5% Deposit – Genuine Savings
This guide explains what counts as genuine savings, what does not, how to build them strategically, and how lender requirements vary so you can prepare for a successful application. For a complete overview of all deposit options available to first home buyers, start there and come back to this guide for the genuine savings detail.
Quick summary: Genuine savings are funds you have accumulated through regular saving and held in your accounts for a minimum of 3 months. They demonstrate to lenders that you have the financial discipline to manage mortgage repayments. Accepted sources include bank savings, term deposits, shares held for 3+ months, and FHSSS withdrawals. Different lenders have different policies, which is why working with a broker who knows each lender's requirements matters.
What are genuine savings?
Genuine savings are funds you have accumulated through regular saving behaviour and held in your accounts for a minimum period, typically 3 months. They demonstrate to lenders that you have the financial discipline to manage ongoing mortgage repayments.
Lenders care about genuine savings because they serve as a predictor of borrower reliability. A history of consistent saving demonstrates that you can set aside money regularly, which correlates with mortgage repayment success. It proves financial stability beyond relying solely on windfalls or borrowed money, and it satisfies the policy requirements that many lenders have as minimum thresholds before they will approve a home loan application.
What counts as genuine savings?
Accepted genuine savings
The most straightforward form of genuine savings is funds held in bank savings accounts for 3+ months, with regular deposits showing an accumulation pattern. Term deposits held for 3+ months are also accepted because they demonstrate commitment to saving and discipline in not accessing the funds during the term.
Shares and managed funds held for 3+ months qualify as well, provided they are readily convertible to cash and valued at current market value. Some lenders may require evidence of regular contributions rather than a single purchase.
Amounts withdrawn from superannuation under the First Home Super Saver Scheme (FHSSS) are widely accepted by lenders as genuine savings. The FHSSS demonstrates long-term saving through salary sacrifice with tax advantages during the accumulation phase, making it a strong signal of financial discipline.
Sometimes accepted (lender dependent)
Genuine gifts from family are accepted by some lenders, but usually only if combined with genuine savings of your own. Typically you would need at least 2.5% to 3% of the property value in genuine savings plus the gift making up the remainder. A signed statutory declaration from the person giving the gift is required, confirming the money is a genuine gift and not a loan to be repaid.
Regular contractual bonuses (annual or quarterly) may be accepted if you can demonstrate a pattern over 2+ years. Inheritance funds may also qualify if held in your accounts for 3+ months, though you may need to provide proof of inheritance including will and estate documents. Some lenders are more flexible than others on these sources.
Generally not accepted
Recent cash gifts received within the last 3 months are generally not accepted because they do not demonstrate your personal saving ability. Recent tax refunds are treated similarly as one-off windfalls. Borrowed funds such as personal loans or credit card cash advances used for a deposit are not accepted under any circumstances. Proceeds from selling assets like cars, jewellery, or electronics do not demonstrate saving discipline. And gambling or lottery winnings, even if substantial, are inconsistent with responsible lending assessments and may raise serviceability concerns.
The general principle is that genuine savings must demonstrate a consistent pattern of saving behaviour over time. It is not just about having money. It is about proving you saved it through financial discipline.
Key rule: If the funds have not been in your account for at least 3 months with evidence of how they got there, most lenders will not count them as genuine savings. The holding period is non-negotiable for most participating lenders.
How much genuine savings do you need?
For the Home Guarantee Scheme with a 5% deposit, lender requirements vary depending on where you apply.
The ideal scenario is having your entire 5% deposit from genuine savings. This is accepted by all participating lenders and puts you in the strongest possible application position. For a $700,000 property, that means $35,000 in genuine savings. For a $1,000,000 property, it is $50,000.
Some lenders accept a partial genuine savings approach, where you provide 2.5% to 3% as genuine savings plus a family gift for the remaining deposit. This requires a statutory declaration confirming the gift is not to be repaid. On a $700,000 property, this means $17,500 to $21,000 in genuine savings plus $13,500 to $17,500 as a gift.
