How to buy your first home with a sibling or friend

Saving a deposit for your first home can be tough, which is why some Australians team up with a sibling or friend to buy a home together. It’s an arrangement that can make ownership more achievable, especially when combined with the First Home Guarantee.

The First Home Guarantee allows eligible buyers to purchase their first home with a 5% deposit without paying lenders mortgage insurance (LMI). The scheme can be used by two people jointly – and they don’t have to be a couple. 

You can apply with a partner, sibling or friend, as long as both applicants meet the eligibility criteria. To qualify, you must:

• Be Australian citizens or permanent residents aged 18 or older.
• Be first-home buyers (or not have owned property in Australia in the past 10 years).
• Intend to live in the property as owner-occupiers.
• Apply for an eligible loan with principal-and-interest repayments through a participating lender.

That means you can’t use the scheme to buy an investment property. You’ll need to move in once the purchase is complete and live there as your main residence. The rules don’t prohibit renting out a spare room, provided you still occupy the property yourself.

Why co-buying can make sense

Pooling your resources with someone else can help you:

• Enter the market sooner by sharing the deposit and borrowing costs.
• Access better locations or larger properties than you could afford alone.
• Share ongoing expenses such as council rates and maintenance.

However, it’s essential to plan carefully. You’ll both be on the loan, which means sharing full responsibility for repayments. It is a good idea to come to a formal agreement setting out each person’s share, responsibilities and what happens if one wants to sell or move to help prevent future problems.

Buying together – and using the First Home Guarantee – could open doors that once felt out of reach.