5% Deposit – Genuine Savings

Understanding genuine savings is critical for first home buyers accessing the Home Guarantee Scheme. Whilst the scheme allows you to purchase with just a 5% deposit, most lenders require that this deposit demonstrates financial discipline through genuine savings accumulated over time.

Quick overview: this comprehensive guide explains what counts as genuine savings, how to build them strategically, and how to meet lender requirements when applying for the Home Guarantee Scheme across Sydney, regional NSW, and throughout Australia.

What are genuine savings?

Definition: genuine savings are funds you've accumulated through regular saving and held in your accounts for a minimum period, typically 3 months. They demonstrate to lenders that you have the financial discipline to manage mortgage repayments.

Why do lenders care about genuine savings?

Lenders use genuine savings as a predictor of borrower reliability:

• Demonstrates saving discipline: you can consistently set aside money
• Reduces default risk: history of savings correlates with mortgage repayment success
• Proves financial stability: you're not relying solely on windfalls or borrowed money
• Meets policy requirements: many lenders have minimum genuine savings thresholds

What counts as genuine savings?

Accepted genuine savings: most lenders have specific criteria for what they'll accept as genuine savings when you're applying for a Home Guarantee Scheme loan. Understanding these requirements helps you prepare appropriately.

Accepted genuine savings

Bank savings accounts:

• Funds held in savings accounts for 3+ months
• Regular deposits showing accumulation pattern
• Most straightforward form of genuine savings

Term deposits:

• Fixed-term deposits held for 3+ months
• Demonstrates commitment to saving
• Can't be accessed during term, showing discipline

Shares and managed funds:

• Held for 3+ months minimum
• Must be readily convertible to cash
• Valued at current market value
• May require evidence of regular contributions

First Home Super Saver Scheme:

• Amounts withdrawn from superannuation under FHSSS
• Demonstrates long-term saving through salary sacrifice
• Widely accepted by lenders as genuine savings
• Tax advantages during accumulation phase

Equity in other property:

• If you've owned property before, not for first home buyer concessions
• Equity from sale of previous property
• Must be held as cash for 3+ months

Sometimes accepted (lender dependent)

Genuine gift from family:

• Some lenders accept gifts if combined with genuine savings
• Typically need at least 5% in genuine savings PLUS gift
• Requires signed statutory declaration from gifter
• Must prove gift is genuine, not a loan to be repaid

Regular bonuses:

• If bonuses are contractual and regular, such as annual or quarterly
• Must demonstrate pattern over 2+ years
• Usually combined with other savings

Inheritance:

• If held in your accounts for 3+ months
• May require proof of inheritance, including will and estate documents
• Some lenders more flexible than others

Generally not accepted

Recent cash gifts:

• Money received within last 3 months
• Doesn't demonstrate your saving ability
• Unless held and accumulated for 3+ months

Recent tax refunds:

• One-off windfalls don't show discipline
• Unless deposited and held for 3+ months

Borrowed funds:

• Personal loans used for deposit
• Credit card cash advances
• Any form of debt used as deposit

Selling assets:

• Car sales, unless held as cash 3+ months
• Jewellery, electronics, etc.
• Doesn't demonstrate saving discipline

Gambling or lottery winnings:

• Even if substantial amounts
• Inconsistent with responsible lending
• May raise serviceability concerns

Key rule: the general principle is that genuine savings must demonstrate a consistent pattern of saving behaviour over time. It's not just about having money, it's about proving you saved it through financial discipline.

How much genuine savings do you need?

Requirements vary: for the Home Guarantee Scheme with a 5% deposit, lender requirements vary. Understanding different scenarios helps you prepare appropriately for your application.

Typical lender requirements

Scenario 1: Full 5% as genuine savings (ideal)

• Entire 5% deposit from genuine savings
• Accepted by all participating lenders
• Strongest application position
• Example: $700,000 property = $35,000 genuine savings needed

Scenario 2: Partial genuine savings with gift

• Some lenders accept 2.5% to 3% genuine savings plus gift for remaining deposit
• Requires declaration that gift is genuine, not to be repaid
• Example: $700,000 property = $17,500 to $21,000 genuine savings + $13,500 to $17,500 gift

Scenario 3: First Home Super Saver Scheme

• Combination of FHSSS withdrawal and other savings
• FHSSS amounts fully accepted as genuine savings
• May be able to use maximum FHSSS worth $50,000 plus minimal other savings

Strategies to build genuine savings

Strategic saving: building genuine savings requires a consistent, disciplined approach. These strategies help you accumulate your deposit whilst meeting lender requirements for the Home Guarantee Scheme.