A third option is combining FHSSS withdrawals with other savings. Because FHSSS amounts are fully accepted as genuine savings, you may be able to use the maximum FHSSS withdrawal (up to $50,000) plus minimal additional savings from your bank account. Use our property deposit calculator to see how different deposit amounts affect your borrowing position.
Strategies to build genuine savings
Strategy 1: Automated savings plan
The most effective way to build genuine savings is setting up automatic transfers from your transaction account to a dedicated savings account on every payday. Even $500 to $1,000 per fortnight adds up quickly and creates a clear pattern of regular saving that lenders want to see. At $1,000 per fortnight, you accumulate $26,000 per year. With consistent saving, you can build a 5% deposit in 12 to 18 months for many properties.
Strategy 2: High-interest savings account
Maximise your growth while building history by using a high-interest savings account offering 4% to 5% interest rates. Meet the monthly deposit requirements to qualify for bonus interest and let compound interest accelerate your savings. Keep all funds in one account for a clear history. As an example, $30,000 at 5% per annum earns $1,500 in interest annually, which itself becomes part of your genuine savings.
Strategy 3: First Home Super Saver Scheme
The FHSSS lets you save up to $50,000 for your first home through super with significant tax benefits. Contributions are taxed at just 15% instead of your marginal rate, and your savings grow through your super fund's investment returns. You can contribute up to $15,000 per year with a $50,000 lifetime cap. When you are ready to buy, the funds are released minus a 30% tax offset, which is still advantageous compared to saving through regular income. The timeline to reach the maximum $50,000 contribution is 3 to 4 years.
Strategy 4: Combined approach
The most powerful approach combines multiple strategies. In years 1 and 2, salary sacrifice $15,000 per year into the FHSSS while simultaneously saving $500 to $750 per fortnight in a high-interest savings account. By year 2 to 3, your FHSSS balance reaches $30,000+ with investment returns, your savings account holds $13,000 to $19,500, and the combined total reaches $43,000 to $50,000+. This is sufficient for a 5%+ deposit on properties up to $850,000 to $1,000,000.
Timeline: how long to build genuine savings?
Here are realistic timelines for building your deposit based on different saving rates. Remember to factor in the 3-month minimum holding requirement.
If you are saving $500 per fortnight ($13,000 per year), after 12 months you have $13,000, which is a 5% deposit on a $260,000 property. After 18 months you reach $19,500 (5% on $390,000), after 24 months $26,000 (5% on $520,000), and after 36 months $39,000 (5% on $780,000).
If you are saving $1,000 per fortnight ($26,000 per year), after 12 months you have $26,000 (5% on $520,000), after 18 months $39,000 (5% on $780,000), and after 24 months $52,000 (5% on a property over $1,000,000, subject to price caps).
If you are saving $1,500 per fortnight ($39,000 per year), after just 12 months you have $39,000 (5% on $780,000), and after 18 months $58,500, which likely exceeds the Home Guarantee Scheme caps for most areas. Use our mortgage repayment calculator to model what these property prices would cost you month to month.
Do not 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 when planning your home buying journey.
Common genuine savings challenges and solutions
You have the money but it is not genuine savings
If you have $40,000 from selling your car, a recent bonus, or a gift from family, the solution is to deposit the funds into a savings account and wait a minimum of 3 months. Meanwhile, add regular deposits to show an ongoing saving pattern. After 3 months, these funds may qualify as genuine savings. Work with a broker to find lenders with flexible policies on this situation.
Your partner has genuine savings but you do not
When applying jointly but only one party has a savings history, many lenders will accept genuine savings from either applicant. Ensure the savings are sufficient for the combined deposit requirement. Both applicants must meet other serviceability requirements, and some lenders are more flexible than others, which is where broker expertise matters.
Your savings are spread across multiple accounts
If your savings are spread across several accounts, some very active, the best approach is to consolidate into one dedicated savings account. Provide comprehensive bank statements showing the accumulation across all accounts, prepare an explanation letter showing your saving sources and pattern, and wait 3+ months in the consolidated position before applying for pre-approval.
