Saving For Your First Home - A Buyer's Guide

Saving For Your First Home – A Buyer’s Guide

By Valeria Davis, Principal Buyer’s Agent at House Hunters Australia

Saving For Your First Home and then actually buying it is an exciting milestone for many Australians. Sometimes thought, saving for that all-important deposit feels like an uphill battle. Knowing where to start is often the hardest part. Housing prices continue to rise, and with life’s daily expenses, achieving this goal may seem daunting—but it’s not impossible.

The key to success? A solid savings strategy, realistic planning, and understanding every resource available to you. That’s where this guide comes in.

Hi, I’m Valeria Davis, Principal Buyer’s Agent at House Hunters Australia. Over the years, I’ve helped countless first-time buyers navigate their way to homeownership. From saving smarter to utilizing government schemes, my goal is to make the process easier and more achievable for you.

I’ll share practical tips, proven strategies, and insights from my real-life experiences to help you save for your first home.

The Basics

Australia’s property market has seen immense growth over the past few decades. While this has made real estate a valuable long-term investment, it has also raised the bar for first-time buyers. For instance, cities like Sydney and Melbourne have consistently ranked among the most expensive housing markets in the world. As of 2024, the average house price in Sydney exceeds $1.3 million, while Melbourne sits at around $930,000.

So, what does this mean for first-time buyers?

Why Homeownership Matters

Buying a home isn’t just about having a place to call your own. It’s about building financial security for the future. Unlike renting, where money goes straight to the landlord, homeownership allows you to build equity—essentially growing your wealth as you pay off your mortgage.

Consider this: If you purchased a property 10 years ago, it’s likely worth significantly more today due to market appreciation. This kind of growth is what makes real estate such a valuable investment.

The Challenges of Entering the Market

While the benefits are clear, the reality of buying a home in today’s market comes with its challenges:

High Deposit Requirements: A 20% deposit on a $700,000 home means you’ll need $140,000 upfront.
Rising Property Prices: In competitive markets, prices often outpace savings.
Hidden Costs: Stamp duty, inspections, and legal fees can add up quickly.

But here’s the good news: Understanding these challenges puts you ahead of the game. With the right strategies and support (like working with a buyer’s agent), you can make informed decisions and overcome these hurdles.

Current Trends You Need to Know

Regional Property Boom: With more Australians embracing remote work, regional areas have seen a surge in demand, offering affordable alternatives to city living.
Government Incentives: Programs like the First Home Owner Grant and stamp duty concessions are making it easier for buyers to enter the market.
Interest Rates: Monitoring interest rate changes is crucial, as lower rates can reduce your mortgage repayments and borrowing costs.

Timing the Market

A common question I hear is, “Should I wait for the market to cool down?” My answer: Don’t try to time the market. The property market is unpredictable, and waiting for the “perfect time” could mean missing out on opportunities. Instead, focus on what’s within your control—saving diligently, getting pre-approval, and understanding your budget.

Determining How Much You Need to Save

Before you start saving for your first home, it’s essential to know exactly how much you need. A clear goal keeps you focused and makes the process feel less overwhelming. While 20% of the purchase price is often recommended as a deposit, there are ways to enter the market with less—especially if you’re a first-time buyer.

Breaking Down the Deposit

Let’s say you’re aiming for a property priced at $600,000:

A 20% deposit would equal $120,000.
If you’re eligible for a smaller deposit loan, such as 10%, you’d need $60,000 upfront.

While saving the full 20% can help you avoid Lenders’ Mortgage Insurance (LMI), many buyers opt for smaller deposits to get into the market sooner. LMI is an extra cost you pay to protect the lender if you default on your loan, and it can add thousands to your borrowing costs.

Valeria’s Tip: “Don’t let a lower deposit discourage you. Sometimes getting into the market sooner, even with LMI, can be better than waiting for years and seeing property prices rise further.”

