What is a family mortgage and how do you use it to buy your first home?

How does a family mortgage between you and your parents work?

With a family mortgage, your parents or grandparents act as the lender. They lend you an amount, and you pay it back in monthly installments. This loan usually runs alongside a standard mortgage from a bank.

Three things make this type of loan different from informal help from your parents:

• You are borrowing from family, which allows you to agree on the interest rate and term together.
• You pay interest and principal, which ensures it remains a loan rather than a gift.
• The terms are documented, so there are no misunderstandings later on.

Many parents gift the paid interest back later. In this scenario, you pay the interest first and then receive a gift from them. This approach has its own specific tax conditions.

{{cta}}

How to arrange a family mortgage in four steps

You arrange a family mortgage by documenting the terms before applying for your bank mortgage. This prevents delays with your bank. Follow these four steps:

1. Determine the amount and the term
2. Agree on a market-rate interest
3. Record everything in a loan agreement
4. Notify your mortgage lender about the loan

1. Determine the amount and the term

You determine the amount by comparing the purchase price with your savings. The bank will lend at most the value of the property, so purchasing costs you pay the rest yourself. If your savings are insufficient, your parents can lend you that portion. You also pay for any bid above the appraised value with personal savingsThe term then determines the amount of your monthly payment to your parents.

2. Agree on a market-rate interest

A market-rate interest is close to the rate a bank would charge. A symbolic interest rate of almost zero is not considered a market rate. Therefore, look at the mortgage rates offered by banks for the same term and fixed-rate period.

3. Record everything in a loan agreement

In a loan agreement, you specify the amount, interest rate, term, and repayment schedule. Also include what happens in the event of a missed payment. This ensures you both know where you stand. A notary can draft this agreement or record it in a deed.

4. Notify your lender of the loan

You must disclose the family mortgage to your lender during your mortgage application. The bank needs to know about any other debts you have. Therefore, include the signed loan agreement with your application.

How does a family mortgage affect your maximum mortgage amount?

A family mortgage reduces the maximum mortgage you can get from a bank. Your bank includes the interest and repayment of a loan from family in their calculations. As a result, there is less room left for the mortgage itself.

Suppose you and your partner have a combined gross annual income of €60,000. Your mortgage interest rate is 4%, with a ten-year fixed period. In 2026, a maximum of 22.6% of that income can go toward interest and repayment. This standard amounts to €1,130 per month. In addition, your parents lend you €30,000 at the same interest rate. You repay both the family loan and your mortgage using an annuity schedule over 30 years. The table shows what the bank will lend, both with and without the family loan.

The difference at the bank is exactly the amount your parents are lending you. As a result, your total remains the same. A family mortgage does not increase your borrowing capacity, but it does cover a shortfall in your own funds. Calculate your own situation first via calculate your maximum mortgage.

For your offer, it is crucial that the amount from your parents is fixed. That amount determines your maximum budget for the property. That is why you should arrange the loan before you start viewing houses. Those who arrange it later are often too late with making an offer on a house.

{{cta}}

What conditions does the Tax and Customs Administration set for a family mortgage?

The Tax and Customs Administration sets fixed conditions for mortgage interest deduction on a family mortgage. You can only deduct the interest if the loan meets all the requirements. These are the conditions for interest deduction on a family loan:

• You use the loan for your own home, i.e., for purchase or renovation.
• You repay on an annuity or linear basis within a maximum of 30 years.
• The interest rate is at market level.
• You actually pay the interest, because forgiven interest does not qualify for deduction.
• You report the loan in your income tax return.

If you do not meet all the requirements, you will lose your mortgage interest deduction. This means you will pay the interest without any tax benefit. We do not verify this ourselves, as we are buying agents, not tax specialists. Therefore, it is best to discuss your situation with the tax authorities or a financial advisor.

Family mortgage, gift, or acting as a guarantor—what suits you best?

With a family mortgage, you borrow the money and pay it back. With a gift, you receive the money and pay nothing back. With a guarantee, your parents only step in if you default. These three routes have very different impacts on your mortgage application.

The gift route has its own exemptions that change every year. For example, in 2026, your parents may give you one-off €33,129 tax-free gift. This exemption applies if you are between 18 and 40 years old. It replaces the annual exemption, which is lower. We explain these amounts in our article on tax-free gifting.

The more generous "jubelton" (tax-free gift for home purchase) has not existed since 2024. That is why many parents now combine gifting and lending. For example, they might gift a portion to cover your closing costs and lend you the rest. This gives you more borrowing capacity at the bank.

{{cta}}

What are the pros and cons of a family mortgage?

A family mortgage has benefits for both you and your parents, but it mixes money and family. For some, that is a fair trade-off; for others, it is not. Therefore, weigh both sides carefully before you agree on anything.

These are the benefits for you and your parents:

• The interest stays within the family, because you pay it to your parents.
• Your parents get their money back, so they can help without giving anything away.

However, there are some downsides to consider:

• A disagreement immediately affects your family, for example, if a repayment is missed.
• Your parents are tied to the loan for years, until you have paid everything off.

A family mortgage is ideal if your parents can spare the funds. It is less suitable if they need that money themselves.

How does homeup help you buy a home with a family mortgage?

homeup helps you by securing your financing before you start bidding. We offer two services for buyers. On the open market, our purchase guidance costs €2999. With our exclusive listings, you buy a home at a fixed price, without needing to outbid others. Our guidance for this costs €5999. In both cases, you only pay upon the transfer of keys.

With homeup as your buying agent you get:

• A free initial mortgage consultation, during which we look at how your family mortgage fits into your financing.
• Amortgage certificate, so your financing is sorted before you start your search.
• Review of your legal documents, including the purchase agreement and the attachments.
• A bidding strategy and an offer made on your behalfbased on our market value research.

All buyers on the homeup platform are pre-screened financially. This gives sellers peace of mind that the sale won't fall through due to financing issues. As a result, homeup buyers purchase a home three months faster on average. Also, read our explanation of the first-time buyer schemes for your first home. You can also register for freeright away. Do you have a question? Feel free to ask it via our contact page.

{{cta}}