How to Save a House Deposit in Australia
Last updated: 6 May 2025
Saving a house deposit is one of the most significant financial challenges most Australians face. With median house prices in capital cities ranging from $600,000 to $1.4M, a 20% deposit requires $120,000 to $280,000 — often taking 5–10 years to accumulate on average incomes.
How much deposit do you need?
Minimum (5%): Most lenders will approve at 5%, but you'll pay LMI (potentially $15,000–$30,000+) and have fewer lender options.
Standard (10–15%): Reduces LMI significantly. Some lenders have LMI waivers at 85% LVR for qualifying professions.
Ideal (20%): No LMI. Better interest rates. Access to the full lender market.
Don't forget: beyond the deposit, you need cash for stamp duty ($20,000–$50,000 depending on state), conveyancing ($1,500–$3,500), inspection fees, and moving costs. Budget 3–5% of purchase price above your deposit for these.
Government schemes that reduce the deposit needed
First Home Guarantee (FHBG): The federal government guarantees up to 15% of the property value, allowing eligible first home buyers to purchase with a 5% deposit without paying LMI. Income caps and property price caps apply. Places are limited annually.
First Home Super Saver (FHSS) Scheme: Allows voluntary contributions to superannuation to be withdrawn for a first home deposit. Contributions are taxed at 15% (vs marginal rate), creating a tax advantage. Up to $50,000 can be released (as of 2024). The tax saving can be $5,000–$15,000+ depending on income.
State-specific grants: Most states have additional first home owner grants (FHOGs) for new builds — typically $10,000–$20,000. Check your state revenue office for current eligibility.
Realistic savings timelines
| Target deposit | Saving $1,500/mo | Saving $2,500/mo | Saving $4,000/mo |
|---|---|---|---|
| $80,000 | 4.4 yrs | 2.7 yrs | 1.7 yrs |
| $120,000 | 6.7 yrs | 4 yrs | 2.5 yrs |
| $150,000 | 8.3 yrs | 5 yrs | 3.1 yrs |
| $200,000 | 11.1 yrs | 6.7 yrs | 4.2 yrs |
Note: includes compound interest at 4.5% per annum on savings balance. Use our savings calculator to model your specific timeline.
Where to keep your deposit savings
- High-interest savings account (HISA): Best for deposits needed within 2–3 years. Currently 4.5–5.5% in 2025. Fully liquid. Government-guaranteed up to $250,000.
- Term deposit: Slightly higher rates for locking funds for 3–12 months. Good if you know your purchasing timeline.
- First Home Super Saver: Tax-effective but less liquid. Best for deposits 2+ years away.
- Shares/ETFs: Not recommended for deposits needed within 5 years due to volatility risk. Sequence-of-returns risk at the wrong time can be devastating.
Strategies to accelerate savings
- Automate transfers: Set up an automatic transfer on payday so savings happen before spending.
- The 50/30/20 rule: 50% needs, 30% wants, 20% savings. Shift the 20% to 30% or 35% while in savings mode.
- Rent strategically: Temporarily moving to lower-rent accommodation (share house, regional, parents) for 12–18 months can accelerate savings by $15,000–$30,000.
- Reduce depreciating asset costs: Cars, subscriptions, and lifestyle expenses. Each $200/month redirected to savings adds $2,400/year and compounds.
- Second income: Overtime, freelance, or a second job for a defined period can inject lump sums into the deposit fund.
Sources: Australian Housing and Urban Research Institute, ATO First Home Super Saver, Housing Australia FHBG program. General information only.