First Home Guarantee for Friends, Siblings and Family Buying Together

By Andrew Paterson

Since July 2023, the First Home Guarantee has allowed friends, siblings and other family members to apply jointly.

Combined incomes mean higher borrowing capacity, a shared 5% deposit is more achievable and the scheme removes Lenders Mortgage Insurance entirely. Since October 2025, with unlimited places and no income caps, more people are exploring whether this could work for them.

But buying property with someone who isn’t your romantic partner introduces complications around legal structure, exit scenarios and long-term financial commitments that are worth understanding before you commit.

How the joint application works

The scheme allows a maximum of two applicants. You can buy with one other person, whether that’s a sibling, friend, parent or other family member.

Both applicants must individually meet every eligibility requirement:

• Australian citizen or permanent resident
• First home buyer, or no property ownership in Australia for 10 years
• Intend to live in the property as an owner-occupier

If your sibling owned a unit in Sydney eight years ago, you can’t apply together. You’d need to wait until they reach the 10-year mark, or apply alone on your own income.

The same applies to parents. A parent who currently owns their home doesn’t meet the eligibility criteria and can’t be a co-applicant under the scheme.

De facto relationships and eligibility

If you’re in a de facto relationship, the scheme treats you as a couple. You can’t apply with a friend or sibling instead of your partner.

The definition comes from the Acts Interpretation Act: living together on a genuine domestic basis, as a couple. There’s no minimum duration requirement.

Applying with your sibling while in a de facto relationship means potentially making a false declaration on a Commonwealth statutory document. The consequences include guarantee cancellation and up to four years imprisonment.

Relationship status changes during the process can also create complications.

If your sibling is single when you apply but enters a de facto relationship before settlement, their eligibility may be affected.

If their new partner owned property within the last 10 years, your sibling can’t use the scheme at all.

How to hold the property

Before settlement, you’ll need to decide whether to hold the property as joint tenants or tenants in common.

• Joint tenants: You each own the whole property together. If one dies, the other automatically receives full ownership. You can’t leave your share to someone else in your will.
• Tenants in common: You each own a defined share. If one dies, their share goes to whoever they’ve named in their will.

For siblings and friends, tenants in common usually makes more sense. You retain the flexibility to leave your share to your own future family.

When one person wants to leave and what happens to the guarantee

If one person wants to leave while the First Home Guarantee is still in place, the guarantee covers a specific loan with specific borrowers. Removing one borrower typically requires refinancing.

That creates several potential problems:

• Refinancing to a non-participating lender ends the guarantee entirely
• If the LVR is still above 80%, you’ll need to pay the LMI you originally avoided
• If the remaining borrower can’t service the loan alone, the refinance may be declined

In most cases, the remaining borrower’s single income won’t support the full loan. If they can’t refinance and the departing co-owner wants their equity, the property has to be sold.

Joint liability and future borrowing

When you take out a joint loan, each borrower is responsible for the entire debt, not just their share.

If your co-owner stops paying, the bank can pursue you for the full amount. If they default on other debts like credit cards or personal loans, it can affect the bank’s risk assessment of the joint loan as well.

Most lenders also count 100% of your joint loan as existing debt when calculating what you can borrow next, even if your co-owner pays exactly half the repayments.

This is why many financial advisors suggest co-ownership with siblings or friends works best as a medium-term strategy. The idea is to build equity over five to seven years, then sell and use the proceeds to buy independently.

Co-ownership agreements

A co-ownership agreement is a legal document that sets out how you’ll manage the property together and what happens when circumstances change. It’s not required by law, but buying without one means important decisions only get discussed when they’re already urgent.

A good agreement covers:

• Financial contributions. Who paid what toward the deposit? How are repayments split? If one person pays more, does their ownership share increase?
• Living arrangements. Who lives there? Can either person’s partner move in?
• Decision making. What requires both to agree? Renovations? Refinancing?
• Exit terms. Does the other get first right to buy out? How do you determine value? What’s the timeframe before you sell on the open market?
• Default scenarios. What if one can’t pay their share? Is there a grace period?
• Death and incapacity. What happens if one dies or becomes seriously ill?

Situations without clear guidance

Some scenarios come up regularly that aren’t well covered by official guidance:

Can ownership be unequal under the scheme?

The scheme doesn’t specify ownership percentages. You could buy as tenants in common with 60/40 ownership if one contributed more deposit.

Both borrowers remain equally liable for the loan regardless of ownership split.

Can one person rent out their room?

Both owners need to live in the property as their principal residence for the guarantee to remain valid.

Taking in a housemate while you both still live there is generally fine. One person moving out and renting their room to someone else is less clear.

What if one person moves out but keeps paying?

The scheme requires the property to be your principal residence. If it’s no longer your principal residence, you may be in breach of scheme conditions, even if your loan repayments continue.

Whether joint buying makes sense for you

Buying with a sibling or friend can work well when both people have similar financial situations and aligned timelines for how long they want to hold the property.

It works less well when incomes are significantly different, or when one person sees it as a stepping stone and the other as a long-term home.

The scheme makes the deposit and LMI barriers easier to clear. The legal and personal dimensions of co-ownership are separate from the scheme and worth thinking through before you commit.

Want to talk it through?

The best starting point is a conversation with your broker before you have the conversation with each other. We can help you understand what the scheme allows and what questions are worth resolving early.

For more on how the First Home Guarantee works alongside other benefits, see our complete guide to Geelong grants and schemes.

Book a free strategy session or call us on (03) 5222 7453.