Understanding Upfront Costs

Beyond the deposit, there are other expenses you’ll need to factor in when buying your first home:

Expense	Estimated Cost
Stamp Duty	Varies by state (use a calculator)
Building & Pest Inspections	$400–$1,000
Conveyancing Fees	$1,000–$2,500
Mortgage Application Fees	$500–$1,500
Moving Costs	$1,000–$3,000

These costs can quickly add up to an extra 5–7% of the property price. To avoid surprises, research these expenses upfront and include them in your savings plan.

Using Online Tools to Set Your Goal

Use online tools like the Moneysmart Savings Goal Calculator to help determine how much you need to save and how long it will take based on your income and spending.

The Importance of Pre-Approval

Before you get too deep into your savings journey, consider speaking to a lender or mortgage broker to get pre-approval. This gives you a clear idea of how much you can borrow and ensures you’re setting a realistic savings target.

Creating a Practical Budget Plan

Once you’ve determined your savings goal, the next step is creating a budget. A solid budget gives you a roadmap to reach your deposit goal faster by managing your money effectively.

Step 1: Assess Your Current Financial Situation

Start by taking a good look at your income and expenses:

Track Your Spending: Write down everything you spend over a month—rent, groceries, entertainment, subscriptions, and more.
Identify Where Your Money Goes: Separate “needs” (essential expenses) from “wants” (non-essentials like dining out and online shopping).
Calculate Your Savings Potential: Subtract your monthly expenses from your income to see how much you can save.

Valeria’s Tip: “Most people underestimate how much they spend on small daily habits like takeaway coffees or rideshares. Cutting back on these can make a huge difference over time.”

Step 2: Set a Realistic Monthly Savings Target

Based on your goal and income, set a monthly savings target that stretches you—but doesn’t leave you living on instant noodles every night. For example:

If you need to save $60,000 in 3 years, you’ll need to save $1,667 per month.

Step 3: Cut Unnecessary Expenses

Here are some simple ways to free up more money for your deposit:

Cook at Home: Meal prepping can save you hundreds each month.
Cancel Subscriptions: Audit your streaming services, gym memberships, and other recurring charges.
Use Public Transport: Save on fuel, parking, and car maintenance.
Shop Smarter: Look for deals, use loyalty programs, and avoid impulse purchases.

Valeria’s Real-Life Example

“One of my clients saved an extra $400 a month by giving up their $6 daily café latte and cooking dinner at home four nights a week. Over a year, that added up to nearly $5,000—enough to cover their stamp duty!”

Step 4: Boost Your Income

If cutting expenses isn’t enough, look for ways to increase your earnings:

Freelancing or Side Gigs: Platforms like Airtasker or Fiverr offer opportunities to earn extra cash.
Ask for a Pay Rise: If you’ve been performing well at work, consider negotiating a salary bump.
Sell Unwanted Items: Declutter your home and sell unused goods online.

Valeria’s Tip: “Even a small side hustle, like tutoring or driving for a rideshare service, can accelerate your savings by hundreds each month.”

Step 5: Automate Your Savings

Make saving easy by automating transfers into a separate account. Set up a direct debit to move money from your pay into a high-interest savings account as soon as you’re paid.

Taking Advantage of Government Schemes for First Home Buyers

Buying your first home in Australia can be made easier thanks to several government initiatives. These programs are specifically designed to help first-time buyers overcome the challenges of saving for a deposit and reduce some of the upfront costs.

1. First Home Owner Grant (FHOG)

The First Home Owner Grant is a one-off payment provided by state and territory governments to help first-time buyers purchase or build a new home. The amount and eligibility criteria vary depending on your location.

Key Points to Know:

FHOG is typically available for new homes only, including newly built houses, apartments, or units.
The grant amount ranges from $10,000 to $20,000, depending on your state or territory.
Price caps apply to the property, which means homes above a certain value won’t be eligible.

For example, in New South Wales, the grant is $10,000 for new homes up to $600,000 or homes where you’re building up to a total value of $750,000. In Victoria, the grant is also $10,000, but regional areas may offer higher amounts.

