How Much Should First Home Buyers Save Beyond Their Deposit?

Saving for your first home can feel like a simple equation.

Property price × deposit percentage = savings target.

If you're buying a $700,000 property and aiming for a 5% deposit, that means saving $35,000.

But that $35,000 is not necessarily the amount you actually need to have available to buy the home.

There are costs that sit outside the deposit, including legal and conveyancing fees, inspections, government charges, moving expenses and the cash buffer you may need once you receive the keys.

That creates an important distinction:

For first home buyers, understanding that difference can prevent a situation where you successfully save the deposit but arrive at settlement with very little money left.

Your Deposit Is Only One Part of the Equation

A deposit is generally expressed as a percentage of the property's purchase price.

Depending on the loan and your circumstances, you may be able to purchase with a deposit below 20%. Government schemes can also help eligible buyers purchase with a smaller deposit while potentially avoiding Lenders Mortgage Insurance.

But the deposit doesn't cover every cost associated with buying your first home.

Your broader savings target may need to account for:

• deposit
• stamp duty or transfer duty
• conveyancing and legal fees
• building and pest inspections
• lender and loan-related costs
• registration and government charges
• moving expenses
• initial insurance and household setup
• emergency savings after settlement

This is why focusing exclusively on reaching a particular deposit percentage can give you an incomplete picture of how much you actually need to save.

The Difference Between Deposit and Total Cash Required

It's useful to think about the purchase as two separate buckets.

The second bucket is often overlooked.

Yet it can be just as important.

Buying a property doesn't eliminate unexpected expenses. In some cases, it introduces new ones.

A hot water system can fail.

A moving truck can cost more than expected.

You may discover that the property needs immediate repairs.

Your electricity, internet and insurance bills still need to be paid.

And your mortgage repayment starts regardless.

How Much Should You Save Beyond the Deposit?

There isn't one universal dollar amount that works for every first home buyer.

Your target will depend on:

• property price
• state or territory
• stamp duty concessions
• deposit size
• loan structure
• whether you qualify for a government scheme
• property type
• moving distance
• existing savings
• income stability
• household expenses
• how much emergency cash you want to retain

However, the information you've gathered points to a useful planning principle.

Upfront costs beyond the core deposit can add around 5% to 7% of the property price in some circumstances, although the actual amount varies significantly depending on the state, purchase price and available concessions.

That doesn't mean every first home buyer needs to save an additional 5% to 7%.

Some buyers will qualify for substantial concessions.

Others may have higher costs.

The important point is that you shouldn't assume the deposit is your complete savings target.

A $700,000 Example

Let's make the numbers more tangible.

Imagine you're buying a home for:

$700,000

And you're targeting a:

5% deposit

Your deposit would be:

$35,000

It would be easy to think:

"Once I reach $35,000, I'm ready."

But your actual cash position could look more like this:

The exact figures need to be calculated for the specific property and location.

But the example demonstrates the key point:

$35,000 is the deposit. It isn't necessarily the complete amount of money you should have saved.

Don't Forget Stamp Duty

Stamp duty, or transfer duty, can be one of the largest costs outside the deposit.

The amount varies depending on:

• state or territory
• property value
• whether you're an eligible first home buyer
• whether the property is your principal place of residence
• the applicable state concessions or exemptions

This makes it particularly important not to rely on a generic national figure.

A first home buyer in one state could have a very different upfront cost from a buyer purchasing an equivalent property elsewhere.

Before setting your savings target, check the rules that apply to your specific purchase.

First Home Buyer Concessions Can Change the Calculation

Government assistance can significantly change the amount you need to save.

The First Home Guarantee can allow eligible buyers to purchase with a 5% deposit while avoiding Lenders Mortgage Insurance, subject to the scheme's eligibility requirements, property price caps and other conditions.

This can make entering the market easier.

But it doesn't mean you only need 5% of the purchase price sitting in your bank account.

You still need to consider the other costs associated with buying and whether you can comfortably manage the mortgage after settlement.

A smaller required deposit can reduce the amount needed to enter the market.

