Home loan guide
There’s more to it than you think
Saving a house deposit while paying rent takes a budget you can sustain. Start with the cash you need to buy, then work backwards to a weekly or fortnightly target. A smaller deposit may be an option, but repayments and buying costs still need to fit.
This guide covers savings targets, spending changes and government support. Our home affordability guide helps you check the repayment side before setting a property budget.
Before you start shifting your budget or skipping your morning coffee, it's essential to understand exactly how much you need to save. Your deposit isn't just a random number, it directly impacts how much you can borrow, what types of loans you qualify for, and whether you'll need to pay extra costs like Lenders Mortgage Insurance (LMI).
For most first-home buyers in Australia, a deposit between 5% and 20% of the property price is standard. For example, on an $800,000 property, a 5% deposit is $40,000, while a 20% deposit is $160,000. With a 5% deposit, you'll usually need Lenders Mortgage Insurance (LMI), unless you qualify for the Australian Government 5% Deposit Scheme. With a deposit of 20% or more, you typically avoid LMI, giving you more flexibility, stronger loan approval odds, and lower repayments. But saving 20% isn't always realistic, especially if you're renting. The good news? With the right support, you can still get into the market sooner with a lower deposit.
If you have less than a 20% deposit, most lenders will charge you Lenders Mortgage Insurance (LMI). This is a one-off premium that protects the lender, not you, if you can't repay the loan. It's usually added to your loan amount, which means you'll be paying interest on it over time.
LMI depends on the lender, loan size, deposit and eligibility for an exemption or waiver. Get a quote for the proposed loan rather than relying on a broad dollar range. If the lender allows the premium to be added to the loan, you also pay interest on it. Use our LMI calculator as an estimate.
The Australian Government 5% Deposit Scheme can help eligible buyers avoid LMI with a smaller deposit. The government guarantees part of the loan to the lender; it does not pay your deposit or reduce the debt you owe.
FHSS is a separate way to save through eligible voluntary super contributions. Whether it improves your result depends on tax, fees and eligibility. The scheme sections below explain what to check.
Now that you understand the deposit requirements, it's time to calculate a goal that works for you. Start by identifying the type of property you want and the average price in your preferred suburbs. Then decide on your deposit amount, 5%, 10%, or 20%. Don't forget to include additional upfront costs, like:
Price each cost separately using the relevant duty rules and quotes. A flat percentage can overstate costs for a duty-exempt buyer or understate them in another situation. Keep an emergency fund separate from the deposit and buying-cost budget.
Once you've set your deposit goal, break it down into smaller, manageable chunks. Divide the total by the number of months you want to save. For example, if your target is $40,000 over two years, that's about $770 per fortnight. This approach makes saving feel less overwhelming and keeps you on track.
If you're renting, it's even more important to stay consistent. You don't need to save everything overnight, but you do need a clear, practical plan. This is where working with a mortgage broker can help. They'll assess your borrowing capacity, show you what deposit you really need, and help you align your savings plan with realistic property goals.
Check the savings target against the loan repayments before committing to it. A smaller deposit can shorten the saving period but leaves a larger loan to repay.
Once you know the target, choose where to keep the money and how much to transfer each payday. Review the amount when rent or other essential expenses change.
A separate savings account makes it easier to track your deposit and avoid spending it. Compare the base rate, bonus conditions, balance limits and fees. Missing a bonus condition may reduce the interest earned.
An offset reduces interest on an existing linked home loan. Pre-approval does not create a mortgage balance to offset, so it is not a substitute for a savings account while buying your first home. Our home loan features guide explains how offsets work after borrowing.
Having a target is one thing, knowing how to hit it month by month is another. Let's say your deposit goal is $40,000 in two years. That's around $770 every fortnight or $1,670 per month. When you break it down like that, the goal feels more achievable.
Tie your savings plan to a realistic timeline. If you're planning to buy in 18 months, your savings target should reflect that. And remember, some months will be better than others. Life happens. The important part is sticking to the plan as best you can and adjusting when needed.
You can't improve what you don't track. That's why it's important to see where your money goes each month. Free tools like MoneySmart's Budget Planner or a simple Google Sheets spreadsheet work just fine.
Track your income, expenses, and most importantly, your savings contributions. Set checkpoints every month to review your progress. Celebrating small wins along the way helps keep motivation high.
Set up a transfer to your deposit account each payday. Choose an amount that leaves enough for rent, bills and other planned spending.
