Last updated: July 2026
How to Save for Your First Home in Australia
Saving for a first home deposit is the biggest financial hurdle for most Australians. But the amount you actually need to save depends heavily on which government schemes you qualify for. With the right strategy, you could need as little as 2% of the property price, and the FHSS can help you get there faster by giving you a tax advantage on every dollar you set aside.
How Much Do You Need to Save?
Your deposit target depends on which path you take:
2% with Help to Buy
The lowest deposit option. The government buys 30-40% equity. Income capped at $103k single / $165k couple or single parent. Citizens only.
5% with First Home Guarantee
Government guarantees 15%, so no LMI. No income cap since Oct 2025. You own 100% of the property.
10% without schemes
LMI applies but is more manageable than at 5%. Some lenders offer competitive rates at 90% LVR.
20% to avoid LMI
The traditional benchmark. No LMI, better interest rates, and a smaller loan. But takes the longest to save.
On top of your deposit, budget an extra $5,000 to $15,000 for upfront costs like stamp duty, conveyancing, and inspections.
The FHSS Tax Advantage
The First Home Super Saver Scheme (FHSS) is one of the most effective tools for building your deposit. You salary sacrifice up to $15,000 per year (up to $50,000 total) into your super fund. These contributions are taxed at 15% instead of your marginal tax rate.
Here is how the numbers work for someone earning $90,000 per year. Your marginal tax rate is 30%, plus the 2% Medicare levy, so you pay 32% tax on each extra dollar earned. By salary sacrificing $15,000 into super, that money is taxed at 15% instead of 32%, saving you 17 cents per dollar. Over one year, that is $2,550 in tax saved. Over three years of maximum contributions ($45,000 total), the tax saving alone is roughly $7,650.
When you are ready to buy, you can release 85% of concessional contributions plus 100% of non-concessional contributions plus deemed earnings. The FHSS stacks with both the FHBG and Help to Buy.
Create a Savings Timeline
Working backwards from your target property price, here is how much you would need to save per month at different timeframes (for a 5% deposit via FHBG, excluding upfront costs):
| Property Price | 5% Deposit | Save in 1 Year | Save in 2 Years | Save in 3 Years |
|---|---|---|---|---|
| $500,000 | $25,000 | $2,084/mo | $1,042/mo | $695/mo |
| $600,000 | $30,000 | $2,500/mo | $1,250/mo | $834/mo |
| $700,000 | $35,000 | $2,917/mo | $1,459/mo | $973/mo |
| $800,000 | $40,000 | $3,334/mo | $1,667/mo | $1,112/mo |
These figures do not account for interest earned on savings or the FHSS tax advantage. Using the FHSS effectively reduces the amount you need to save from regular income because of the tax savings.
Practical Saving Tips
- Pay yourself first: set up an automatic transfer to your savings account on payday, before you spend on anything else
- Track your spending for a month to find areas where you can cut back without major lifestyle changes
- Reduce discretionary spending: eating out less, pausing subscriptions, and shopping smarter can free up hundreds per month
- Consider a side income: freelancing, tutoring, or selling unused items can accelerate your savings
- Use a high-interest savings account: rates above 5% are available if you meet monthly deposit and transaction conditions
- Salary sacrifice into super via FHSS: this is the single most tax-effective way to build a deposit in Australia
Government Schemes That Boost Your Deposit
Beyond saving from your income, several government schemes directly add to your deposit or reduce the costs around it:
FHSS: up to $50,000 per person
Salary sacrifice into super and release the funds for your deposit with a significant tax advantage. Learn more about FHSS
FHOG: $10,000 to $50,000 depending on state
Cash grants for new home purchases. Applied at settlement, they reduce the amount you need to borrow. See grant amounts by state
Stamp duty concessions: save thousands
First home buyer exemptions and concessions mean less money needed for upfront costs, so more of your savings go towards the deposit. Calculate your stamp duty
Saving as a Couple
Buying as a couple has a significant advantage: both partners can use the FHSS independently. That means up to $100,000 in combined FHSS contributions ($50,000 each), with both partners benefiting from the tax saving.
Other tips for couples:
- Set a joint savings target and contribute proportionally based on income
- Open a joint savings account specifically for the house deposit so you can both track progress
- Both partners should check their credit scores and address any issues early
- Discuss your budget, preferred areas, and non-negotiables before you start looking
- Remember that joint income affects Help to Buy eligibility ($165,000 cap for couples)
See which schemes you qualify for
Answer a few questions and get a personalised strategy showing every scheme you can stack, how much you could save, and what to do first.
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Frequently Asked Questions
How much do I need to save for a first home deposit?
It depends on which government schemes you use. With Help to Buy, you need just 2% of the property price. With the First Home Guarantee (FHBG), you need 5%. Without any scheme, most lenders expect 10-20%, with LMI required below 20%. For a $650,000 property, that ranges from $13,000 (2%) to $130,000 (20%).
Is the FHSS worth it for a short savings period?
Even one year of FHSS contributions can be worthwhile. If you salary sacrifice $15,000 in a single year and your marginal tax rate is 30% (plus Medicare), you save roughly $2,550 in tax compared to saving in a regular bank account. The longer you contribute, the greater the benefit.
Can I use a gifted deposit to buy my first home?
Most lenders accept gifted deposits from immediate family members, but they typically still require evidence of genuine savings (money you have accumulated over 3-6 months). A gift can cover part of the deposit while your genuine savings cover the rest. Your lender will need a signed statutory declaration from the person giving the gift.
Should I save in a high-interest savings account or invest?
For a deposit you plan to use within 1 to 3 years, a high-interest savings account is generally safer. Share market investments can lose value in the short term, which could delay your purchase. The FHSS is a strong middle ground: your contributions earn a deemed rate of return set by the ATO, and you get the tax advantage on top.
Sources:
ATO - First Home Super Saver Scheme | Housing Australia - First Home Guarantee | Housing Australia - Help to Buy
Disclaimer: This information is general in nature and does not constitute financial, legal, or tax advice. Calculations are estimates only and may not reflect your exact circumstances. Eligibility criteria and dollar amounts may change without notice. Always verify with the relevant government authority, your mortgage broker, or a licensed financial adviser before making decisions.