guarantor receives confirmation that their property is free from the lender’s charge

Important: Review your loan balance and estimated property value periodically. Do not leave the guarantee running longer than necessary — the guarantor’s property remains at risk for the duration.

Risks the guarantor takes on

Guarantors should understand exactly what they are committing to:

• Credit file impact: The guarantee may appear on the guarantor’s credit file, which could affect their own future borrowing
• Property at risk: If the borrower defaults significantly, the guarantor’s property can be used to recover the debt
• Relationship risk: Financial arrangements between family members can create tension — especially if the borrower runs into difficulty making repayments
• Unable to sell easily: While the guarantee is active, the guarantor’s property has a second mortgage/charge registered against it. Selling requires the lender’s agreement and typically means discharging the guarantee first

Most solicitors advising guarantors will walk through these risks in detail during the independent advice process.

Frequently asked questions

Q: My parents live in China and own property there. Can they be my guarantor?
No. Guarantor security must be Australian property. Your parents’ overseas property cannot be used.

Q: Can I use a guarantor and still apply for the First Home Guarantee?
Yes, these are separate products and can be combined in some circumstances. The HGS removes LMI on the first 15% gap; a guarantor removes the need for LMI on any LVR above 80%. If you have a 5% deposit and a willing guarantor, a broker can assess whether using both or just one makes more sense.

Q: What if the guarantor wants to sell their property while still on my loan?
The lender’s charge on the guarantor’s property must be discharged before it can be sold with a clear title. Options include releasing the guarantee (if LVR qualifies), refinancing to remove the guarantee requirement, or substituting a different security.

Q: As a guarantor, do I need to provide income proof?
Yes. Lenders assess the guarantor’s own financial position — income, debts, and whether their own finances are sound. A guarantor who is already financially stretched may be rejected by the lender.

Is a guarantor loan right for you?

The guarantor arrangement is one of the most powerful tools for buying sooner with a smaller deposit — when the right guarantor is available. The key is matching the structure to your actual situation.

At Arrivau, we work with guarantor structures regularly and can assess whether you have a viable guarantor option, which lenders have the best policies for this structure, and what the release timeline looks like.

Get a free guarantor loan assessment →

Last updated: May 2026. Guarantor loan policies and requirements vary significantly between lenders. Individual and guarantor financial positions are assessed separately. Seek independent legal and financial advice before entering a guarantee arrangement.