It doesn't eliminate the need for financial preparation.

What About the First Home Super Saver Scheme?

The First Home Super Saver Scheme, or FHSS, can also help eligible first home buyers build their deposit through voluntary super contributions.

The scheme allows eligible buyers to request the release of certain voluntary contributions, subject to the applicable annual and lifetime limits and other rules.

This can be useful for someone who is struggling to accumulate a deposit entirely from ordinary savings.

But again, the FHSS is primarily a tool for building the funds needed for the purchase.

It doesn't remove the other costs you need to plan for.

Your savings strategy should therefore consider both:

How will I build my deposit?

and:

How much cash will I need outside the deposit?

The Deposit Isn't the Same as Your Financial Safety Net

One of the biggest mistakes a first home buyer can make is using almost every dollar they have to complete the purchase.

You might be tempted to use the remaining $15,000 for furniture, renovations or other immediate expenses.

But that $15,000 may be more valuable as a financial buffer.

Once you're a homeowner, unexpected expenses don't disappear.

They become your responsibility.

Why an Emergency Buffer Matters

Moneysmart recommends building an emergency fund to help cover unexpected expenses and financial shocks.

For a homeowner, that buffer can become particularly important.

You may need money for:

• urgent repairs
• medical expenses
• temporary income disruption
• unexpected bills
• insurance excesses
• vehicle repairs
• household emergencies

Keeping some savings separate from the money required to complete the purchase can help prevent an unexpected expense from immediately becoming a credit card balance or personal loan.

Your Mortgage Doesn't Wait for Your Next Pay Rise

There's another reason to keep cash available.

Your mortgage repayment begins after settlement.

You don't get a grace period simply because you've just purchased your first home.

At the same time, you may have:

• electricity bills
• water costs
• council rates
• insurance
• internet
• transport expenses
• groceries
• maintenance

For many buyers, this is the first time they've had to manage all of these costs alongside a substantial mortgage.

A strong savings position gives you some breathing room while you adjust.

Moving Costs Can Add Up Quickly

Moving into your first home can involve more expenses than expected.

You may need to pay for:

• removalists
• truck hire
• packing materials
• cleaning
• utility connections
• internet installation
• initial furniture
• appliances
• minor repairs

Some of these expenses are optional.

Others are difficult to avoid.

The problem is that they often arrive at almost the same time as the biggest financial commitment of your life.

Planning for them before settlement means you don't have to immediately reach for credit.

The Cost of Making the Property Feel Like Home

This is where first home buyers can easily lose control of their budget.

You've spent months or years saving.

You finally have the keys.

Suddenly you want:

• a new sofa
• a television
• outdoor furniture
• curtains
• appliances
• landscaping
• renovations

There's nothing wrong with making your home comfortable.

But you don't necessarily need to do everything immediately.

A useful approach is to separate purchases into:

Your savings buffer should come before the third category.

Don't Let the Bank's Maximum Loan Become Your Budget

Another important distinction is between what you can borrow and what you should spend.

A lender assesses whether you can service a particular loan based on your income, expenses, debts and lending criteria.

But your maximum borrowing capacity isn't necessarily your ideal purchase budget.

For example, if a lender says you could potentially borrow $650,000, that doesn't mean you need to purchase a property requiring the full amount.

A lower purchase price could leave you with:

• a smaller mortgage
• lower repayments
• greater cash reserves
• more flexibility
• greater ability to handle unexpected expenses

Your savings target should therefore be considered alongside your ongoing affordability.

Your Everyday Spending Matters

Lenders don't only look at your deposit.

They assess your broader financial position, including income, existing debts and living expenses.

Your spending habits can therefore influence how much you can borrow.

Regular costs such as:

• groceries
• transport
• dining out
• subscriptions
• insurance
• childcare
• utilities
• entertainment

all contribute to your household budget.

This creates an important relationship between saving for your deposit and preparing for the mortgage.

If you're already struggling to create a monthly surplus before becoming a homeowner, a larger mortgage may make that pressure more difficult.

