How to Save for a Home Deposit in Australia

Saving for a home deposit is one of the biggest financial challenges Australians face. Property prices can feel out of reach, but with a clear plan, the right strategies, and an understanding of what's actually required, it's more achievable than you might think. Here's a practical guide to help you get there faster.

How Much Deposit Do You Actually Need?

The short answer is: it depends. Most lenders require a minimum of 5% of the purchase price as a deposit, but there are important thresholds to understand.

• 5% deposit — The minimum most lenders will accept. You'll need to pay Lenders Mortgage Insurance (LMI), which can add thousands to your costs.
• 10% deposit — Reduces your LMI costs and gives you access to a wider range of lenders and products.
• 20% deposit — The gold standard. No LMI required, access to the best interest rates, and lower monthly repayments.

For a $500,000 property, a 5% deposit is $25,000, a 10% deposit is $50,000, and 20% is $100,000. But remember — government schemes may help you avoid LMI even with a smaller deposit.

Government Schemes That Can Help

The Australian government offers several programs designed to help first home buyers get into the market sooner.

First Home Owner Grant (FHOG)

A one-off payment for eligible first home buyers. The amount varies by state — in Victoria, it's $10,000 for new homes. This can go directly toward your deposit or purchase costs.

First Home Guarantee (formerly FHBG)

This scheme allows eligible buyers to purchase a home with as little as 5% deposit without paying LMI. The government guarantees up to 15% of the loan. From October 2025, income caps and annual place limits have been removed, making this one of the most accessible schemes available.

Stamp Duty Concessions

Many states offer reduced or zero stamp duty for first home buyers below certain property price thresholds. In Victoria, first home buyers pay no stamp duty on properties up to $600,000 and receive a concession up to $750,000.

Budgeting Strategies That Work

Saving a deposit requires discipline, but it doesn't have to mean living miserably. Here are practical strategies that make a real difference.

Track Every Dollar

Before you can save more, you need to know where your money is going. Use a budgeting app or a simple spreadsheet to track your income and expenses for at least a month. Most people are surprised by how much they spend on things they don't really need.

Set Up Automatic Transfers

Pay yourself first. Set up an automatic transfer to a dedicated savings account on payday, before you have a chance to spend it. Even $200 per week adds up to over $10,000 in a year.

Cut the Big Expenses

Small savings help, but cutting big expenses makes the biggest impact. Consider these high-impact changes:

• Reduce rent — Move to a cheaper area, downsize, or get a housemate
• Review subscriptions — Cancel services you rarely use
• Refinance existing debts — Lower your interest on car loans or personal loans
• Cook at home — Eating out less can save hundreds per month
• Pause big holidays — Redirect travel funds to your deposit for a year or two

Use a High-Interest Savings Account

Don't let your deposit sit in a transaction account earning nothing. A dedicated high-interest savings account can earn you meaningful interest while you save. Look for accounts that offer bonus rates when you deposit regularly and don't make withdrawals.

Consider Salary Sacrificing

The First Home Super Saver Scheme (FHSSS) allows you to make voluntary super contributions (up to $15,000 per year) and later withdraw them for a home deposit. Because super contributions are taxed at 15% instead of your marginal tax rate, this can be a tax-effective way to boost your savings. Over two years, you could potentially save an extra few thousand dollars compared to saving in a regular account.

How Long Will It Take?

This depends on your income, expenses, and target deposit. Here's a rough guide for saving a 10% deposit on a $500,000 property ($50,000):

• Saving $500/week: About 2 years
• Saving $750/week: About 16 months
• Saving $1,000/week: About 12 months

Remember, you may not need the full 20%. With government schemes and a broker who knows the landscape, you could be in your first home sooner than you think.

Next Steps

Everyone's situation is different. A mortgage broker can help you work out exactly how much you need to save, which government grants you qualify for, and what lenders will offer you based on your current position. The best part? It's a free service with no obligation.