Saving for Your First Home: The Dos and Don'ts

Saving for a deposit sounds straightforward until you start doing it and realise your current rent is eating half your income.

Most people think they need to save 20% of the property price plus costs, then lock themselves into a strict no-spending routine for years. That approach works, but it ignores the fact that you can often buy with less, and it definitely ignores how burnt out you'll feel if you never leave the house. What you actually need is enough genuine savings to meet lender requirements, a realistic timeline that accounts for how you live, and a plan that lets you access the schemes built specifically for this moment.

How Much You Actually Need in the Bank

You need enough to cover your deposit plus settlement costs, and lenders want to see that the deposit came from genuine savings, not a short-term windfall. Under the Australian Government 5% Deposit Scheme, eligible buyers across Greater Perth can purchase with a 5% deposit and no lenders mortgage insurance. The scheme covers properties up to $850,000 in the Perth metropolitan area. Settlement costs typically include conveyancing, building and pest inspections, loan establishment fees, and title transfer costs. These can add several thousand dollars to what you need upfront, so factor them in from the start.

Western Australia removed stamp duty for eligible first home buyers on homes valued up to $600,000 from May 2026, with a concessional rate applying on homes between $600,001 and $800,000. If you're buying land to build on, no duty applies on land valued up to $450,000, with concessions available up to $550,000. That change makes the actual cash requirement much lower than it used to be, especially if you're looking in outer suburbs where values sit under the full exemption threshold.

Genuine Savings vs Gift Deposits

Lenders define genuine savings as money you've held in your account for at least three months. Regular deposits from your salary into a savings account count. So does the balance in your offset account if you've been renting and building it up over time. A tax refund held for three months counts. Money your parents transferred to you last week does not, even if it's sitting in your account right now.

Gift deposits are allowed by most lenders, but they usually can't make up your entire deposit. A gift can top up your savings, but lenders still want to see that you've demonstrated the ability to save consistently over time. If your parents are contributing, the lender will ask for a statutory declaration confirming the money is a gift, not a loan. The declaration needs to state that there's no obligation to repay and no interest in the property. If you're planning to use a gift, confirm with your broker how much genuine savings the lender still expects you to show.

The First Home Super Saver Scheme

The First Home Super Saver Scheme lets you make voluntary contributions into your super fund and later release up to $50,000 toward your deposit. Concessional contributions are taxed at 15% rather than your marginal rate, which can make a material difference if you're earning above the tax-free threshold. You can release up to $15,000 from any single financial year, with a lifetime cap of $50,000.

Consider a buyer earning $75,000 a year who salary sacrifices $10,000 annually into super for three years. Instead of paying tax at 32.5% on that income, they pay 15% inside the super fund. When they apply to release the contributions, the ATO taxes the withdrawn amount at their marginal rate minus 30 percentage points, with any associated earnings taxed at their marginal rate minus 30 percentage points. The tax saving isn't huge on a per-dollar basis, but it compounds over time and gives you a deposit faster than leaving everything in a standard savings account. You need to apply for a determination from the ATO before you sign a contract, so start the process early if you're planning to use this option.

Fixed or Variable Rate for a First Home Loan

You'll need to decide whether to lock in a fixed interest rate, take a variable rate, or split your loan between the two. A fixed rate gives you certainty. Your repayments stay the same for the fixed period, which is usually between one and five years. That makes budgeting easier, especially in your first year of ownership when you're still adjusting to the cost of rates, insurance, and maintenance. The downside is that you're locked in. If rates drop, you don't benefit. If you want to make extra repayments beyond a certain limit, some lenders charge you. If you need to break the loan early, break costs can be significant.

A variable rate moves with the market. If rates fall, your repayments fall. You can usually make unlimited extra repayments without penalty, and most variable loans come with an offset account, which reduces the interest you pay by offsetting your loan balance with your savings. The risk is that if rates rise, so do your repayments, and you need to be able to manage that.

Splitting your loan lets you fix part of it for stability and keep part of it variable for flexibility. You get an offset account on the variable portion, and you can make extra repayments there without restriction. The fixed portion holds your minimum repayments steady. It's a middle path that works for buyers who want some certainty but don't want to lose access to features like offset accounts and flexible repayments. Your broker can model different split ratios based on your income and how much buffer you want in your budget.

What to Do If You're Still Six Months Away

If you're close but not quite there, keep your savings in a high-interest account and don't move money around. Lenders review your bank statements going back three to six months, and they want to see stable, consistent saving behaviour. Large unexplained deposits raise questions. Frequent transfers between accounts don't disqualify you, but they slow down the assessment because the lender has to trace where the money came from.

Cut back on buy-now-pay-later services if you're using them. Afterpay, Zip, and similar platforms are treated as credit commitments by most lenders, even if your balance is zero. They reduce your borrowing capacity because the lender assumes you could draw on that credit at any time. Close any accounts you're not using. The same applies to credit cards. If you've got a card with a $10,000 limit that you never use, either close it or ask the bank to reduce the limit. Even if you're not carrying a balance, that available credit is factored into your application as a potential liability.

Get pre-approval before you start looking seriously. Pre-approval tells you exactly how much you can borrow based on your current income, savings, and commitments. It's usually valid for three to six months, depending on the lender. It doesn't lock you into that lender, but it does give you confidence when you're ready to make an offer. Sellers and agents take pre-approved buyers more seriously, especially in suburbs where stock moves quickly.

Buying in Greater Perth: What You're Working With

Greater Perth covers a wide range of price points. Suburbs closer to the CBD and along the coast sit well above the $600,000 stamp duty exemption threshold, but there are still pockets in the northern corridor around Joondalup, the southern suburbs near Rockingham, and further east around Midland where you can find homes within that range. If you're looking at apartments or units in areas like Applecross or South Perth, you might land under the threshold depending on the property type and size.

The $850,000 cap under the 5% Deposit Scheme gives you more reach than the stamp duty exemption does. You can look at established homes in middle-ring suburbs and newer developments in growth areas without needing to save a full 10% or 20% deposit. The scheme is available through participating lenders, and your broker can confirm which lenders are on the panel and what loan features they offer under the scheme. Not all lenders offer offset accounts or unlimited redraws on loans written under the scheme, so ask before you commit.

If you're buying vacant land to build on, the duty exemption applies to land valued up to $450,000, with a concessional rate up to $550,000. Blocks in some of the newer estates in Baldivis, Byford, and the outer northern suburbs often sit within that range. Building takes longer than buying established, but if you've got time and you want something new, the tax treatment makes it worth considering. Just make sure your lender is comfortable with construction finance and that your deposit covers the land purchase and enough of the build cost to meet their lending requirements.

Call one of our team or book an appointment at a time that works for you. We'll walk through your savings, your timeline, and the loan structures that give you the most flexibility without overcommitting you in the first few years of ownership.

Frequently Asked Questions