Credit Cards and BNPL Can Also Matter

Your credit commitments can affect borrowing capacity.

Lenders may consider credit card limits rather than simply the balance currently owing.

So a card with a $10,000 limit can still be relevant even if you've paid the balance down to zero.

Buy Now, Pay Later facilities can also be treated as credit commitments depending on the lender and assessment methodology.

If you're preparing for a home loan, reviewing unnecessary credit facilities can therefore be worthwhile.

A Better Savings Target

Instead of saying:

"I need to save a 5% deposit."

Try thinking:

"I need enough money to buy the home and still be financially comfortable afterwards."

Your target could therefore be structured as:

This creates a much more realistic picture of what "ready to buy" actually means.

The Goal Isn't Just to Get the Keys

Buying your first home is a major milestone.

But a successful purchase shouldn't leave you financially exhausted on settlement day.

The strongest position is one where you can:

That is why the right savings target is rarely just the deposit.

It is the amount you need to buy the home without putting your financial stability at unnecessary risk.

How to Build a Savings Buffer Beyond Your Deposit

Saving enough for the deposit is a major milestone, but the final stretch before buying a home is where your savings strategy needs to become more detailed.

Rather than treating everything beyond the deposit as spare money, separate your savings into clear categories.

This gives you a better understanding of what money is genuinely available for the purchase and what should remain untouched.

Create Separate Savings Buckets

A practical approach is to divide your target into five buckets:

This approach can make your savings target feel much more manageable because you're no longer looking at one large number without knowing what it needs to cover.

Work Out Your Purchase Costs Before You Start House Hunting

One of the easiest mistakes is deciding on a property price first and working out the costs later.

Instead, estimate the total cash requirement before you start seriously looking.

For example:

This gives you a much more realistic savings target.

The exact figures will vary depending on where you're buying and your circumstances, particularly because first home buyer concessions can substantially change the amount of duty payable.

Don't Assume a 5% Deposit Means You Only Need 5%

A lower deposit can make home ownership more accessible.

The First Home Guarantee, for example, can allow eligible buyers to purchase with a 5% deposit while avoiding Lenders Mortgage Insurance, subject to the applicable rules.

But think carefully about what that means.

Those figures represent the deposit only.

You still need to consider the other costs associated with completing the purchase and maintaining a home after settlement.

A low-deposit scheme can reduce the amount you need for the deposit.

It doesn't eliminate the need for additional savings.

A Smaller Deposit Can Mean More Debt

There's another trade-off worth understanding.

If you purchase with a smaller deposit, you generally borrow more relative to the property's value.

For example:

The smaller deposit gets you into the property sooner, but it also means taking on a substantially larger mortgage.

That's why the decision shouldn't simply be:

"How little can I save?"

A better question is:

"What deposit and overall cash position gives me a sustainable starting point?"

Understand the LMI Question

Lenders Mortgage Insurance can apply when borrowing above certain loan-to-value ratios, although eligible government schemes can provide an exemption from LMI.

If you're not using a relevant government guarantee, a smaller deposit may result in an LMI cost.

That doesn't automatically mean a 20% deposit is the right choice for everyone.

Waiting years to reach 20% may mean paying more rent and delaying home ownership.

The right decision depends on the broader numbers.

The important thing is to understand the cost of choosing a smaller deposit before committing to a purchase.

Your Emergency Buffer Should Be Separate

One of the strongest principles in your savings plan should be:

Don't count your emergency fund as part of your deposit.

If you have $70,000 saved and need $50,000 to complete the purchase, you don't necessarily have $20,000 available for furniture.

Some of that money may need to remain untouched as your financial safety net.

This distinction is particularly important for first home buyers because you're moving from a position of renting or living with family into a situation where you're responsible for the property's ongoing costs.

Think About Your First 90 Days as a Homeowner

The day you settle isn't the end of your financial preparation.

It is the beginning.

During the first few months, you may encounter expenses that weren't obvious while you were saving.

You might discover:

• a leaking tap
• a broken appliance
• maintenance issues
• higher-than-expected utility bills
• insurance costs
• unexpected moving expenses
• furniture or household items you genuinely need

You don't need to anticipate every possible problem.

