How to Save for a House Deposit Faster in Australia (2026 Guide)

The 20% deposit benchmark exists because it avoids Lenders Mortgage Insurance (LMI) - but it is not the only path to homeownership.

• 20% deposit: avoids LMI entirely, gives you access to the best interest rates, and demonstrates strong financial discipline to lenders
• 5-10% deposit: possible through LMI-covered loans or government schemes - you own the home sooner but pay LMI ($5,000-$30,000+) or accept scheme conditions
• LMI protects the lender, not you - it is a one-off premium added to your loan or paid upfront, based on your LVR and loan size
• 2% genuine savings requirement: most lenders require at least 2-5% of the purchase price to be held in savings for 3+ months (not gifts)
• Government scheme deposits (5%): the First Home Guarantee and other federal schemes allow eligible buyers to purchase with 5% without paying LMI - the government guarantees the remaining 15%
• First Nations Home Guarantee: 2% deposit for eligible First Nations buyers
• State-based stamp duty concessions often apply to first home buyers - in NSW, stamp duty is waived for properties under $800,000 for eligible first home buyers

The federal government's First Home Guarantee (formerly First Home Loan Deposit Scheme) allows eligible first home buyers to purchase with a 5% deposit, with the government guaranteeing the remaining 15% - avoiding LMI.

• Eligibility: Australian citizens or permanent residents, first home buyer, income under $125,000 (singles) or $200,000 (couples)
• Property price caps apply and vary by state/territory - check NHFIC (National Housing Finance and Investment Corporation) for current caps
• 35,000 places available per financial year - historically the scheme fills quickly, particularly in metro areas
• Participating lenders only: not all banks offer the scheme - check the NHFIC website for the current list
• You still pay stamp duty (unless your state has a first home buyer concession) - factor this into your deposit target
• Family Home Guarantee: 18,000 places for single parents and single legal guardians with a 2% deposit
• Regional First Home Buyer Guarantee: 10,000 places per year for buyers in regional areas with 5% deposit

The FHSS scheme allows first home buyers to save money inside superannuation, benefit from the lower 15% tax rate, and then withdraw the contributions (plus earnings) for a house deposit.

• How it works: make voluntary concessional or non-concessional contributions to super, then apply to release up to $50,000 (increased from $30,000 from July 2022) for a deposit
• Tax saving on the way in: concessional contributions taxed at 15% inside super instead of your marginal rate - saving up to 32% for a 47% earner
• Annual cap: $15,000 per year can be contributed and later withdrawn under FHSS (within the annual concessional contributions cap of $30,000)
• Earnings credited at a deemed rate (SG rate + CPI adjustment - approximately 4-5% currently) not actual fund earnings
• Application process: request a FHSS determination from the ATO, receive a release authority, withdraw funds to use for your deposit
• Must be used within 12 months of release (or request an extension)
• Cannot be used if you have previously owned a home in Australia - genuine first home buyer only
• FHSS works best if you have a multi-year savings horizon (2-5 years) and a marginal rate of 32.5% or above

Your deposit savings should be working as hard as possible while you accumulate. The difference between a 1.5% and a 5.5% savings rate on $80,000 over 3 years is approximately $10,000.

• Ubank Save Account, ING Savings Maximiser, Macquarie Savings Account, and Rabobank High Interest Savings: consistently offer among the highest rates in Australia
• Bonus rate conditions: most high-rate accounts require you to meet monthly conditions (minimum deposit, minimum transactions) to unlock the bonus rate - check the fine print
• Term deposits: if you know you will not need the funds for 12-24 months, term deposits offer certainty - rates are currently competitive at 4-5% for 12-month terms
• Offset account strategy: if you already have a home loan on a different property, an offset account reduces interest charged - but for most first home savers, a HISA or term deposit is simpler
• Separate your deposit savings from your emergency fund and everyday spending - have the deposit savings auto-transfer on payday so you spend only what remains

Reducing the time to reach your deposit target requires either earning more, spending less, or both. These are the highest-leverage areas.

• Calculate your exact monthly savings rate: (current monthly saving ÷ deposit target) × months remaining - most people are shocked by how small the number is
• Cut fixed costs first: renegotiate rent if possible, refinance any existing loans, cancel subscriptions, switch to cheaper utilities via Energy Made Easy
• Reduce discretionary spending in three categories that typically have the most slack: dining and takeaway, clothing, and entertainment
• Increase income: a side income of $500/month invested for 3 years at 4.5% adds approximately $20,000 to your deposit - the power of additional income is underestimated
• Windfalls to the deposit account first: tax refunds, bonuses, gifts, and inheritances - redirect 100% to the deposit before lifestyle inflation absorbs them
• Rentvesting: buy an investment property in a more affordable market and continue renting where you want to live - access to the market sooner, though you forgo the FHOG and lose main residence CGT exemption on that property

State governments offer additional support for first home buyers - but eligibility conditions and amounts vary significantly by state and property type.

• NSW: First Home Owner Grant of $10,000 for new builds under $600,000; stamp duty exemption for properties under $800,000, concession up to $1,000,000
• VIC: $10,000 FHOG for new builds in metro areas, $20,000 in regional Victoria; stamp duty exemption for properties under $600,000
• QLD: $30,000 FHOG for contracts signed from November 2023; stamp duty concessions apply
• WA: $10,000 FHOG for new builds; first home buyer stamp duty rebates apply
• SA: $15,000 FHOG for new builds; stamp duty concessions available
• Grants typically only apply to new or substantially renovated properties - not established homes
• Use your state revenue office website for current thresholds and eligibility - rules change frequently and amounts above are indicative for 2025-26

If a family member (typically a parent) has equity in their property, a guarantor loan allows you to borrow with a smaller deposit - or no deposit - using their property as additional security.

• The guarantor does not give you money - they provide security from their own property's equity to cover the deposit shortfall
• This avoids LMI even with a deposit below 20%, as the combined security (your property + guarantor's equity) covers the lender's risk
• The guarantor is liable if you default - this is a serious commitment that must be understood by all parties
• Family pledge loans: a limited guarantee (only the shortfall portion) is better for the guarantor than an unlimited guarantee over the full loan
• The guarantee can typically be removed once your equity reaches 20% - through repayments or property price growth
• Independent legal advice is strongly recommended for the guarantor before they sign
• Not all lenders offer guarantor loans - check with a mortgage broker who works with multiple lenders

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