The median house deposit in Australia's capital cities now exceeds $150,000. At the standard 20% savings rate from a median income, that's 8–12 years of saving. But with the right strategies — many of which Australians underutilise — you can cut that timeline dramatically.
How much deposit do you actually need?
Most Australians assume they need 20% to buy a home. The reality is more nuanced:
- 5% — minimum with the First Home Guarantee (no LMI, government-backed)
- 5–10% — possible with LMI (adds $10,000–$40,000 to your loan)
- 20% — avoids LMI, gives you full lender choice and best rates
- 2% — minimum for single parents via the Family Home Guarantee
Before saving for 20%, check whether you qualify for the First Home Guarantee — it can halve your required deposit.
Strategy 1: Open a dedicated high-interest savings account
The biggest mistake deposit savers make is keeping money in a transaction account earning near-zero interest. High-interest savings accounts (HISAs) from online banks currently offer 5.0–5.5% p.a. conditional rates — which means an extra $2,500–$5,500 per year on a $100,000 deposit balance.
Strategy 2: Use the First Home Super Saver Scheme (FHSS)
The FHSS allows you to make voluntary contributions to your superannuation and withdraw them (plus earnings) to use as a house deposit. The tax advantage is substantial:
- Voluntary contributions are taxed at just 15% (versus your marginal rate, which could be 30–47%)
- You can contribute up to $15,000 per financial year and withdraw up to $50,000 total
- Withdrawals are taxed at your marginal rate less a 30% tax offset — still far less than income tax
For a person earning $90,000, the FHSS can save approximately $3,000–$5,000 in tax per $15,000 contributed — effectively giving you a 20–33% return on your deposit savings before interest.
Strategy 3: The 50/30/20 deposit plan (modified)
A traditional budget splits income into 50% needs, 30% wants, and 20% savings. For serious deposit savers, modify this to 50/10/40 — cutting discretionary spending in half and doubling savings. On a $80,000 after-tax income ($6,667/month), this generates $2,667/month in savings — $32,000 per year.
Strategy 4: The parental guarantor option
If your parents own property with sufficient equity, they can act as guarantor for part of your loan — allowing you to purchase with a much smaller deposit (sometimes 5% or less) without paying LMI. The guarantee is limited to the portion needed to reach 20% LVR and is released once your loan-to-value ratio improves through repayments or property growth.
This approach requires careful consideration — the guarantor's property is at risk if you can't repay. A mortgage broker and solicitor should be involved before proceeding.
Strategy 5: Reduce credit card limits
Every $10,000 in credit card limits reduces your borrowing capacity by approximately $30,000–$40,000. Lenders assess 3.8% of your total credit card limit as a monthly liability — regardless of your actual balance. Cancelling unused credit cards before applying for a home loan directly increases the amount you can borrow.
Strategy 6: Consider regional markets
A 20% deposit on a $400,000 regional property ($80,000) is achievable far sooner than a 20% deposit on a $900,000 Sydney property ($180,000). Regional markets in Queensland, South Australia, and Western Australia have seen strong price growth in recent years while remaining meaningfully more affordable than major capital cities.
Track your progress
Use our affordability calculator to track which suburbs move into your "can afford" range as your deposit grows. Set a goal, link it to a timeline, and review monthly.