Strategy 1: automated savings plan

The most effective way to build genuine savings is setting up automatic transfers:

• Schedule automatic transfer on payday to savings account
• Even $500 to $1,000 per fortnight adds up quickly
• Creates clear pattern of regular saving for lenders
• $1,000 per fortnight = $26,000 per year

Timeline: with consistent saving, build 5% deposit in 12–18 months for many properties.

Strategy 2: high-interest savings account

Maximise growth whilst building history:

• Use high-interest savings accounts with 4% to 5% interest rates available
• Meet monthly deposit requirements to qualify for bonus interest
• Compound interest accelerates your savings
• Keep all funds in one account for clear history

Example: $30,000 at 5% per annum = $1,500 interest earned annually.

Strategy 3: First Home Super Saver Scheme

Tax-advantaged saving through superannuation. The FHSSS lets you save up to $50,000 for your first home through super with tax benefits:

• Tax advantage: contributions taxed at 15% instead of your marginal rate
• Investment returns: your savings grow through super fund investments
• Maximum contribution: $15,000 per year, $50,000 lifetime
• Withdrawal: released when you're ready to buy, minus 30% tax (still advantageous)

Timeline: 3–4 years to reach maximum $50,000 contribution.

Strategy 4: savings boost techniques

Accelerate your savings with these practical approaches:

• 50/30/20 rule: 50% essentials, 30% wants, 20% savings
• Reduce discretionary spending: dining out, subscriptions, entertainment
• Increase income: side hustles, overtime, second job temporarily
• Move back with parents: if possible, save on rent, the biggest expense
• Share accommodation: reduce housing costs whilst saving

Strategy 5: combined approach

Year 1–2: Build FHSSS

• Salary sacrifice $15,000 per year into FHSSS
• Simultaneously save $500 to $750 per fortnight in savings account

Year 2–3: Continue both

• FHSSS: $30,000+ with investment returns
• Savings account: $13,000 to $19,500
• Combined: $43,000 to $50,000+

Result: sufficient for 5%+ deposit on properties up to $850,000 to $1,000,000.

Timeline: how long to build genuine savings?

Realistic timelines: here are realistic timelines for building your deposit based on different saving rates. Remember to factor in the 3-month holding requirement.

Saving $500 per fortnight ($13,000/year)

• 12 months: $13,000 (5% deposit on $260,000 property)
• 18 months: $19,500 (5% deposit on $390,000 property)
• 24 months: $26,000 (5% deposit on $520,000 property)
• 36 months: $39,000 (5% deposit on $780,000 property)

Saving $1,000 per fortnight ($26,000/year)

• 12 months: $26,000 (5% deposit on $520,000 property)
• 18 months: $39,000 (5% deposit on $780,000 property)
• 24 months: $52,000 (5% deposit on $1,040,000 property, if under price caps)

Saving $1,500 per fortnight ($39,000/year)

• 12 months: $39,000 (5% deposit on $780,000 property)
• 18 months: $58,500 (5% deposit on $1,170,000, likely exceeds HGS caps)

Don't forget the 3-month rule: even if you can save your target amount quickly, remember that most lenders require savings to be held for at least 3 months. Factor this into your timeline.

Common genuine savings challenges and solutions

Solving challenges: many first home buyers face similar challenges when building genuine savings. Understanding solutions helps you navigate these obstacles and qualify for the Home Guarantee Scheme.

Challenge 1: "I have the money but it's not genuine savings"

Situation: you have $40,000 from selling your car, a recent bonus, or a gift from family.

Solution:

• Deposit funds into savings account
• Wait 3 months, minimum requirement
• Meanwhile, add regular deposits to show ongoing saving pattern
• After 3 months, these funds may qualify as genuine savings
• Work with a broker to find lenders with flexible policies

Challenge 2: "My partner has genuine savings but I don't"

Situation: applying jointly but only one party has savings history.

Solution:

• Many lenders accept genuine savings from either applicant
• Ensure the savings are sufficient for combined deposit requirement
• Both applicants must meet other serviceability requirements
• Some lenders more flexible than others, broker can advise

Challenge 3: "I've been saving but not in the 'right' account"

Situation: savings spread across multiple accounts, some very active.

