How to save for a house deposit
Saving a deposit has three parts: setting the target from the price, the deposit percentage and the upfront costs; shrinking it with the schemes that let an eligible buyer purchase with 5% or 2% and no LMI, and save part of it inside super; and then the method, a budget and an automatic transfer on payday. This guide works the target on a $700,000 home, shows what the schemes do to it, and lists what lenders mean by genuine savings.
- Target = price minus what you can borrow, plus the costs of buying such as stamp duty and legal fees (Moneysmart’s method)
- On a $700,000 home: 20% is $140,000 to avoid LMI; 5% is $35,000 with no LMI under the 5% Deposit Scheme for an eligible first home buyer; 2% is $14,000 for a single parent or under Help to Buy
- The First Home Super Saver Scheme saves about $2,250 a year in tax per $15,000 salary sacrificed at a 37% marginal rate, up to $50,000 in total
- Method: analyse spending, set a realistic budget, save consistently on payday into a dedicated account, reduce debt (CommBank, Moneysmart)
- Genuine savings: many lenders want around 5% saved over time on higher-LVR loans; rent history counts at some; gifts need a letter
WARNING: This comparison rate is true only for the example given and may not include all fees and charges. Different terms, fees, or other loan amounts might result in a different comparison rate. Comparison rates are based on a secured loan of $30,000 over 5 years for vehicle finance and $50,000 over 5 years for equipment finance, as required under the National Credit Code.
Step one: set the target
Moneysmart's guide gives the method: the size of the deposit depends on the price of the home you want; you also need to cover the other costs of buying a house, like stamp duty and legal fees; what you can borrow plays a part, because the more you can borrow the less you need upfront; so take the price, subtract what you can borrow, and the balance is your deposit, your savings goal. Two of the three inputs are on this site: the borrowing power calculator for what you can borrow and the upfront buying costs calculator for the costs. The how much deposit guide works the percentages by state.
| $700,000 home | Deposit | LMI | Who | Costs on top (indicative) |
|---|---|---|---|---|
| 20% deposit | $140,000 | None | Anyone | Stamp duty, registration, PEXA, conveyancing, inspections |
| 10% deposit | $70,000 | Yes, on a 90% loan | Anyone | Same, plus LMI unless added to the loan |
| 5% under the 5% Deposit Scheme | $35,000 | None; Housing Australia guarantees the lender | Eligible first home buyers, at or below the price cap | Same, often with a first home buyer duty concession |
| 2% single parent stream, or Help to Buy | $14,000 | None | Single parents and legal guardians; or income-tested buyers with a government equity share | Same |
Step two: shrink it
The schemes change the target more than any budgeting can. The Australian Government 5% Deposit Scheme takes an eligible first home buyer from 20% to 5% with no LMI, with no income cap and unlimited places since October 2025, subject to the location price cap; the single parent stream goes to 2%. Help to Buy goes to 2% for income-tested buyers with the government taking up to 30% or 40% of the home. And the First Home Super Saver Scheme lets you save part of the deposit inside super, salary sacrificing up to $15,000 a year and $50,000 in total at 15% tax rather than your marginal rate, which we work out at about $2,250 a year saved at a 37% rate. IMB publishes that the 5% scheme can be combined with the FHSS and state grants, so the three stack. CommBank's guide makes the same point in one line: government schemes and family support options may help eligible buyers get into their first home with a smaller deposit.
Step three: the method
CommBank publishes it as three sentences: saving for a house deposit starts with understanding your spending, setting a realistic budget and building strong saving habits; reducing debt, saving consistently and choosing the right savings account help you reach the goal sooner. Moneysmart adds the plan: set the goal, know the timeframe, and put the money in a dedicated account. In practice that is a transfer to a separate high-interest account on payday, sized to the target divided by the months you have, before any spending; the bonus-rate conditions on those accounts (a monthly deposit, no withdrawals) enforce the habit. Two things move the number more than anything else. Rent, which is the largest expense for most savers and the reason BCU's guide is about saving while renting: a cheaper lease or a housemate for two years can be worth $20,000. And debt, because a lender assesses the limit on a credit card and the repayment on a car loan against your borrowing power, so closing them often does more for the purchase than the same money saved.
What lenders mean by genuine savings
A deposit has to be evidenced, and lenders distinguish between money you saved and money that arrived. Genuine savings means funds accumulated over time in your own name, shown on statements, and many lenders want to see around 5% of the price held or built up over three to six months on loans above 80% LVR. A gift from family is usually accepted with a letter confirming it is not repayable, though some lenders want it in your account for a period. Regular rent paid on time counts as genuine savings at some lenders and not others. An FHSS release and a first home owner grant are accepted as deposit but are not genuine savings at every lender. This is where a broker changes the outcome: the same $35,000 is a clean file at one lender and a query at another.
How long will it take?
Divide the target by what you can put away each month, then take the schemes off the top. A couple saving $2,500 a month reaches a $140,000 deposit in about four and a half years and a $35,000 one in just over a year; with $15,000 a year each going through the FHSS, part of that is saved at a lower tax rate. The price cap and your borrowing power set the ceiling, and both move, so re-run the borrowing power calculator every six months. A broker can tell you when you are close enough to start looking, and which lender will take the deposit you have assembled; Your Finance Guide refers you to one licensed broker partner for that, and we do not lend, hold deposits or give financial advice on where to invest them.
Deposit guides
The target, the schemes and the calculators.
Saving a deposit FAQs
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Tell us what you have saved, what you earn and where you want to buy, and we refer you to one licensed broker partner who sets the target, stacks the schemes, and tells you when to start looking. Free for borrowers, no obligation.