Saving for a House Deposit: Tips and Reality Checks

Building a house deposit is a marathon, not a sprint. Here’s how to plan your savings and understand how much you’ll need.

Work out your deposit target

Moneysmart suggests calculating your deposit as:

• the purchase price, plus fees and charges (stamp duty, legal fees, moving costs);

• minus the amount you can comfortably borrow moneysmart.gov.au.

Most lenders prefer at least a 20 % deposit plus costs, but some will accept as little as 5 %. Remember that a smaller deposit means you’ll pay more interest and

LM Imoneysmart.gov.au.

Why a bigger deposit helps

• Lower LVR and interest:  A bigger deposit lowers your loan amount and may qualify you for better interest rates.

• Avoids LMI:  If your LVR is below 80 %, you won’t pay LMI moneysmart.gov.au.

• Shows you’re a good saver:  Demonstrates to lenders that you can manage your finances moneysmart.gov.au.

  
  

Saving strategies

• Prepare a budget:  Track income and expenses to see how much you can save regularly moneysmart.gov.au.

• Automate your savings:  Set up an automatic transfer into a separate savings account each payday moneysmart.gov.au.

• Consider investing:  If your timeline is several years, investing some of your deposit could boost growth, but seek advice moneysmart.gov.au.

• Government support:  Schemes like the First Home Super Saver Scheme (FHSSS) let you make voluntary super contributions and withdraw up to $50,000 plus earnings to put toward your deposit moneysmart.gov.au. The Home Guarantee Scheme allows eligible buyers to purchase with a 5 % deposit without LMI housingaustralia.gov.au.

  
  

While saving for a deposit, speak with a broker early. They can estimate your borrowing power and help you target a realistic deposit amount.