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Save for a house deposit

Start building your home deposit today

Page reading time: 5 minutes

Buying a home is exciting, whether it's your first or the first time in a while.  and life changing. It all starts

To make it happen, you’ll need to save for a deposit. Knowing how much to save – and having a plan – will bring you closer to your goal.

1. Your savings goal

The size of your deposit depends on the price of the home you want. You’ll also need to cover the other costs of buying a house like stamp duty and legal fees.

What you can borrow also plays a part – because the more you can borrow, the less you need to save upfront. 

To work out your deposit: 

Why a bigger deposit can be better

Saving a bigger deposit has clear benefits:

Aim for around 20% of the purchase price, plus enough to cover buying costs. Some lenders may accept as little as 5%. But a smaller deposit may mean higher costs like lenders mortgage insurance (LMI), unless you're eligible for the Australian Government's 5% Deposit Scheme for first homebuyers.

Loan to value ratio

Your deposit also affects the size of your loan compared to the property’s value. Lenders call this the loan-to-value ratio (LVR).

For example, if you borrow $450,000 to buy a $600,000 home, your LVR is 75%. The lower your LVR, the lower your costs and better your chance of loan approval.

Lenders mortgage insurance

If your LVR is above 80%, you may need to pay lenders mortgage insurance. This is a one-off fee that protects the lender if you can’t repay the loan. It doesn’t protect you or your guarantor (if you have one).

You pay the lenders mortgage insurance at settlement, or your lender adds it to your loan. Learn more about lenders mortgage insurance on the Insurance Council of Australia website.

2. What lenders look for when you apply

When you apply for a home loan, lenders look at more than just your deposit. They want to see that you can manage the loan now and in the future. 

Here are the main things they check: 

3. Where to put your deposit savings

Once you’ve set a savings goal, think about where to keep the money while you build your deposit. Choosing the right place can help your savings grow faster and make them easier to manage. Examples of places to save your money for a short time include:

High-interest savings account

These accounts pay you interest while keeping your money safe. Many also offer bonus interest if you deposit regularly and don’t withdraw. It’s a simple way to grow your deposit without taking on risk.

Offset account

If you already have a home loan, an offset account can save you money. The lender counts the money in this account against your loan, so you pay less interest. Unlike a savings account, it won’t earn interest. But it can reduce the cost of your loan over time.

First Home Super Saver Scheme (FHSSS)

This scheme lets you save money for your deposit inside your super account. The government taxes super at a lower rate, so this could help you reach your goal sooner. You can withdraw up to $15,000 of voluntary contributions each year, and up to $50,000 in total. Find out more about the first home super saver scheme on the Australian Tax Office website.

4. Get help to buy a home

When you’re saving for a home, every bit of help counts. If you’re a first-home buyer, government grants and programs can give your deposit a boost or reduce the upfront costs of buying.

First Home Owner Grant

This grant can help out if you're buying or building your first home. Each state and territory sets its own rules and amounts, but the grant can help with your purchase or reduce the stamp duty. For details, check the first home owner grant website.

5% Deposit Scheme

This scheme lets eligible first-home buyers purchase a home with a deposit as small as 5%, without paying lenders mortgage insurance (LMI). The government guarantees part of your loan, which lowers risk for lenders and helps you buy sooner. Find out more about the First Home Guarantee on the Housing Australia website to see if you’re eligible.

5. Start saving your house deposit

Once you know more about housing prices where you want to buy and have set your deposit target, put a savings plan in place to reach it. Saving takes time, but a few simple steps can keep you on track.