Articles - Finance

How to save for your first home

17th July 2019

For most first home buyers saving for a deposit can be a daunting task. As the price of living has risen, so has the number of offers allowing first home buyers to purchase a home with almost no deposit. Those deals may sound ideal, but they can be a terrible decision in the long run.

Just remember the more money you put down upfront, the less you'll have to borrow. Having a higher deposit can save you hundreds of thousands as you will repay less interest, skip mortgage lenders insurance and may be eligible for a lower interest rate.

There are a lot of factors to consider when saving for your first home. That's why we've put together our top tips so you can say goodbye to renting and move into your new home.


Planning how much you need to save, how much you can afford, and how you are going to achieve your goals is probably the most critical stage in the process. However, it is often overlooked. Creating a solid plan from day one will help you stay focused throughout the entire process.

The first thing you will need to do is work out how much money you need. Use a mortgage calculator to find out how much you can afford to borrow.

To work out how much you can afford to borrow, use the below calculation:

Amount you can afford to borrow + deposit saved - fees & charges* = amount you can spend on a property.

To work out how much you need for a deposit using the below calculation:

Amount you need to buy the property + fees & charges* - amount you can afford to borrow = deposit you need to save

Next, you will have to check your loan to value ratio (LVR). Lenders will use your LVR to decide how risky it would be to give you a loan. If you have a high LVR (80% or over) usually you will have to pay lenders mortgage insurance (LMI). LMI is a one-off insurance premium used to protect the lender should you default on your home loan.

Remember when planning to include all fees and charges that may apply so your not disappointed when you are ready to purchase your home. Here are some of the typical costs you may incur when buying a home:

  • House deposit
  • Stamp duty - If you are a first home buyer you may be able to avoid or pay a reduced amount, check with your state government to see what is required in your region.
  • Mortgage Lenders Insurance
  • Home loan application and bank fees
  • Building and pest inspection
  • Conveyancing fees
  • Council rates and charges


Once you have worked out how much you need to time to create a budget or savings plan.

It may be easier to download and app to help you with this. We recommend YNAB as it uses a zero budgeting strategy, which is great for beginners.

Otherwise, you can use a simple spreadsheet to get started. Simply write down all of your expenses and work out how much you have leftover to save.

Pro Tip: Make sure your savings goals are realistic and based on your lifestyle and income. If you don't set a realistic goal, your budget will be almost impossible to follow long term.

Savings Account

Now you have your budget in place its time to start saving! There are a few different methods you can try to make the savings process a little easier.

Get a high-interest savings account - once you know how much you can save, it's time to make your money work for you. If you leave your money sitting in an everyday account, not only are you more likely to spend it but you are also missing out on sweet, sweet interest.

Pro tip: If you sign up to a savings account that offers a bonus if you don't make a withdrawal, you will be less tempted to spend that money.

Automate your savings - to keep you on track automate your savings to come out of your bank account each payday. The automatic transfer will allow you to set and forget, knowing that your savings are growing without you have to transfer them manually every time you get paid.

Consider investing - Have you ever considered investing? You may need to get some professional financial advice first, but investing is an excellent option if buying a home is a long term goal.

First Home Super Saver Scheme

If saving isn't your forte, the first home super saver (FHSS) scheme allows first home buyers to save from a home deposit within their super fund.

The scheme allows you to make super contributions, within existing contribution caps, and from 1 July 2017 up to $15,000 of those contributions made in a financial year cap be withdrawn to purchase your first home. Don't forget the maximum that can be released is $30,00 in total, plus an amount that represents deemed earnings.

For information on the FHSS scheme visit the Australian Taxation Office's website.

Saving Tips

Here a few extra savings tips to help you on your way:

  • Move back home to save on rent
  • Swap takeaway for homemade meals
  • Use your budget and give every dollar a job
  • Set small achievable goals to keep you motivated
  • Consider implementing the 30-day rule - wait 30 days until you decide to purchase something
  • Write a list before you do your food shopping
  • Invite friends over instead of going out

Buying your first home is an excellent investment and will set you up for great financial success. Just keep working towards your goals at your own pace, and you'll be in that new home in no time!