You simply need enough financial breathing room that one unexpected expense doesn't immediately become expensive debt.

Don't Spend Your Entire Buffer on Furniture

This deserves its own warning.

It's tempting to treat the first few months in a new home as a complete lifestyle reset.

You finally have your own place, so you want to furnish it properly.

But a home doesn't need to be finished immediately.

Consider prioritising:

There is nothing wrong with buying these things later.

Protecting your cash buffer is usually more important than having a perfectly furnished home on day one.

Your Savings History Can Help Your Application

Saving isn't only about accumulating the final dollar amount.

Your savings behaviour can also demonstrate financial discipline.

A consistent savings pattern can show that you're capable of regularly setting money aside while managing your existing expenses.

This is particularly useful when you're preparing for a mortgage because your future home loan repayment will become another regular commitment.

If you've been able to consistently save while paying rent and covering your current living expenses, you have a clearer picture of what you can realistically afford.

Test the Future Mortgage Before You Buy

One useful exercise is to start living as though you already have the mortgage.

If you can comfortably maintain that pattern for several months, you'll have:

• Added to your savings.
• Tested your future cash flow.
• Identified spending habits that may need adjusting.

It's not a substitute for a lender's serviceability assessment.

But it can be a useful personal budgeting exercise.

Your Budget Matters After You Buy

A deposit demonstrates that you've accumulated savings.

But your ability to maintain home ownership depends on what happens every month afterwards.

Consider:

Your income needs to comfortably accommodate all of these commitments.

This is why buying at the absolute maximum of your borrowing capacity can be risky.

Don't Ignore Your Existing Debts

Before buying, look at everything you're currently paying.

That includes:

• credit cards
• personal loans
• car loans
• HECS-HELP obligations where applicable
• Buy Now, Pay Later commitments
• other regular financial commitments

Reducing unnecessary debt can potentially improve your financial position and may affect your borrowing capacity.

But don't automatically use every dollar of savings to eliminate debt before buying.

You need to balance debt reduction against maintaining sufficient cash reserves.

Government Assistance Can Change Your Target

First home buyers should investigate the assistance available in their state or territory before setting a final savings goal.

Depending on eligibility, assistance can include:

• First Home Guarantee
• First Home Super Saver Scheme
• stamp duty exemptions
• stamp duty concessions
• other state or territory programs

The important thing is to check the current eligibility rules rather than assuming that a program applies simply because you're a first home buyer.

A concession can materially change the amount of cash you need to have available.

FHSS Can Be Part of the Strategy

The First Home Super Saver Scheme can allow eligible buyers to use certain voluntary super contributions toward their first home.

The scheme has specific contribution and withdrawal rules.

If you're considering using it, understand how it fits into your broader savings strategy.

It can potentially help build the deposit, but you should still plan separately for the other costs associated with purchasing and settling into the property.

Don't Forget That Buying Costs Vary

There is no single Australian figure for "how much extra you need."

A buyer in Victoria may face different costs from a buyer in Queensland.

A buyer purchasing a $500,000 property has a different cost structure from someone buying for $900,000.

A buyer receiving a stamp duty concession has a different requirement from someone who doesn't qualify.

That's why generic rules of thumb can be useful for initial planning but shouldn't replace a property-specific calculation.

Build Your Target From the Property Price Backwards

Once you have a realistic property price range, calculate backwards.

For example:

This gives you a much clearer number than simply saying:

"I need 5%."

Don't Set Your Property Budget From Your Savings Alone

You might have enough savings to buy a particular property but not enough income to comfortably service the resulting mortgage.

Conversely, you might have strong income but not enough cash to cover the upfront costs.

The purchase needs to work on both sides.

These three questions should be considered together.

Give Yourself a Buffer Against Your Own Expectations

Property buyers often underestimate how long the purchasing process takes.

They may also underestimate how much the final property costs once all expenses are included.

Building a little additional margin into your savings target can reduce the pressure to make decisions based on the absolute minimum amount of money required.