Keep the saving amount affordable enough to repeat. If a month goes off plan, update the target rather than using debt to catch up.
Bring your savings target, income and regular expenses to a broker assessment so we can compare the saving plan with your borrowing capacity.
Saving for a house deposit while renting means making every dollar count. But that doesn't mean you have to sacrifice everything you enjoy. It starts with being honest about where your money goes, and being smart about where you can make changes.
Open your banking app or download 3 months of statements. Categorise your spending into rent, groceries, transport, subscriptions, eating out and other costs. This gives you a starting point for your budget.
Use a spreadsheet or budgeting tool to group your costs. Look for expenses you could reduce, then decide how much to transfer into savings each payday.
We're not saying cancel every coffee or stop living your life. But some temporary sacrifices can help you save thousands. Start by reviewing your subscriptions and memberships, including Spotify, Netflix, the gym, meal kits, and cloud storage. Can any be paused, shared, or switched to a cheaper plan?
Dining out and food delivery are other big ones. Even cutting back to one or two nights a month could save hundreds of dollars. The key is not to go cold turkey, just scale it back while you're in savings mode. Remember, it's not forever. Once you've bought your home, you can always reassess and reintroduce those little luxuries.
Rent is likely your biggest monthly expense, so trimming it, even slightly, can fast-track your deposit. Here are a few proven ways to save:
Every dollar you save on rent is a dollar you can redirect into your deposit fund
If you overspend one week, review what happened and adjust the next week's budget. An occasional extra expense does not undo the money you have already saved.
Allow some room in your budget for things you enjoy. A savings plan needs to be manageable while you are paying rent and everyday bills.
Add the savings from each change to your budget before raising the regular transfer. Keep enough for essential expenses so the plan is sustainable.
Extra income can bring your savings target closer. Consider the hours, costs and tax involved before taking on more work, so the extra commitment is worthwhile.
Extra work may help if the hours and costs fit around your main job. Possible options include:
An extra $200 a week is $10,400 over 52 weeks before tax and work expenses. Budget using what you can actually keep. A lender may need an income history before counting a new second job or business towards borrowing capacity.
Selling unused items can provide a one-off boost. Count the net proceeds after fees and delivery costs, rather than treating it as ongoing income.
You could list unused items on Facebook Marketplace, Gumtree or eBay and put the proceeds towards your deposit.
If you've got a skill, writing, design, photography, web development, or admin, freelancing can be a great source of extra income. Websites like Airtasker, Upwork, or Fiverr make it easy to find short-term gigs without long commitments.
Alternatively, consider picking up a casual weekend shift. Working in retail, hospitality, or events can be a manageable way to earn extra income without burning out during the week. Even one or two shifts a month can significantly boost your deposit fund.
Sometimes, the fastest way to increase your income is by having one honest conversation. If you've been performing well at work, it may be time to ask for a raise. Prepare your case, highlight your contributions, and don't be afraid to advocate for your value.
A better-paid role may improve savings, but changing jobs can affect a loan application. Check how the lender treats probation, variable income and your employment history before relying on the new pay.
Government schemes may reduce the deposit or upfront costs you need. Each has separate eligibility rules, and you should check those rules before relying on the assistance in your budget.
Eligible voluntary super contributions of up to $15,000 a financial year and $50,000 overall per person can count towards FHSS. A release can include 85% of eligible concessional contributions, 100% of eligible non-concessional contributions and associated earnings. Compulsory employer contributions do not qualify.
Tax, contribution caps and release conditions affect the result. Arrange an ATO determination before property ownership transfers, preferably before signing. Current rules can allow a determination after contract signing, with separate release and notification deadlines. Check the ATO's FHSS guidance and get tax advice before changing super contributions.
The current name is the Australian Government 5% Deposit Scheme. It supports eligible first or returning buyers with a minimum 5% deposit and no LMI. Eligible single parents or single legal guardians have a separate minimum 2% pathway.
There are no income caps and places are unlimited. Property-price caps, ownership history, citizenship or residency, occupation and lender credit requirements still apply. You must generally use available savings towards the deposit under the scheme and lender rules; a 5% minimum is not permission to retain any amount of savings.
Check the official eligibility rules. Our NAB and CommBank reviews help compare loan features; scheme participation does not guarantee approval.
Check the duty concession for your state, property type and contract date before setting your savings target. An exemption is not automatic just because it is your first home.
