How To Save A Deposit

How much deposit do you actually need

The traditional benchmark is 20% of the purchase price, which avoids Lenders Mortgage Insurance (LMI) entirely. But 20% isn't a legal requirement — most lenders will accept 5–10% deposits, with LMI added to cover the lender's risk on the higher-LVR portion. On current national figures, the average dwelling value sits above $900,000, so a 20% deposit means saving well over $180,000 — which is exactly why deposit-reducing government schemes have become central to how most first home buyers actually get into the market.

The First Home Guarantee — buying with just 5% down

The First Home Guarantee (FHBG), run by Housing Australia, lets eligible first home buyers purchase with as little as a 5% deposit while the government guarantees the remaining gap to 20% — meaning no LMI is payable. On a $750,000 property, that's the difference between needing $150,000 and needing $37,500 upfront, plus it avoids an LMI premium that would otherwise run into the tens of thousands.

Since October 2025 the scheme has expanded significantly: there's no longer an annual cap on the number of places, and for many buyers income caps have also been removed. Property price caps still apply and vary by state and region — they've also been increased materially to reflect current prices, but always confirm the current cap for your area directly with Housing Australia or a broker before relying on a figure, since these settings are reviewed periodically. You'll still need genuine savings (some lenders require a 3-month savings history) and to pass normal lending serviceability checks — the scheme removes the deposit and LMI barrier, not the need to prove you can afford the loan.

A related program, the Family Home Guarantee, offers eligible single parents and legal guardians a path to purchase with just a 2% deposit.

Other schemes you can stack

• First Home Owner Grants (FHOG) — state-based cash grants for buyers building or buying a new home, varying by state (for example, Queensland currently offers $30,000 for eligible new builds). Check your state revenue office for current amounts and eligibility.
• Stamp duty concessions — most states offer full or partial stamp duty exemptions for first home buyers under a price threshold — see our Stamp Duty Calculator for a state-by-state estimate.
• First Home Super Saver Scheme (FHSSS) — lets you make voluntary contributions into your super (up to $15,000 per financial year, taxed at 15% rather than your marginal rate) and later withdraw those contributions plus deemed earnings specifically for a first home deposit. This can mean genuine tax savings while you save, though the withdrawal process takes time to arrange, so plan ahead rather than leaving it until you've found a property.

These schemes can generally be combined — for example, using the FHSSS to build savings inside super, then using the First Home Guarantee and a state stamp duty concession when you actually purchase. Eligibility rules differ across schemes, so confirm your specific combination with a broker or Housing Australia before counting on a particular outcome.

Building a realistic savings plan

Three numbers matter: your target deposit, your current savings, and how much you can realistically set aside each month. Use the Deposit Savings Calculator to see how long it will actually take at different contribution levels and interest rates — small increases in your monthly contribution compound significantly over a multi-year savings horizon, more than most people expect.

A few practical levers that make a real difference:

• Automate a fixed transfer to a separate savings account on payday, rather than saving "whatever's left"
• Review recurring subscriptions and one direct cost that's genuinely avoidable, rather than trying to cut everything at once
• Reassess your target — a 5% deposit via the First Home Guarantee might get you into the market years earlier than saving the traditional 20%, even though your loan (and repayments) will be larger

Where to keep your deposit while you save

A high-interest savings account is the standard choice — accessible, low-risk, and currently paying a meaningfully better return than it did a few years ago given where the cash rate sits. Term deposits can offer a slightly higher rate in exchange for locking funds away, which suits money you're confident you won't need before a fixed date, but reduces flexibility if your timeline shifts. Highly volatile investments (shares, crypto) are generally not appropriate for deposit savings on anything under a multi-year horizon — a market downturn right before you're ready to buy could set you back significantly, which defeats the purpose of a safe deposit fund.

Common mistakes that slow people down

• Waiting for a "perfect" 20% deposit when a scheme-backed 5–10% deposit would get you into the market years sooner, especially while prices continue rising faster than most people can save.
• Not accounting for upfront costs beyond the deposit — stamp duty (where it applies), conveyancing, building and pest inspections, and moving costs all add up and need to be saved for separately from the deposit itself.
• Leaving First Home Super Saver withdrawals to the last minute — the ATO processing time means this needs to be requested well before you need the funds, not during a live property negotiation.
• Not confirming current scheme rules before relying on them — price caps, grant amounts, and eligibility settings change periodically, so verify directly with Housing Australia, your state revenue office, or a broker rather than relying on an article that may be out of date by the time you're ready to buy.