It can also give you more flexibility if:

• the property you want costs slightly more
• an unexpected purchase expense appears
• settlement costs change
• your moving expenses are higher than expected
• you need immediate repairs

The objective isn't to save forever.

It's to avoid entering home ownership with no financial breathing room.

Your Savings Target Should Reflect Your Real Life

The right amount to save beyond your deposit depends on your circumstances.

A single buyer with stable employment and low living costs may have different requirements from a couple with children.

A buyer moving from one rental property to another may have different moving costs from someone relocating interstate.

Someone with family support may have different financial resources from someone buying entirely independently.

There is no universal "correct" buffer.

What matters is that your target reflects the risks and expenses you are actually likely to face.

The Goal Is to Arrive at Settlement in a Strong Position

Reaching the deposit target is worth celebrating.

But don't let the excitement of getting approved push you to spend every dollar you've saved.

Ideally, you want to arrive at settlement with:

• The deposit ready
• Purchase costs covered
• Moving costs planned
• Mortgage repayments understood
• An emergency buffer intact
• A realistic monthly budget

That gives you something much more valuable than simply owning the property.

It gives you financial breathing room as a homeowner.

Turning Your Savings Into a Sustainable First Home Purchase

Saving beyond the deposit is ultimately about giving yourself enough financial flexibility to handle the transition into home ownership.

The strongest position isn't necessarily the buyer with the biggest deposit.

It is the buyer who can complete the purchase while still having enough capacity to manage the mortgage, absorb unexpected costs and continue building their financial position.

Know Your Numbers Before You Make an Offer

Before committing to a property, make sure you understand four separate numbers:

The fourth number is often forgotten.

Yet it can have a significant impact on how comfortable you feel once the mortgage begins.

Consider Your Cash Position After Settlement

Imagine you have accumulated:

$80,000

You are purchasing a:

$700,000 property

And your deposit and transaction costs require:

$65,000

You technically have enough to complete the purchase.

But your remaining:

$15,000

is not necessarily "spare money."

It may need to cover moving costs, initial expenses and your emergency reserve.

This is why a buyer should consider the post-settlement cash position, not just whether the purchase can technically be completed.

Keep Your Emergency Savings Accessible

An emergency fund is most useful when you can access it quickly.

For homeowners, keeping some emergency savings in an appropriate high-interest savings account or, where suitable, an offset account can provide a combination of accessibility and interest savings.

An offset account can reduce the portion of your mortgage on which interest is calculated while allowing you to retain access to your money, subject to the loan's terms and features.

For example, if you have:

$600,000 mortgage

and:

$20,000 in an offset

the interest calculation may effectively be based on:

$580,000

rather than the full $600,000, assuming the account is correctly linked and the loan operates this way.

That means your emergency savings can potentially serve two purposes:

Financial safety net + interest-saving balance

Don't Put Every Dollar Into the Deposit

There can be a psychological temptation to maximise the deposit.

A larger deposit generally means borrowing less.

But there's a point where putting additional cash into the property can leave you with too little liquidity.

For example, if you have $100,000 available, you could potentially choose between:

The better choice depends on your loan, interest rate, cash-flow position, risk tolerance and financial goals.

There isn't a universal rule that says every dollar should go toward reducing the mortgage.

Liquidity has value too.

Think About Your First Year, Not Just Settlement Day

A first home purchase should be affordable beyond the day you receive the keys.

Consider what your financial position could look like over the next 12 months.

You may have:

• mortgage repayments
• council rates
• insurance
• utilities
• maintenance
• transport costs
• groceries
• other existing debts
• unexpected household expenses

Then consider whether your income still provides a comfortable surplus after all of these costs.

If the answer is no, the property may be too expensive even if the lender is willing to approve the loan.

Stress-Test Your Own Budget

Interest rates can change.

Your income can change.

Your expenses can change.

A useful exercise is to test your household budget against a less comfortable scenario.

Ask yourself:

• What happens if mortgage repayments increase?
• What happens if one income temporarily falls?
• What happens if the property needs a major repair?
• What happens if another large household expense appears?

