What are the Real Savings Targets for First Home Buyers?

Your deposit is only part of what you need saved before you can buy. Most first home buyers focus on getting to 5% or 10% and assume that covers it, but there are settlement costs, lender requirements around genuine savings, and decisions about whether to use government schemes that all change how much cash you actually need in the bank.

How Much Cash You Need Beyond Your Deposit

You need to cover stamp duty, conveyancing, loan establishment fees, building and pest inspections, and sometimes valuation fees. In Victoria, a full stamp duty exemption applies to properties up to $600,000 with a sliding scale concession from $600,001 to $750,000, which means a first home buyer purchasing at $550,000 pays nothing in transfer duty but still needs around $3,000 to $5,000 for other settlement costs. Someone buying at $700,000 in the same state would pay a reduced duty amount plus the same settlement expenses.

Lenders also expect to see genuine savings, which means money you've accumulated over time rather than a sudden cash gift or sale proceeds. Most lenders want at least 5% of the purchase price held as genuine savings for a minimum of three months. A gift from a parent can sometimes form part of your deposit, but it won't always count toward the genuine savings requirement unless it's been sitting in your account long enough.

Consider a buyer looking at a property around the median in Mount Eliza, where waterfront proximity and bayside appeal push values higher than many nearby areas. Even with Victoria's stamp duty exemption on properties up to $600,000, they'd need to show genuine savings separately from any gifted deposit and budget for conveyancing, inspections, and loan fees on top of the deposit itself.

What Government Schemes Actually Change About Your Savings Timeline

The Australian Government 5% Deposit Scheme allows eligible first home buyers to purchase with a 5% deposit without paying lenders mortgage insurance. That removes one of the largest upfront costs. Without the scheme, a 5% deposit would trigger LMI that could add $10,000 to $30,000 or more to your borrowing costs depending on the property value and lender.

The scheme is uncapped by income and by annual places, so you're not competing for a limited number of spots. You apply through a participating lender, not directly through Housing Australia. The scheme operates through a panel of 31 lenders comprising three major banks and 28 non-major lenders. Not every lender participates, and not every participating lender offers identical terms, so your choice of lender still matters.

Property price caps apply: Sydney $1,500,000, Melbourne $950,000, Brisbane $1,000,000. Mount Eliza falls under the Melbourne cap. If you're buying above that threshold, you can't use the scheme and will either need a larger deposit or will pay LMI on a lower deposit.

Help to Buy is a different structure. The Australian Government contributes up to 40% of the purchase price for a new home and up to 30% for an existing home in exchange for a proportional equity stake, with a minimum 2% deposit required. Income limits are $100,000 for individuals and $160,000 for joint applicants or single parents. You can't combine it with the 5% Deposit Scheme, so you need to decide which structure suits your income, deposit size, and willingness to share equity.

Using Savings Held in Super Through the First Home Super Saver Scheme

You can make voluntary contributions into your super and later withdraw them, along with associated earnings, to put toward your first home. The scheme has annual contribution limits and a total withdrawal cap, and withdrawals are taxed at your marginal rate minus 30%. It's not a way to avoid tax entirely, but it does let you salary sacrifice into super at a concessional rate and then pull that money out later with some tax benefit retained.

The scheme works if you're still a year or two away from buying and want to build savings inside a tax-effective structure. It doesn't help if you're ready to buy in the next few months, since contributions need time to process and you need to apply for a determination and then a release authority before the money becomes available.

If you're weighing up whether to keep saving in a high-interest account or redirect some income into super under this scheme, the decision comes down to your timeline, your marginal tax rate, and whether you're confident you'll use the money for a property purchase. Once you've made voluntary contributions specifically for this purpose, pulling them out for something other than a home deposit triggers different tax treatment.

How Your Deposit Size Changes What You Can Borrow

Lenders assess your borrowing capacity based on your income, existing debts, living expenses, and the deposit you're putting down. A larger deposit doesn't increase your income, but it does reduce the loan amount you're asking for, which can push you over the line if you're borderline on serviceability.

Someone borrowing 95% of the property value has less buffer in the lender's eyes than someone borrowing 90% or 80%. If you're self-employed, casually employed, or carrying other debts like a car loan, a larger deposit can offset some of that perceived risk and improve your chances of approval. It also opens up access to lenders who don't participate in low deposit schemes and who may offer different rate structures or offset features.

For buyers considering refinancing down the line, starting with a lower loan-to-value ratio gives you more equity sooner, which makes it easier to switch lenders or access equity for renovations or other purposes later. It's not the only reason to save a bigger deposit, but it's one that plays out over the life of the loan rather than just at settlement.

Fixed Versus Variable Rates and How That Affects Your Savings Strategy

Your deposit is locked in at purchase, but your interest rate structure affects how much you pay over time and whether you have access to features like an offset account. A variable rate typically allows full offset and redraw, which means any extra savings you build after settlement can sit in an offset account and reduce the interest charged on your loan balance.

A fixed rate locks in your repayment amount for the fixed period, but many fixed loans either don't offer offset or limit how much extra you can repay without penalty. If you're planning to keep saving aggressively after you buy, a variable rate or a split structure gives you more flexibility to use those savings to reduce interest. If you want repayment certainty and aren't focused on parking extra cash against the loan, fixing might suit better.

Some buyers split their loan, fixing part for stability and leaving part variable for flexibility. That gives you access to offset on the variable portion while protecting part of your repayment from rate rises. Your income stability, risk tolerance, and how much extra cash you expect to have after settling all feed into which structure makes sense. For more on how rate types work and when fixed terms end, see fixed rate expiry.

What Happens If You're Buying New Versus Established in Mount Eliza

Mount Eliza has both established homes, many on larger blocks with bay views or bushland surrounds, and newer developments closer to the village and Canadian Bay Road. Victoria's First Home Owner Grant provides $10,000 for new homes valued up to $750,000 and does not apply to established homes. If you're buying new, that grant reduces the cash you need to bring to settlement.

Victoria's stamp duty exemption applies to new and established homes up to $600,000, with a concession from $600,001 to $750,000. Both property types qualify for the duty concession, but only new builds attract the grant. That $10,000 difference can cover most of your settlement costs if you're buying new, while an established home buyer at the same price needs to fund those costs entirely from savings.

If you're building or buying off-the-plan, your settlement timeline is longer, which gives you more time to save but also means your pre-approval needs to account for construction delays and potential rate changes between contract and settlement. For buyers looking at newly built townhouses or units in Mount Eliza, the grant and longer savings runway can work in your favour if you're disciplined about continuing to save during construction.

Call one of our team or book an appointment at a time that works for you to talk through your savings position, which government schemes suit your situation, and what your borrowing capacity looks like based on the deposit you're building toward.

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