Living with your parents and not paying rent? Lenders want it confirmed in writing, so they know your housing cost now and after you buy.
A rent-free letter is a short note from the owner of the home you live in, usually a parent, confirming that you live there and do not pay rent. It also matters for genuine savings, because rent paid is one way lenders accept savings history.
Lenders use it to explain why your bank statements show no rent and to set your current living costs.
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[Date] To whom it may concern Re: [Full name of applicant], living at [Address] I/We, [Full name(s) of the homeowner(s)], are the owner(s) of the property at [Address]. I/We confirm that [Full name of applicant], our [relationship, for example: son / daughter / niece], has lived at this address since [Month and year]. [Full name of applicant] does not pay rent or board to live here. [Optional, only if true: They contribute about $[Amount] a [week/month] towards groceries and utilities.] [Full name of applicant] will move out when they buy their own home, and there is no agreement for them to pay rent now or in the future. Signed: _______________________________ _______________________________ [Name of homeowner] [Name of homeowner] Date: [Date] Date: [Date] Phone: [Number]
Before you use this. The owner of the home signs it, not you. Only include a contribution to bills if you actually make one, and make sure it matches your bank statements. Some lenders have their own form and will ask you to use it instead.
Charles Touma, Mortgage Broker.
It can. For deposits under about 10%, many lenders want to see genuine savings: money you saved over time, often for three months or more. The genuine savings page and the genuine savings checker explain the rules.
Some lenders accept a rental history in place of savings, but if you live rent-free you cannot use that route, so a steady savings record in your own account becomes important.
Not directly. Lenders assess you on the costs you will have after you buy, including the new loan, using their living cost benchmark. Living rent-free helps you save the deposit faster, which is the real advantage.
It also helps with the 5% Deposit Scheme, which needs only a 5% deposit with no lenders mortgage insurance; the 5% deposit checker gives a quick answer.
Then say so in the letter, with the amount, and make sure the payments show on your statements. Regular board can work in your favour, because it shows you already meet a regular housing cost.
If your parents are also helping with the deposit, a separate gift letter covers that money.
The owner or owners of the home you live in, usually your parents, not you.
Not always, but many do when your statements show no rent and your application says you live with family.
Yes. Many first home buyers do. The letter explains your situation, and your savings record shows your capacity to save.
Usually not, unless the lender asks for a statutory declaration. Check the lender’s requirements.
Include the amount in the letter and make sure it matches your bank statements.
See the full home loan documents list and the first home buyer checklist.
Charles can tell you how lenders will treat living rent-free, whether your savings count as genuine savings, and which schemes you can use.
Prefer a callback?Charles calls back within one business day. No documents needed yet.
General information only, not credit or legal advice. Lenders may ask for their own forms or a statutory declaration.