Valeria’s Tip: “Don’t overlook FHOG. I’ve had clients who didn’t realize they qualified for the grant until we reviewed their options—saving them $10,000 on their first purchase.”

2. First Home Super Saver Scheme (FHSSS)

The First Home Super Saver Scheme allows you to save for a deposit inside your superannuation fund, which can provide tax benefits and help you grow your savings faster.

How It Works:

You can contribute up to $15,000 per year (and up to $50,000 in total) into your superannuation fund.
These contributions are taxed at the concessional rate of 15%, which is lower than most people’s income tax rate.
When you’re ready to buy, you can withdraw the money, including any earnings, to put toward your deposit.

Example:
If you’re in the 32.5% income tax bracket, contributing through the FHSSS could save you 17.5% tax on each dollar saved—money that goes straight into your deposit fund.

Valeria’s Insight: “The FHSSS is one of the most underutilized tools for first-home buyers. If you’re serious about saving, it’s a great way to maximize your efforts.”

3. Stamp Duty Concessions

Stamp duty can be one of the biggest upfront costs when buying a home, but many states offer concessions or exemptions for first-time buyers.

In NSW, first-home buyers purchasing a property under $800,000 pay no stamp duty.
In Victoria, homes valued under $600,000 are exempt, with discounts available for properties up to $750,000.

Check your local state government’s website for eligibility and updates on these concessions.

4. Home Guarantee Scheme

The Home Guarantee Scheme, including the First Home Guarantee and Regional First Home Buyer Guarantee, helps eligible buyers purchase a home with a deposit as low as 5% without paying Lenders’ Mortgage Insurance (LMI). The government guarantees part of your loan to the bank, making it easier to qualify for a mortgage.

Exploring Guarantor Loans and Family Assistance

For many first-time buyers, saving a large deposit can feel out of reach. That’s where guarantor loans and family assistance can make all the difference.

What Is a Guarantor Loan?

A guarantor loan allows a close family member—usually a parent—to use the equity in their property as security for part of your home loan. This can help you secure a loan without needing a full 20% deposit.

How It Works:

The guarantor agrees to provide security for a portion of your loan, such as 10–20%.
This reduces your Loan-to-Value Ratio (LVR), helping you avoid Lenders’ Mortgage Insurance (LMI).
Over time, as you repay the loan and build equity, the guarantor’s obligation can be removed.

Benefits of a Guarantor Loan

Get into the Market Sooner: You don’t need to wait years to save a large deposit.
Avoid LMI: Reducing your LVR helps you avoid thousands in mortgage insurance costs.
Borrow More: Lenders may approve a higher loan amount because of the additional security.

Risks for the Guarantor

While a guarantor loan can be a great solution, it’s important to understand the risks involved:

If you default on your loan, the guarantor’s property could be at risk.
It may limit the guarantor’s ability to borrow for their own needs.

Valeria’s Tip: “Always have an open conversation with your family about what a guarantor loan involves. Make sure everyone understands the risks, and seek professional advice before proceeding.”

Family Gifts or Loans

Another option is receiving financial help from family in the form of a gift or loan.

Gifts: A family member provides you with funds for your deposit without the expectation of repayment. Most lenders require a written statement confirming the money is a gift, not a loan.
Loans: If the money is provided as a loan, it must be disclosed to the lender, as it can impact your borrowing capacity.

Example:
A couple looking to buy a $700,000 home needed $140,000 for a 20% deposit. Their parents gifted them $50,000, allowing them to enter the market sooner and avoid LMI.

Combining Family Assistance with Government Schemes

If you’re lucky enough to receive family assistance, consider combining it with programs like the First Home Super Saver Scheme or Home Guarantee Scheme to maximize your options.

Valeria’s Insight: “I’ve seen families come together to help their children achieve homeownership sooner. Whether through a guarantor loan or financial gifts, this support can make all the difference.”