Solution:

• Consolidate savings into one dedicated account
• Provide comprehensive bank statements showing accumulation
• Prepare explanation letter showing saving sources and pattern
• Wait 3+ months in consolidated position before applying

Challenge 4: "I have savings but poor bank statement presentation"

Situation: bank statements show gambling, Afterpay, or excessive spending.

Solution:

• Clean up spending habits immediately
• Cancel buy-now-pay-later accounts
• Stop any gambling transactions
• Build 3–6 months of "clean" statements
• Demonstrate changed financial behaviour

Get expert guidance today

We help first home buyers across Baulkham Hills, Gladesville, and all of Sydney navigate genuine savings requirements and find lenders whose policies match your situation.

Book consultation Call: 0426 002 202

Lender variations: why a broker matters

Different lender policies: different lenders have different genuine savings policies. This is where working with an experienced mortgage broker provides significant advantage.

Example lender comparisons

Lender A (Major Bank):

• Requires full 5% as genuine savings
• Minimum 3 months holding period
• No gifts accepted
• Strict bank statement assessment

Lender B (Regional Bank):

• Accepts 3% genuine savings + 2% gift
• 3 months holding period for savings portion
• Gift requires statutory declaration
• More flexible on statement presentation

Lender C (Non-Bank Lender):

• Accepts FHSSS as full genuine savings
• Minimal additional savings required
• 2 months holding period
• Focus on saving pattern rather than specific amount

A specialist broker has access to 35+ lenders and understands each lender's genuine savings policies. This means matching your situation to the right lender, not wasting time with lenders who'll decline, maximising your chance of approval, and potentially accessing better rates.

Frequently asked questions

Can I use money I've saved in cash at home?

Unfortunately, no. Lenders need to see a clear paper trail of your savings through bank statements. Cash at home cannot be verified and doesn't demonstrate saving discipline through regular account deposits. If you have cash savings, deposit them into a bank account and hold for at least 3 months.

What if I've been living rent-free with family and saving my entire salary?

This is actually ideal! Living rent-free and saving aggressively creates a strong genuine savings position. Ensure your bank statements show regular deposits from salary and minimal withdrawals. This demonstrates excellent saving discipline. Some lenders specifically view this favourably as it shows low living expenses and high serviceability.

Do both partners need genuine savings when applying jointly?

No. Most lenders accept genuine savings from either applicant. However, both applicants' bank statements will be assessed for spending patterns and serviceability. The non-saving partner's statements should still show responsible financial behaviour even if they haven't been actively saving.

Can I use funds from selling cryptocurrency as genuine savings?

This depends on the lender. Most lenders will want to see clear evidence of legitimate cryptocurrency trading or investment, funds converted to AUD and held in bank account for 3+ months, and explanation of how you acquired the cryptocurrency initially. Some lenders are more comfortable with cryptocurrency than others. This is where a broker's knowledge helps.

What if my savings are in an offset account for an investment property?

Funds in an offset account can count as genuine savings if they've been there for 3+ months and show a pattern of accumulation. However, lenders will assess whether you'll need to keep these funds in the offset account after purchasing your first home to reduce interest on the investment loan. The accessible equity is what matters.

How do lenders view savings accounts that fluctuate significantly?

Lenders prefer to see consistent growth or at least maintained balances. Accounts that yo-yo up and down suggest irregular income or spending control issues. If your account fluctuates due to legitimate reasons, such as annual insurance payments or quarterly rent, be prepared to explain these patterns. A supplementary savings account with steady growth can help demonstrate discipline.

Take the next step

Ready to start building your genuine savings for the Home Guarantee Scheme? Contact our team to understand your budget and create your savings strategy today.

Book consultation Call: 0426 002 202

📧 Email: hello@buyvest.com.au

Related resources for first home buyers

Explore these related articles:

• Home Guarantee Scheme (5% deposit) – first home guarantee, family guarantee, and more
• Home Guarantee Scheme benefits and risks – buy with low deposit and no LMI
• First Home Super Saver Scheme guide – use superannuation to grow deposit faster with tax advantages
• All deposit options explained – explore guarantor support, government schemes, and LMI options
• Understanding LVR – understanding LVR for better loan terms and avoiding extra costs

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A clear and practical guide to building genuine savings for first home buyers.

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Important stuff:

Please note that the views and opinions expressed in this post are general information only, and this is not financial advice.

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