Helping Your Child Buy a Home: What Does It Do to Your Own Plan?

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  A gift. The money leaves your plan, and the Age Pension tests can still count part of it.
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  A written loan. You keep a claim on the money, but it counts as your asset for the Age Pension.
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  A guarantee. No money moves now, but you could have to repay the loan, and it can affect your own borrowing.
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  Co-owning. Stamp duty and tax can change depending on the state and who goes on title, so your accountant and a solicitor should confirm the position first.
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  Rent-free living. A property you own, other than your home, still counts in the Age Pension assets test if your child lives there rent-free.
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  Doing less. A smaller amount, or one form of help instead of two, is a legitimate answer.

Since 1 October 2025 the 5% Deposit Scheme has had no income caps, no waitlist and no lenders mortgage insurance, and places are unlimited. The minimum deposit is 5%, or 2% for single parents and legal guardians. The Government guarantee is to the lender, so your child stays responsible for repayments and must still meet the lender’s credit policy. Price caps depend on location: in capital cities and listed regional centres they are $1.5 million in New South Wales, $950,000 in Victoria and $1 million in Queensland.

Help to Buy works differently: the Government contributes up to 30% of the price of an existing home or 40% of a new one, with a 2% minimum deposit and 10,000 places a year. It has its own price caps. Taxable income caps from 1 July 2026 are $103,000 for a single applicant and $165,000 for joint applicants or a single parent. This is shared equity: the Government holds an equity share, so your child should understand the ongoing conditions and how that share can be bought back.

Banks generally assess repayments using an interest rate at least 3 percentage points above the loan rate. A smaller deposit leaves less cushion if values keep falling. Your child’s broker can explore whether either scheme fits, and what each option costs.

Services Australia’s Age Pension gifting free areas are $10,000 in one financial year and $30,000 over five financial years. These limits apply to a couple combined, rather than separately to each partner. The excess is counted in the assets test and deemed (treated as earning a set rate) in the income test for five years from the gift, so timing matters if you could claim the pension, or already receive it, within that window.

Money you lend counts in both tests, and forgiving the loan later may be treated as a gift. Tax on any interest you charge is a question for your accountant.

A guarantee involves no payment up front, but Moneysmart says a guarantor may have to repay the whole loan plus interest, the lender may sell a home used as security, and a default may be recorded on the guarantor’s credit report. A partial guarantee may limit what you owe, but the security is still at risk. Moneysmart suggests independent legal or financial advice before signing, and a solicitor can take you through the guarantee itself.

Worth knowing:

Banks That Follow the Banking Code of Practice Generally Won’t Accept a Guarantee Until the Third Day After You’re Given the Required Information.

The Code also requires a notice that you can refuse to sign and can limit your liability. Unless you or your lawyer confirm you’ve had independent legal advice, the bank takes reasonable steps to meet you without the borrower present. Use those days for that advice, and ask the lender exactly how much you’d be guaranteeing and when it ends.

None of this needs settling in one sitting.

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  With each other. Agree your limit, and what you won’t do, before talking numbers with your child.
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  With your child. Gift or loan, what happens if they separate or sell, and when you’ll review it.
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  With your other children. Whether this is an advance on an inheritance, and what fair means in your family.
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  On paper. Write it down, whatever the form, and have a solicitor prepare any loan agreement.