First home buyers are increasingly opting for credit card debt and personal loans to cover their home deposits, according to a new survey.

Only 51 per cent of first home buyers are sourcing all of the money for their deposit from savings, down from 66 per cent in 2014, Lenders Mortgage Insurance provider Genworth’s Streets Ahead report found.

Of first home buyers surveyed, 19 per cent were using credit cards and 18 per cent were using personal loans to finance their property purchase.

In 2013, 3 per cent opted for a credit card, while 8 per cent used a personal loan to help get them on the ladder.

First home buyers also indicated using inheritance, loans or gifts from parents or other family members and winnings from lotteries or competitions to fund their property purchase.

When you’re seeing house prices going up and the Australian dream of owning your home is still strong, people will find ways to bridge that gap.Bridget Sakr, Genworth

Genworth chief commercial officer Bridget Sakr​ said the proportion of first home buyers indicating they’re using alternative funding has steadily increased since 2013.

“House prices are going up year on year, when you’re seeing house prices going up and the Australian dream of owning your home is still strong, people will find ways to bridge that gap,” Sakr said.

“In this climate you can expect this trend to continue,” she said.

Reliance on other sources of debt to fund a home purchase may be the reason first home buyers are more likely to be heavily indebted – at 35 per cent compared to an average of 23 per cent, she said.

Paul Bevan, senior adviser and mortgage broker at Dream Financial, said if an applicant was on a high enough income to pay for the loan but didn’t have the full savings needed then it could be acceptable to a bank in terms of serviceability.

He said these strategies were more common pre-GFC, calling them “risky and not something I would advocate”, but knew of some lenders that would allow borrowers to take out a personal loan to get them over the line.

“If your property goes up 10 per cent in the first year, then it may pay for the debt,” he said.

Home buyers could potentially use credit cards by taking a cash advance, or by using the credit card to buy a deposit bond. A cash advance on a credit card incurs an interest rate significantly higher than the purchase rate.

Yet using a credit card to cover the full deposit may not be possible as most lenders want to see some form of savings history, though some consider rental payments as a portion of the genuine savings, he said.

Michelle Hutchison, spokeswoman for comparison website Finder, said the sizes of loans to first home buyers have increased in NSW, Victoria, Western Australia and the ACT over the past year.

While this means first home buyers are having to pay more for homes and find larger deposits, she discouraged them from considering alternative sources of debt calling them a more expensive option.

“However, using other sources like a personal loan or credit card to get you over the line as a proportion of your deposit could be beneficial if it means getting into the property market now, as long as you’re not overstretching yourself,” she said.

Guidelines from Home Loan Experts suggest a personal loan would be used as a portion of the deposit, with an estimated cost of $60 a week for every $10,000 borrowed.

If the home increased in value, they suggest the home owner could potentially refinance and pay out the personal loan.

Applicants would need a relatively high income to afford both repayments, little existing debt, clear credit history, savings to make up any shortfall and a preferred proven rental history.