Choosing the Best Savings Accounts and Investment Options

Once you’ve started saving for your first home, it’s essential to make your money work harder for you. Choosing the right savings account or investment option can maximize your returns and help you reach your goal faster.

1. High-Interest Savings Accounts

A high-interest savings account is one of the safest and most effective ways to save for your deposit. These accounts reward you with a bonus interest rate if you meet specific conditions, like making regular deposits and avoiding withdrawals.

What to Look For:

Interest Rate: Compare base and bonus interest rates across major banks.
Conditions: Look for accounts with minimal restrictions.
Fees: Avoid accounts with monthly fees that eat into your savings.

Example:
A savings account offering 4.5% p.a. on $10,000 will earn you $450 per year in interest—free money for your deposit.

Valeria’s Tip: “Set up a separate savings account purely for your home deposit. Automate transfers from your pay to ‘set and forget,’ so you’re not tempted to spend the money.”

2. Term Deposits

If you have a lump sum of money saved and want guaranteed returns, a term deposit can be a great option. You lock your funds away for a fixed period (e.g., 6 months to 3 years) and earn a higher interest rate than a regular savings account.

Pros:

Safe and predictable.
Higher interest rates than most savings accounts.

Cons:

You can’t access the funds until the term ends.
Lower flexibility compared to other savings options.

3. Micro-Investing Platforms

Micro-investing apps like Raiz or Spaceship allow you to invest small amounts of money in diversified portfolios. This is ideal if you want your savings to grow faster but don’t have the experience or time to invest directly.

Benefits:

Start with as little as $5.
Automatic round-up features invest your spare change.
Returns are typically higher than traditional savings accounts over time.

Risks:

Investments are subject to market fluctuations, so there’s a chance of losing money.

Valeria’s Insight: “Micro-investing is a great way to boost your deposit savings, but keep the majority of your funds in safer options if your goal is short-term—like 2–3 years.”

4. Superannuation (FHSSS)

As mentioned earlier, the First Home Super Saver Scheme (FHSSS) allows you to save for your deposit through your superannuation fund, benefiting from concessional tax rates.

Why It’s Worth Considering:

Super funds often provide better returns than savings accounts.
You benefit from the tax advantages of superannuation.

Important Tip: Make sure to check how long it will take to withdraw your FHSSS funds once you’re ready to buy, as delays can occur.

Understanding and Budgeting for Hidden Costs

Many first-time buyers focus solely on saving for a deposit, only to be caught off guard by the hidden costs of buying a home. These additional expenses can add up to thousands of dollars, so it’s crucial to plan for them in your budget.

1. Stamp Duty

Stamp duty is a government tax on property purchases and one of the biggest additional costs you’ll face. The amount you pay depends on the property value and your state or territory.

Example Costs:

In NSW, stamp duty on a $700,000 home is approximately $26,000.
First-time buyers may qualify for exemptions or concessions, so check your eligibility.

Stamp Duty Calculators: Use online tools like the NSW Revenue Calculator to estimate how much you’ll need to budget.

2. Building and Pest Inspections

Before you commit to buying a property, it’s vital to get a building and pest inspection to identify any structural issues or pest problems.

Average Cost: $400–$1,000.
Why It’s Important: Undetected issues can cost you thousands in repairs later on.

Valeria’s Tip: “Never skip the inspections. It’s a small upfront cost that can save you from buying a ‘money pit’ and facing unexpected expenses.”

3. Conveyancing and Legal Fees

You’ll need a conveyancer or solicitor to handle the legal side of buying a home, including contracts and title transfers.

Average Cost: $1,000–$2,500.
What It Covers: Legal advice, property searches, and contract reviews.

4. Lenders’ Mortgage Insurance (LMI)

If your deposit is less than 20%, you’ll likely need to pay LMI, which protects the lender if you default on the loan.