Do not assume every jurisdiction offers a general first-home exemption. Tasmania's published established-home exemption ended for settlements after 30 June 2026. The NT has a specific eligible house-and-land package exemption, rather than a general discount for every first home.
Our state-by-state first home stamp duty guide explains the conditions. Include any remaining duty, registration fees and legal costs in your deposit budget.
For an estimate, use our stamp duty calculator and select the state, property type and first-home buyer option that fits your purchase.
Eligible buyers may combine FHSS, a state cash grant, duty relief and the 5% Deposit Scheme where each program permits it. Check every application separately and confirm when any grant money becomes available.
Shared equity has different rules. Federal Help to Buy cannot be combined with another government deposit guarantee or shared-equity program for the same purchase. Our first-home support guide explains the distinctions.
Check to see if you are eligible for a home loan
For many first-home buyers in Australia, help from family can be a valuable boost to saving for a deposit. The "Bank of Mum and Dad" isn't a formal bank, but a real source of support, whether through gifting money, lending funds, or acting as a guarantor. If you're lucky enough to have this option, it's worth understanding how it works and what to consider.
Parents and family can assist in a few ways. They might gift you part or all of your deposit outright, which doesn't need to be repaid. Alternatively, they could provide a private loan, where you agree on terms and repayments. The third option is acting as a guarantor, meaning they use their property as security so you can borrow with a smaller deposit.
Each method has pros and cons, and what suits you best depends on your family's financial situation and comfort level.
Even when dealing with family, it's wise to have clear agreements in writing. Gifted money may require formal paperwork to satisfy lenders and tax authorities. Loan agreements should outline repayment terms, interest (if any), and what happens if circumstances change.
Tell the lender whether family money is a gift or a loan. A written agreement does not turn repayable money into a gift; the debt and repayments must be disclosed.
A lender may accept a limited guarantee secured against a family member's property. That additional security can reduce the cash deposit required and may avoid LMI. You still need to afford the full loan repayments.
The guarantor's property can be at risk if you default. The guarantee limit and release conditions need to be clear, and the guarantor should obtain independent legal advice. Read our guarantor guide before making a family arrangement.
A genuine gift may require a declaration confirming no repayment is expected. A private family loan may not appear on a credit report, but you still need to disclose it so the lender can assess the debt and repayments.
For guarantor loans, lenders assess the guarantor's equity in their home and may require their income details. Transparency is key for a smooth approval process.
If you have a supportive family, exploring help from the "Bank of Mum and Dad" can fast-track your path to homeownership. Just make sure you understand the legalities and lender requirements before moving forward.
Saving a large deposit can feel overwhelming, especially for first-home buyers renting and trying to get ahead. Luckily, the Australian market offers several loan options that allow you to buy with a smaller deposit, sometimes as low as 5%. Understanding these alternatives can help you take the right path toward homeownership sooner.
Many lenders now offer low-deposit home loans, letting you get into the property market with just a 5% deposit. These loans are designed to assist buyers who may not yet have a large nest egg but have steady income and a good credit history. However, if your deposit is under 20%, you'll usually have to pay Lenders Mortgage Insurance (LMI) unless you qualify for government schemes like the Australian Government 5% Deposit Scheme. It's essential to factor in LMI costs when budgeting your purchase.
Before choosing this option, work through the guarantee limits and family risks above. Ask the lender what must happen before it will release the guarantee.
Shared equity reduces the loan you need because another party contributes towards the purchase in exchange for a share of the home's value. The agreement can involve sharing gains and losses, ongoing reviews and future buyback obligations.
Federal Help to Buy has a minimum 2% deposit, eligibility tests and participating-lender requirements. Check current rules and availability rather than assuming it can be added to a deposit guarantee.
Buying with a smaller deposit can get you into your first home faster, but it comes with some trade-offs. You may face higher interest rates, bigger monthly repayments, and the cost of LMI if it applies. Also, with less equity in your home, you might be more vulnerable to market fluctuations. That's why it's vital to seek expert advice and choose a loan that fits your financial situation and long-term goals.
Compare the deposit saving with the larger loan repayments and any LMI. Buying sooner only helps if the ongoing budget works.
Saving for your first home deposit is exciting, but it also demands discipline. Avoiding certain financial habits can protect your savings goal and keep you on track to homeownership faster. Here are some common pitfalls to steer clear of while you're working on your deposit.
