Everything You Need to Know About Saving for Your First Home

How Much Deposit Do You Actually Need?

Most lenders want 20% of the purchase price as a deposit to avoid Lenders Mortgage Insurance, but you can buy with as little as 5% if you meet the criteria for the Australian Government 5% Deposit Scheme.

The 5% threshold matters because it opens access to the federal scheme, which removes LMI entirely. Under this scheme, Housing Australia guarantees the gap between your deposit and 20% of the property value. For Mount Martha, the price cap sits at $950,000 for capital city and regional centres. Both the purchase price and the lender's assessed value need to fall within that cap.

Consider a buyer purchasing at $850,000 in Mount Martha. A 5% deposit is $42,500. Without the government scheme, LMI could add $30,000 or more to the upfront cost. With the scheme, that cost disappears. You still need to show genuine savings for the deposit itself, plus cover stamp duty and settlement costs, but the removal of LMI changes the timeline significantly.

Victorian first home buyer stamp duty concessions run separately. You can access a full stamp duty exemption on properties up to $600,000 and a sliding concession on homes between $600,001 and $750,000. If you're buying above $750,000 in Mount Martha, the concession no longer applies, but you can still use the federal 5% deposit scheme up to $950,000.

Genuine Savings vs Gift Deposits

Lenders assess not just the size of your deposit, but where it came from.

Genuine savings are funds you've accumulated over time in accounts like savings accounts, term deposits, or shares held for at least three months. Most lenders want to see at least 5% of the purchase price come from genuine savings. A gifted deposit from a parent or family member can make up the rest, but it needs to be accompanied by a signed statutory declaration confirming it's a gift, not a loan.

In practice, if you're buying at the suburb's current median and using a 10% deposit, you'd typically need half of that amount in genuine savings, with the remainder able to come from family. Lenders apply their own policies, and some are more flexible than others depending on your income stability, employment type, and credit profile.

Using the First Home Super Saver Scheme

The First Home Super Saver Scheme lets you make voluntary contributions into your super fund and withdraw up to $50,000 to put toward a deposit.

Contributions are taxed at 15% instead of your marginal rate, which means someone earning $85,000 per year saves around 22.5% in tax on every dollar contributed. You can contribute up to $15,000 in any one financial year. Once you're ready to buy, you apply to the ATO for a determination, which confirms how much you're eligible to release. Most buyers need that determination before signing a contract, so timing matters.

This scheme works alongside the federal 5% deposit scheme and state stamp duty concessions. You can stack all three. The FHSS amount doesn't replace your deposit requirement, it helps you build it faster.

What Counts Toward Serviceability

Lenders assess whether you can afford the repayments, not just whether you've saved the deposit.

Serviceability calculations include your gross income, minus tax, minus living expenses, minus existing debts like car loans, personal loans, HECS, and credit card limits. The lender applies a buffer, usually 3%, above the actual loan rate to stress-test whether you could still afford repayments if rates rose.

Mount Martha sits within commuting distance of Frankston and the broader Mornington Peninsula employment hubs, but many buyers in the area work remotely or hold professional roles in Melbourne. Lenders don't penalise location, but they do scrutinise income consistency. If you're casually employed, contract-based, or self-employed, expect to provide additional payslips, tax returns, or ABN records.

An offset account can help once you've secured the loan. Every dollar sitting in offset reduces the interest charged on your home loan without locking the funds away. That makes it useful for buyers who want liquidity while minimising interest costs.

Fixed vs Variable Rate Structures for First Home Buyers

You'll be offered a choice between a fixed rate, a variable rate, or a split.

A variable rate moves with the market. If the Reserve Bank cuts rates, your repayments drop. If rates rise, so do your repayments. Most variable loans come with an offset account and the ability to make extra repayments without penalty.

A fixed rate locks your repayments for a set term, typically one to five years. You get certainty, but less flexibility. Most fixed loans don't offer offset accounts, and if you want to break the loan early, exit costs can apply.

A split loan divides your borrowing between fixed and variable. You might fix 50% for three years and leave the rest variable with an offset. That gives you some rate protection and some flexibility. There's no universal formula, it depends on your income predictability, risk tolerance, and whether you plan to make lump sum repayments.

How Pre-Approval Changes Your Position

Pre-approval confirms how much a lender is willing to lend before you start looking at properties.

It's conditional, not binding, but it gives you a number to work with and signals to agents that you're a serious buyer. Most pre-approvals last 90 days. If you haven't found a property by then, you can request an extension or reapply.

For Mount Martha buyers, pre-approval matters because stock in the area moves quickly during peak selling seasons. Knowing your limit before you attend an auction or make an offer removes guesswork. Lenders base pre-approval on the same serviceability assessment they'll apply at formal approval, so the figure is reliable provided your circumstances don't change.

You'll need recent payslips, tax returns if you're self-employed, bank statements showing savings history, and ID. If you're using a gifted deposit or the FHSS scheme, disclose that upfront so the lender can structure the assessment correctly.

Closing Costs Beyond the Deposit

The deposit is the largest upfront cost, but it's not the only one.

Stamp duty applies unless you qualify for the Victorian first home buyer concession. If you're buying above the concession thresholds, factor in the full duty amount before you sign anything. Conveyancing or solicitor fees typically range from $1,200 to $2,500 depending on complexity. Building and pest inspections cost $500 to $800 combined. Lender establishment fees vary but can reach $600. If you're buying in a strata scheme, budget for strata reports.

These costs don't come out of your loan, they come out of your savings. If you've allocated every dollar to the deposit, you won't have enough left to settle. Build a buffer of at least $8,000 to $12,000 for a typical established home purchase in Mount Martha, more if you're buying vacant land or new construction where additional inspections and compliance checks apply.

Call one of our team or book an appointment at a time that works for you. We'll review your savings position, confirm which schemes you're eligible for, and structure a home loan application that fits your timeline and the property you're targeting.

Frequently Asked Questions