Cost: Varies depending on your loan amount and deposit size, but it can range from $5,000 to $15,000 or more.
How to Avoid It: Save a larger deposit or use a guarantor loan.

5. Moving Costs

Don’t forget the costs of physically moving into your new home. Whether you hire professional movers or rent a truck, these expenses can add up quickly.

Estimated Costs:

DIY Moving: $200–$500 for a rental truck and supplies.
Professional Movers: $1,000–$3,000, depending on the distance and amount of furniture.

6. Ongoing Ownership Costs

Once you’ve purchased your home, you’ll also need to budget for ongoing expenses like:

Council Rates
Home Insurance
Utilities (electricity, water, internet)
Maintenance and Repairs

Pro Tip: Set aside 1–2% of your home’s value each year for maintenance costs to avoid surprises.

Valeria’s Insight: “I always recommend first-time buyers create a ‘hidden cost buffer’ in their savings plan. Having an extra $5,000–$10,000 set aside will give you peace of mind as you go through the buying process.”

The Role of a Buyer’s Agent in Simplifying the Process

Buying your first home can be overwhelming. From navigating the property market to negotiating with sellers and understanding contracts, there’s a lot to take on. This is where a buyer’s agent can help make the process smoother and less stressful.

What Does a Buyer’s Agent Do?

A buyer’s agent (also called a buyer’s advocate) represents you, the buyer, throughout the property purchase process. Unlike real estate agents, who work for the seller, a buyer’s agent works solely in your best interests.

Key Responsibilities Include:

Property Search: Identifying homes that match your budget, needs, and lifestyle.
Market Research: Providing insights on property values and growth potential.
Negotiation: Handling negotiations to secure the best possible price and terms.
Due Diligence: Managing inspections, contracts, and other legal requirements.
Auction Bidding: Assisting with strategies to increase your chances of success at auctions.

How a Buyer’s Agent Saves You Money

While hiring a buyer’s agent is an upfront cost, it can save you thousands in the long run:

Avoid Overpaying: Agents use their market expertise to ensure you don’t pay more than a property’s worth.
Time Savings: They do the legwork, allowing you to focus on your savings plan.
Unlisted Opportunities: Buyer’s agents often have access to off-market properties, giving you a competitive edge.

Valeria’s Tip: “I’ve had clients who were nervous about buying at auction or unsure of how to negotiate. A buyer’s agent removes that stress and ensures you’re making a sound investment.”

Real-Life Example from Valeria Davis

One of my recent clients—a young couple saving for their first home—were overwhelmed by the process and worried they’d make a costly mistake. After sitting down with them to understand their needs and budget, we found an off-market property in their ideal suburb.

By negotiating on their behalf, we secured the property for $20,000 below the asking price, helping them avoid the emotional stress of a bidding war.

Why First-Time Buyers Benefit Most

For first-time buyers, the property market can feel like unfamiliar territory. A buyer’s agent provides clarity, expertise, and peace of mind. Instead of second-guessing every decision, you’ll have a trusted professional guiding you every step of the way.

Staying Motivated and Focused on Your Goal

Saving for your first home is a long-term commitment, and it’s easy to lose motivation along the way. Staying focused, celebrating milestones, and surrounding yourself with the right resources will keep you on track.

1. Set Realistic, Achievable Milestones

Breaking your big savings goal into smaller milestones makes the process less daunting. For example:

Short-Term Goal: Save $5,000 in 3 months.
Mid-Term Goal: Reach 50% of your deposit in 1 year.
Long-Term Goal: Hit your full deposit savings target within 2–3 years.

Track your progress and celebrate small wins, like reaching the halfway point. Reward yourself in simple, budget-friendly ways—like a night out or a treat you’ve been eyeing.

Valeria’s Insight: “I always tell my clients: progress, no matter how small, is still progress. Focus on what you’ve achieved rather than how far you have to go.”

2. Create a Visual Savings Tracker

Seeing your progress visually can boost motivation. Use tools like:

Savings apps with graphs and charts.
A physical savings thermometer you can mark off each month.
A vision board of your dream home to keep you inspired.