One of the biggest mistakes when saving for a house deposit is taking on new debts. Whether it's a car loan or frequent use of buy-now-pay-later services like Afterpay, these debts can increase your monthly outgoings and reduce your ability to save. More importantly, lenders look closely at your total debt when assessing your borrowing capacity. Adding debt now could lower the loan amount you qualify for or even cause your application to be rejected.
Keep an emergency buffer alongside your deposit savings. If an essential expense arises, update the savings timeline rather than borrowing simply to keep the deposit account untouched.
Applications for credit can leave enquiries on your credit report. Several applications close together may affect a lender's assessment. Check eligibility and compare options before applying; also review unused card limits and existing debts.
Unrealistic expectations can sabotage your plans. Trying to save too quickly or aiming for a property way out of your budget often leads to frustration or poor financial decisions. Set achievable goals based on your income, expenses, and local market prices. Be open to compromise, maybe start with a smaller home or a different suburb and upgrade later.
This is a hypothetical savings example, not a verified client result. Saving $70,000 over 104 weeks requires about $674 a week, ignoring interest and starting savings.
On a $750,000 home, a 10% deposit is $75,000. A $70,000 balance is $5,000 short of that deposit before duty, legal fees and other costs. A 5% deposit would be $37,500, but access to a suitable low-deposit loan or scheme must be confirmed.
Use actual take-home pay and expenses to test the weekly target. Extra shifts, cheaper rent and savings interest can help, but none guarantees an approval or a particular purchase date.
Read more: saving a house deposit in 12 months.
It depends on the gap between your income and expenses, the target property and your timeframe. A sustainable saving amount and confirmed scheme eligibility can help you work out a realistic plan.
Some home loans are available with a 5% deposit, while particular government pathways may allow 2% for eligible buyers. A larger deposit can improve your options. If you borrow more than 80% of the property value, check whether LMI applies or whether you qualify for a scheme or waiver. Allow for buying costs as well as the deposit.
Yes, renting cheaper can fast-track your savings. Even saving $100 a week adds up to $5,200 a year toward your deposit. It's not forever, just a short-term trade-off to get into your own place sooner.
FHSS can release eligible voluntary super contributions and associated earnings towards a first home. The $50,000 limit is on eligible contributions, not guaranteed cash in hand. Tax and release conditions apply. Check the ATO guidance before contributing or signing.
A separate savings account can suit a short-term deposit goal. Compare the base rate, bonus rules, fees and access to your money. An advertised bonus rate may depend on conditions you cannot consistently meet.
Yes, either through standard low-deposit loans (which usually require Lenders Mortgage Insurance) or via the Australian Government 5% Deposit Scheme (5% deposit with no LMI if eligible).
It's about balance. Start by paying down high-interest debts first, like credit cards or personal loans. Then split your focus: put some toward your savings while still reducing debt. The cleaner your finances, the better your borrowing power when it's time to buy.
Great side hustles include freelance gigs, rideshare driving, tutoring, weekend hospitality shifts, or selling items online. Even $100 extra a week adds up fast over 12 months. Just be sure to keep good records for your lender. We can help show how extra income impacts your borrowing power.
Yes, and there are a few ways. They can gift you money, act as guarantors, or even lend it informally. Each option has legal and financial implications, so it's important to set it up correctly. We help families structure these arrangements in a way lenders accept
Buy-now-pay-later repayments reduce the money available to save and may affect the lender's assessment of commitments. Disclose the accounts and balances. Using one does not automatically mean a home loan will be declined.
Divide the amount you still need by what you can realistically save each month. That gives you a starting timeline. Review it when your rent, income or target purchase price changes, and include any government assistance only after checking your eligibility.
Yes. A broker can estimate the deposit and buying costs, check borrowing capacity and explain which schemes may fit. That gives you a target to work towards without promising a particular purchase date.
Would you like to learn about your situation?
Start with a property budget you can repay, price the buying costs, and subtract your current savings to find the gap. Divide that gap by a realistic saving period. Review the plan when rent, income or your household changes.
If the target does not fit, adjust the property budget, timeline or savings amount. Government support may help, but confirm eligibility before counting it.
Hunter Galloway can help you work out a deposit target and compare loan options. Bring your savings balance, income and regular expenses to a free assessment.
If you want to get started, please give us a call on 1300 088 065 or book a free assessment online to see how we can help.
Duty information checked on 12 September 2026. The transaction date and each buyer's circumstances determine which rules apply.