You don't need to predict the future.

You simply need to understand whether your financial position has enough room to absorb reasonable shocks.

Don't Confuse Borrowing Capacity With Affordability

A lender's borrowing assessment is an important part of the process.

But it isn't a personal financial comfort test.

Your maximum borrowing capacity represents what a lender may consider serviceable under its assessment methodology.

Your personal affordability should also consider:

• how much you want to save each month
• your preferred lifestyle
• future family expenses
• travel
• education
• vehicle costs
• investments
• retirement savings
• emergency reserves

Two households with identical incomes can have very different definitions of an affordable mortgage.

Your First Home Doesn't Have to Be Your Forever Home

First home buyers sometimes feel pressure to buy the "perfect" property.

That can lead to stretching the budget unnecessarily.

Instead, consider whether the property meets your important requirements:

• suitable location
• manageable mortgage
• acceptable condition
• reasonable transport access
• appropriate size
• potential future needs

You don't necessarily need to solve every future housing need with your first purchase.

The priority is establishing a sustainable financial foundation.

Be Careful With Renovations Immediately After Settlement

A common temptation is to start renovating as soon as you move in.

But renovations can quickly consume your remaining savings.

Before committing to major work, separate projects into:

If your emergency savings are still small, cosmetic renovations may be better postponed.

Keep Building the Savings Habit

Home ownership doesn't mean your savings journey is finished.

Once you've bought the property, continue building financial reserves.

You may eventually want to save for:

• renovations
• future property purchases
• investments
• children's expenses
• major repairs
• retirement

The discipline that helped you build the deposit can become part of your long-term financial habits.

Your first home can therefore become more than a place to live.

It can become the foundation for your broader financial goals.

Review Your Mortgage Regularly

Your financial position won't remain static.

Income can increase.

Interest rates can change.

Property values can move.

Household expenses can change.

Your loan balance will gradually decline as you make repayments.

That means your mortgage should not necessarily be treated as something you set and forget for 30 years.

Regularly reviewing your loan can help you determine whether the current structure remains appropriate for your circumstances.

This can include reviewing:

• interest rate
• loan features
• offset arrangements
• repayment frequency
• available equity
• loan balance
• overall household cash flow

Equity Can Become Important Later

As you repay your mortgage and potentially benefit from property value growth, you may build equity.

In simple terms:

Property value − mortgage balance = equity

For example:

But total equity isn't necessarily the same as usable equity.

Lenders will consider factors such as loan-to-value ratio, income, expenses and serviceability when determining how much additional borrowing may be appropriate.

So don't assume that an increase in property value automatically means you can borrow the full amount of the increase.

The First Home Purchase Can Shape Your Next Financial Move

Your first mortgage can affect what becomes possible later.

A manageable mortgage can potentially leave more room for:

• saving
• investing
• paying down debt
• building an offset balance
• future property purchases

An excessively large mortgage can have the opposite effect.

It may consume more of your household cash flow and reduce your ability to respond to future opportunities.

This is why the purchase price matters just as much as the deposit.

A Useful First Home Buyer Checklist

Before making an offer, consider whether you have accounted for:

The Real Target Is Financial Readiness

There is no magic amount that every first home buyer should have sitting in the bank beyond their deposit.

For some buyers, the additional amount may be relatively modest because they qualify for significant concessions and have strong income and savings buffers.

For others, the required amount could be considerably higher because of stamp duty, property costs, moving expenses or the need for a larger emergency reserve.

The important thing is to calculate your own position rather than relying solely on a deposit percentage.

Think of your target as:

Buying a Home Shouldn't Empty Your Bank Account

Getting the keys is an important milestone.

But the real test begins after settlement.

You need to live in the property, pay the mortgage, maintain the home and continue managing the rest of your financial life.

That's why saving beyond the deposit matters.

The goal isn't simply to have enough money to buy a home.

It's to have enough financial strength to own one comfortably.

A first home should be the beginning of your financial foundation, not the point where your savings disappear.

Save for the deposit, but plan for the life that comes after it.