3. Surround Yourself with Supportive People

Share your savings goal with close friends and family who can encourage you. Avoid comparisons to others—everyone’s homeownership journey is unique. Instead, focus on what you can control: your saving habits, budget, and mindset.

4. Stay Flexible and Adaptable

Life happens—unexpected expenses, job changes, or market fluctuations can impact your plan. Stay adaptable and adjust your budget as needed. If you have a setback, don’t let it derail you. Simply refocus and keep moving forward.

5. Learn from Others Who’ve Done It

Hearing success stories from people who’ve achieved homeownership can be incredibly motivating. Talk to friends, family, or professionals like buyer’s agents who can share tips and lessons they’ve learned.

Valeria’s Tip: “When I was saving for my first property, I had setbacks too. The key is persistence. Surround yourself with positive influences and remind yourself why you started.”

Insights from Valeria Davis

As someone who has worked closely with first-time home buyers for years, I’ve seen firsthand the challenges—and triumphs—of saving for a first home. It’s no secret that the Australian property market can feel intimidating, especially when prices are climbing and deposits seem out of reach. However, I’ve also seen clients who thought homeownership was impossible achieve their dreams through dedication, planning, and the right support.

Why Saving Smarter, Not Harder, Is Key

When it comes to saving, the small changes really do add up. I’ve had clients who made adjustments like cutting out expensive subscriptions, cooking at home more often, and automating their savings. These changes might seem insignificant day to day, but over a year or two, they can shave months—if not years—off your savings timeline.

For example, I once worked with a young couple who were struggling to save for their deposit while paying high rent in Sydney. By guiding them to take advantage of a guarantor loan from their parents and utilizing the First Home Super Saver Scheme, they were able to buy a property two years earlier than they expected.

The Power of Professional Guidance

Many first-time buyers underestimate the value of working with a professional buyer’s agent. The property market is competitive, and without experience, it’s easy to overpay, get outbid, or miss opportunities entirely. A buyer’s agent doesn’t just help you find the right property—they give you the confidence to make informed decisions and negotiate the best deal.

I’ve had clients come to me frustrated after months of searching on their own. By using my knowledge of the market, we found them properties that fit their needs and budget—sometimes even off-market homes they would never have discovered otherwise.

My Final Thoughts

Saving for your first home requires patience, discipline, and the right mindset. Break your goal into manageable steps, take advantage of every resource available—like government schemes and family assistance—and don’t be afraid to seek professional advice. Remember, the sooner you start, the sooner you’ll get there.

At House Hunters Australia, we’re here to help make the process easier for you. Whether you need advice on where to start, assistance with negotiations, or support in finding the perfect property, my team and I are ready to guide you every step of the way.

Your first home is within reach. Stay focused, stay determined, and don’t lose sight of your goal.

In A Nutshell

1. What is the minimum deposit I need for my first home?
The minimum deposit varies, but typically you need at least 5–10% of the property’s value. However, a 20% deposit is ideal to avoid Lenders’ Mortgage Insurance (LMI).

2. Are there government programs to help first-time buyers?
Yes! Programs like the First Home Owner Grant (FHOG), First Home Super Saver Scheme (FHSSS), and Home Guarantee Scheme can reduce costs and help you save faster.

3. How long does it take to save for a home deposit?
The time it takes depends on your income, expenses, and savings habits. On average, it can take 3–5 years to save a 20% deposit, but this can be shortened with the right strategies and support.

4. What are the hidden costs of buying a home?
Beyond the deposit, you need to budget for costs like stamp duty, building and pest inspections, conveyancing fees, moving costs, and ongoing expenses like rates and insurance.

5. Is hiring a buyer’s agent worth the cost?
Yes. A buyer’s agent can save you time, stress, and money by helping you find the right property, negotiate the best deal, and navigate the buying process—especially if you’re a first-time buyer.