How to Save for a House Deposit in Australia

How much deposit do you actually need?🔗

The short answer: 20% is the gold standard, but it is not the only path. A 20% deposit lets you skip LMI and means you borrow less, so repayments are lower. But it is a big number, and plenty of Australians buy with as little as 5%, through many lenders or through government schemes. The trade-off is LMI or meeting specific eligibility rules.

What is LMI, exactly? Lenders Mortgage Insurance protects the lender, not you. If you default and the bank sells your home for less than you owe, LMI covers the lender's shortfall, and you pay the premium. It is a one-off cost, paid at settlement or added to your loan (so you pay interest on it for years), and on a typical home it can run to $10,000 to $20,000 or more. The good news: the First Home Guarantee lets eligible buyers purchase with a 5% deposit and skip LMI entirely. For the deposit side in detail, see how much deposit you need.

What does a deposit actually look like in dollars?🔗

Let us make it concrete with an illustrative $600,000 home. Prices vary enormously across Australia, so Sydney and Melbourne will be higher and many regional areas lower. Adjust for your own market.

And here is the trap that catches so many first home buyers: the upfront costs on top of the deposit. Budget for stamp duty (the big one, varies by state, often tens of thousands, though some states offer first home buyer concessions), conveyancing ($1,000 to $2,500), a building and pest inspection ($400 to $800), and moving costs ($500 to $2,000). As a rule of thumb, add at least $20,000 to $30,000 on top of your deposit, and more if you are buying in NSW or VIC. Check stamp duty for your state before you plan.

Government help for first home buyers🔗

There are real schemes that can make a meaningful difference. Rules, caps and thresholds change regularly, so treat this as a starting point and check the official sources.

• First Home Guarantee. Lets eligible first home buyers purchase with a 5% deposit without paying LMI, because the government guarantees part of the loan. Avoiding $15,000 to $20,000 of LMI is a real saving. See our guide to the First Home Guarantee scheme.
• First Home Super Saver (FHSS) scheme. Lets you make voluntary super contributions and later withdraw them (plus earnings) for a deposit. Concessional contributions are taxed at 15% rather than your marginal rate, which adds up over a few years of saving.
• State grants and stamp duty concessions. Most states offer First Home Owner Grants and stamp duty exemptions or concessions under certain price thresholds. Search "[your state] first home owner grant" and go directly to your state revenue office for current figures.

Building your savings plan🔗

Knowing your target is one thing, getting there is another. A practical, step-by-step approach:

• Work out your target. Deposit + upfront costs + buffer. A $600,000 property at 10% might be $60,000 + $25,000 = $85,000.
• Work out your timeline. Divide the target by the months you have. $85,000 over four years is about $1,770 a month, which tells you fast whether the plan is realistic.
• Automate your savings. Set an automatic transfer on payday, before you can spend it. You never see it, so you never miss it. This is the single most effective savings habit there is.
• Use a high-interest savings account. The difference over a few years is meaningful. See our best high-interest savings account guide, and set the transfer to meet the bonus-interest rules.
• Cut the big three first. Housing, transport and food move the needle far more than skipping a coffee. Sharing a house another year, or meal-prepping a few nights, can free up hundreds a month.
• Boost your income. A pay rise, overtime, a side hustle or selling unused stuff, all sent straight to the fund, shortens the timeline.

Where to keep your deposit while you save🔗

For a 1 to 5 year goal like a house deposit, a high-interest savings account is the right tool: safe, liquid and earning a competitive rate, with the capital protected. Keep in mind interest earned is taxable, so track it for your return.

Why not shares or crypto? Volatility. They can deliver strong long-run returns, but they can also fall 30% or 40% in a short period. If the market drops in the year you planned to buy, your deposit drops with it and you may be forced to delay. For a horizon this short, capital preservation matters more than growth. If you are years away from needing the money, that calculus changes, which is where your emergency fund and longer-term investing come in.

Common mistakes to avoid🔗

• Waiting for the "perfect" time. There is not one. Start saving now with whatever you can and adjust as you go.
• Forgetting upfront costs. Stamp duty, conveyancing and inspections can add $20,000 to $30,000 or more. Budget for them from day one.
• Raiding the fund. Treat the deposit account like it does not exist. It is not an emergency fund or a holiday fund.
• Lifestyle creep. Every pay rise is a chance to save more before your spending adjusts to the new income.
• Putting the deposit in volatile assets. Shares and crypto are not appropriate for money you need in 1 to 3 years.

Staying motivated over a multi-year save🔗

Saving a deposit is a marathon, so a bit of strategy helps. Break the goal into milestones and celebrate $10,000, then $25,000, then $50,000. Make it concrete by finding a suburb and real listings you would actually want, so the goal stops feeling abstract. Find an accountability partner to share progress with. And remember what every dollar represents: each $1,000 you save is $1,000 of equity you already own. Progress beats perfection, and a month where you save $800 instead of $1,500 is still $800 closer.

❓ Frequently asked questions🔗

Keep reading🔗

• How much deposit do you need?
• The First Home Guarantee scheme
• Stamp duty explained
• Best high-interest savings accounts