Everything You Need to Know About Saving for Your First Home

How Much Do You Really Need to Save?

You need a 5% deposit plus settlement costs to buy your first home under the Australian Government 5% Deposit Scheme. Settlement costs typically include legal fees, building and pest inspections, conveyancing, and loan establishment fees.

Consider a buyer looking at a property at the median price in Echuca. With the Regional first home buyer Guarantee, they can access a home loan with 5% saved, and avoid paying Lenders Mortgage Insurance (LMI). That 5% needs to be genuine savings, which means funds held in your account for at least three months that you've accumulated yourself, not a recent cash gift or a one-off tax refund.

Settlement costs vary depending on the property and lender, but it's not unusual to see an additional amount needed on top of your deposit. Some lenders will let you capitalise certain costs into the loan, but you still need cash on hand for things like the building inspection and your solicitor's initial invoice.

What Counts as Genuine Savings?

Genuine savings are funds you've built up consistently over time and held in your account for at least 90 days. Most lenders want to see regular contributions from your salary, not a single lump sum deposited last month.

Bank statements are reviewed closely during the home loan application process. Lenders look for a pattern of saving. A good approach is to set up an automatic transfer into a separate offset account or high-interest savings account each time you're paid. Even small amounts add up if they're regular.

Gifts from family can form part of your deposit, but most lenders will require that the majority comes from genuine savings. If your parents are contributing, you'll need a signed gift letter confirming the funds don't need to be repaid. That gift won't count as genuine savings, so if you're relying heavily on family help, check your lender's policy before assuming you meet the savings requirement.

Victorian Stamp Duty Concessions for First Home Buyers

Victorian first home buyers receive a full stamp duty exemption on properties up to $600,000, and a sliding scale concession from $600,001 to $750,000. This applies to both new and established homes, as long as the property will be your principal place of residence.

In Echuca, where the median is typically below the $600,000 threshold, most first home buyers won't pay stamp duty at all. That's a significant cost removed from your upfront budget. If you're looking at a property just over the threshold, the concession still reduces what you'd otherwise owe.

Victoria also offers a $10,000 First Home Owner Grant for new homes valued up to $750,000. This doesn't apply to established homes. If you're buying land and building, or purchasing a newly constructed house, that grant can be put toward your deposit or settlement costs. You apply through your lender or conveyancer as part of the settlement process.

Using the First Home Super Saver Scheme

The First Home Super Saver Scheme lets you make voluntary super contributions and later withdraw up to $50,000 to put toward your first home deposit. Contributions are taxed at 15% on the way in, which is lower than most marginal tax rates, and you're also earning investment returns inside the super fund.

In our experience, this works well for buyers who've been renting for a few years and want to accelerate their savings without locking funds into a standard savings account. You can contribute up to $15,000 per financial year, and up to $50,000 in total. Once you've built up the balance, you apply to the ATO to release it.

Withdrawals under the scheme are taxed again at your marginal rate minus a 30% offset, so you won't lose all the tax benefit on the way out. The scheme works well when combined with employer contributions and regular savings held outside super. It's not a replacement for genuine savings, but it can be part of your overall deposit strategy. If you're curious about whether you qualify for first home buyer eligibility, it's worth checking early in your planning.

How Pre-Approval Fits Into Your Savings Timeline

Pre-approval gives you a clear borrowing limit before you start looking at properties. You submit your income, expenses, and savings to a lender, and they confirm how much they're willing to lend. This doesn't lock you into that lender, but it does give you confidence when you're ready to make an offer.

Getting pre-approval once you've saved your deposit makes sense because it shortens the time between finding a property and submitting a formal offer. In Echuca, where stock can move quickly, having pre-approval already in place means you're not waiting weeks for a lender to assess your application while another buyer makes an offer.

Pre-approval typically lasts 90 days, though some lenders offer longer. If your circumstances change during that period, you'll need to update your application. It's not a guarantee that the loan will settle, but it does give you a reliable indication of your budget and borrowing capacity.

What Happens If You're Saving While Renting?

Renting while saving is common, but lenders want to see that you're managing rent and still putting money aside. If your rent is high relative to your income, it can affect how much you're able to save and how lenders assess your ability to meet loan repayments.

A buyer renting in Echuca and paying around the regional median for a two-bedroom unit would need to demonstrate consistent savings alongside that rent. If you're paying rent on time and still saving a set amount each month, that shows discipline. If your savings are irregular or only appear in months where you didn't have other expenses, lenders will ask questions.

Keep your rental payment history clean. Some lenders now accept rental payment records as part of your credit file. Missing rent payments or consistently paying late can affect your home loan application, even if you haven't missed a credit card or personal loan repayment.

Should You Use a Fixed or Variable Interest Rate?

A fixed interest rate locks in your repayments for a set period, usually between one and five years. A variable interest rate can move up or down depending on the lender's decisions and market conditions. Both have advantages depending on your circumstances.

If you value certainty and want to know exactly what your repayments will be while you settle into homeownership, a fixed rate can help with budgeting. If rates rise during the fixed period, you're protected. If rates fall, you're locked in and won't benefit unless you break the loan, which usually comes with a cost.

Variable rates offer more flexibility. You can usually make extra repayments without penalty, access a redraw facility, and link an offset account to reduce the interest you pay. For first home buyers who expect their income to increase or plan to pay down the loan faster, a variable rate often makes more sense. Some buyers split their loan between fixed and variable to get a mix of certainty and flexibility.

Low Deposit Options and Lenders Mortgage Insurance

If you're buying with less than a 20% deposit and not using the Australian Government 5% Deposit Scheme, you'll usually pay Lenders Mortgage Insurance. LMI protects the lender if you default on the loan, and it's a one-off cost added to your loan or paid upfront.

The Regional first home buyer Guarantee avoids this cost altogether by letting eligible buyers purchase with a 5% deposit and no LMI. This is a federal scheme with no income cap and no annual limit on places, so it's accessible to most first home buyers in Echuca. You apply through a participating lender, not through Housing Australia directly.

If you've saved a 10% deposit and don't qualify for the scheme, or you're buying a property above the regional price cap, you'll likely pay LMI. The amount depends on your deposit size and loan amount. A mortgage broker in Echuca can compare lenders and show you how much LMI you'd pay with each, and whether there are any lender promotions that reduce or waive it.

Frequently Asked Questions