Your bank statements show problematic spending
If your bank statements show gambling transactions, buy-now-pay-later accounts, or excessive discretionary spending, you need to clean up your spending habits immediately. Cancel all buy-now-pay-later accounts, stop any gambling transactions, and build 3 to 6 months of clean statements that demonstrate changed financial behaviour. Lenders review your statements closely, and problematic spending patterns can affect your application regardless of your savings balance.
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Lender variations: why a broker matters
Different lenders have different genuine savings policies, which is why working with an experienced mortgage broker provides a significant advantage. Here is how lender requirements can vary.
A major bank might require the full 5% as genuine savings with a minimum 3-month holding period, accept no gifts at all, and apply a strict bank statement assessment. A regional bank might accept 3% genuine savings plus a 2% gift with a 3-month holding period for the savings portion, require a statutory declaration for the gift, and take a more flexible approach to statement presentation. A non-bank lender might accept FHSSS as full genuine savings with minimal additional savings required, apply just a 2-month holding period, and focus on the overall saving pattern rather than a specific dollar amount.
A specialist broker has access to 35+ lenders and understands each lender's genuine savings policies. This means we can match your specific situation to the right lender, avoid wasting time with lenders who would decline your application, maximise your chance of approval, and potentially access better interest rates in the process. Understanding how your Loan to Value Ratio interacts with genuine savings requirements helps us position your application for the best outcome.
Frequently asked questions
Can I use money I have saved in cash at home?
No. Lenders need to see a clear paper trail of your savings through bank statements. Cash at home cannot be verified and does not 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 before applying for pre-approval.
What if I have been living rent-free with family and saving my entire salary?
This is actually an ideal situation. Living rent-free and saving aggressively creates a strong genuine savings position. Ensure your bank statements show regular deposits from salary and minimal unnecessary withdrawals. This demonstrates excellent saving discipline. Some lenders specifically view this favourably as it shows low living expenses and high serviceability for mortgage repayments.
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 have not been actively saving.
Can I use funds from selling cryptocurrency as genuine savings?
This depends on the lender. Most will want to see clear evidence of legitimate cryptocurrency investment, funds converted to AUD and held in a bank account for 3+ months, and an explanation of how you acquired the cryptocurrency initially. Some lenders are more comfortable with cryptocurrency sources than others, which is where a broker's lender knowledge helps.
How do lenders view savings accounts that fluctuate significantly?
Lenders prefer to see consistent growth or at least maintained balances. Accounts that move up and down significantly 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 showing steady growth can help demonstrate discipline alongside your main account.
What is the minimum holding period for genuine savings?
Most lenders require a minimum of 3 months, though some non-bank lenders may accept 2 months. The holding period is measured from when the funds appear in your account to when you submit your loan application. Plan your timeline accordingly and ensure your savings have been in place for the required period before you start looking at properties seriously. Our budgeting guide helps you plan the full timeline.
Take the next step
Building genuine savings is a key step in your first home buyer journey. Once you have your deposit ready, you can explore the Home Guarantee Scheme to buy with just 5% deposit and no LMI, or consider the Help to Buy (Shared Equity) Scheme with just 2% deposit. Understand the benefits and risks of low deposit purchases, and make sure you are across stamp duty concessions and the $10,000 First Home Owner Grant to maximise your total benefits.
When you are ready to start searching for the right property, our guides on location, condition, and vibes, freestanding houses, strata properties, and buying land will help you make an informed choice. And our guides on private treaty, auction, and off-the-plan purchases explain each buying method, with our property purchase and valuation guide covering bank valuations and the settlement process.
Use our property deposit calculator to see how your deposit affects borrowing power, our home equity calculator to model different LVR scenarios, and our mortgage repayment calculator to plan your budget. Explore our choosing the right finance guide to compare loan types, and read our construction guide if you are considering building.
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Related resources for first home buyers
Continue building your knowledge with our Home Guarantee Scheme guide for 5% deposit purchases with no LMI, our benefits and risks guide for a full picture of low deposit buying, our First Home Super Saver Scheme guide to accelerate your deposit through superannuation, our deposit options guide for every pathway to your first deposit, and our pathways to home ownership for a complete overview of all routes to buying your first home.
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A clear and practical guide to building genuine savings for first home buyers.
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