Beginner's Guide to Saving for Your First Home

Saving for your first home requires a clear understanding of how much deposit you need, which government schemes reduce that requirement, and how lenders assess your savings history.

Deposit Requirements Under the Australian Government 5% Deposit Scheme

The Australian Government 5% Deposit Scheme allows eligible buyers to purchase with a 5% deposit without paying lenders mortgage insurance. Housing Australia guarantees the difference between your deposit and 20% of the property value. In Brisbane, the property price cap is $1,000,000, with higher regional caps available in some Queensland locations. Applications are submitted through one of 31 participating lenders, not directly to Housing Australia.

A 5% deposit means you still need to demonstrate savings capacity. Consider a scenario where a buyer purchases at $650,000 in Brisbane. The 5% deposit is $32,500. On top of that, settlement costs including legal fees, building and pest inspections, and loan establishment fees typically add another $8,000 to $12,000. Your total upfront cash requirement sits around $40,000 to $45,000.

Lenders assess whether those funds represent genuine savings. Money held in your account for at least three months generally qualifies. Funds received as a gift from an immediate family member can also be accepted, but most lenders require at least a portion of the deposit to be your own verified savings. A pattern of regular contributions over time strengthens your home loan application because it demonstrates financial discipline and the ability to meet ongoing repayments.

Queensland First Home Owner Grant and Stamp Duty Concessions

Queensland offers a $15,000 grant for new homes valued under $750,000 for contracts signed from 1 July 2026. This grant applies only to new builds, not established properties. The grant amount was reduced from $30,000, which applied to eligible contracts signed between 20 November 2023 and 30 June 2026.

Stamp duty concessions in Queensland depend on whether you are buying new or established. For established homes, nil transfer duty applies up to $700,000, with a sliding concession up to $800,000. For new builds, full transfer duty concessions apply with no price cap from 1 May 2025, alongside partial concessions for homes priced between $500,000 and $550,000. These concessions reduce the upfront cash you need at settlement and can be combined with the 5% Deposit Scheme.

As an example, a buyer purchasing an established home at $680,000 in Brisbane pays no stamp duty and provides a 5% deposit of $34,000 plus settlement costs. A buyer purchasing a new build at the same price receives the $15,000 grant, pays no stamp duty, and reduces their net cash outlay significantly. Understanding which concessions apply to your property type changes the timeline and amount you need to save.

What Counts as Genuine Savings

Genuine savings are funds you have saved and held in your own account for at least three months before applying for a home loan. Lenders use this criterion to assess your ability to manage money and make regular loan repayments. Funds that typically qualify include savings account balances, term deposits, and shares held for the required period.

Funds that do not count as genuine savings include proceeds from the sale of assets, tax refunds received within the three-month window, and most forms of borrowed money. A gift from a parent or immediate family member is treated separately. Most lenders will accept gifted funds as part of your deposit but still require you to demonstrate at least 5% genuine savings of your own.

In a scenario where a buyer has $25,000 in genuine savings accumulated over 18 months and receives a $15,000 gift from their parents, the total available deposit is $40,000. The lender assesses the $25,000 as evidence of savings discipline and accepts the $15,000 gift to meet the 5% deposit requirement. If the entire $40,000 had been gifted with no genuine savings history, most lenders would decline the application or require a larger deposit.

Using the First Home Super Saver Scheme to Accelerate Your Deposit

The First Home Super Saver Scheme allows you to make voluntary superannuation contributions and later withdraw up to $50,000 of those contributions, plus associated earnings, to put towards your first home deposit. Contributions are taxed at the concessional superannuation rate of 15%, which is lower than most marginal income tax rates. Withdrawals are taxed, but the effective rate remains lower than if you had saved the same amount in a standard savings account.

You can contribute up to $15,000 per financial year, with a total lifetime cap of $50,000. Both concessional contributions made through salary sacrifice and non-concessional contributions from after-tax income count towards the scheme. Withdrawals must be requested through the Australian Taxation Office and can take several weeks to process, so timing your application relative to settlement is important.

As an example, a buyer salary sacrifices $10,000 per year for three years, building a total of $30,000 in eligible contributions plus earnings. When ready to purchase, they request a release and receive approximately $27,000 after withdrawal tax. That amount is added to other savings and used as part of the deposit. The scheme works well when combined with the 5% Deposit Scheme, as it accelerates the timeline to reach your target amount.

Building a Budget That Prioritises Savings Without Overcommitting

Your savings budget needs to balance building a deposit with demonstrating the capacity to service a home loan. Lenders assess your income and expenses when calculating borrowing capacity, so maintaining a pattern of disciplined spending while saving is as important as the total amount saved.

Start by calculating your net income after tax and deducting fixed expenses including rent, utilities, insurance, and transport. Allocate a realistic portion of what remains to savings, then track discretionary spending on dining, entertainment, and subscriptions. Lenders scrutinise bank statements for patterns of excessive spending on gambling, buy-now-pay-later services, and frequent overdrafts. A history of living within your means supports your application more than a last-minute effort to inflate your balance.

Consider a buyer earning $75,000 per year with net monthly income of approximately $5,000. Fixed expenses total $2,800, discretionary spending averages $1,200, leaving $1,000 per month available for savings. Over 18 months, they accumulate $18,000 in genuine savings. During that period, their bank statements show consistent deposits, no missed payments, and controlled discretionary expenses. That profile positions them well for pre-approval even with a modest deposit, particularly when combined with the 5% Deposit Scheme.

Timing Your Application and Choosing Between Fixed and Variable Rates

Once your deposit and genuine savings are in place, pre-approval gives you a clear budget and strengthens your position when making an offer. Pre-approval is conditional and subject to final valuation and documentation, but it confirms your borrowing capacity and the interest rate structure available to you.

You will choose between a variable interest rate, a fixed interest rate, or a split loan combining both. A variable rate moves with market conditions and typically provides access to an offset account, which reduces the interest charged by offsetting your savings balance against your loan balance. A fixed rate locks in your repayment amount for a set period, typically one to five years, but generally does not include an offset facility and may carry break costs if you repay early.

Interest rate discounts are more readily available on variable loans for borrowers with a deposit above 10% and strong credit profiles. Lenders assess your application based on your genuine savings history, employment stability, and the property value relative to the loan amount. If refinancing becomes relevant later, the structure you choose now affects your flexibility to switch lenders without penalty.

Call one of our team or book an appointment at a time that works for you. We assess your savings position, confirm your eligibility for state and federal schemes, and structure your home loan application to align with your circumstances and the property you intend to purchase.

Frequently Asked Questions