How to save for a home deposit in Perth

Work out what you are aiming at

It is hard to hit a target nobody has put a figure on. The first job is to work out what a purchase in the area you are looking at would realistically cost, and what deposit that implies at the kind of lender you could use.

That turns a vague sense of needing more into an amount you could aim at. It also tells you whether the gap is a matter of months or of years, which changes what you should do about it.

What has to be paid in cash on top of the deposit

• Transfer duty, unless a concession applies to your purchase
• Settlement and transfer fees, plus the lender's own establishment costs where they are charged
• Building and pest inspections, and a strata report where one applies
• Conveyancing or legal fees
• Moving costs, connections, and whatever the property needs before you could live in it
• A cash buffer for the months after settlement, which nobody budgets for and everybody needs

Lenders mortgage insurance sits slightly apart from that list, because it is commonly added to the loan rather than paid on the day. It is still a real cost, and it belongs in the comparison when you are weighing buying sooner with less against saving for longer.

What a lender reads in your savings

Most people assume a deposit is judged on size alone. Many lenders also look at how it got there, because a balance built up steadily reads as evidence that you could meet a repayment.

The policy term for that is genuine savings, and what counts differs from lender to lender. A sum that arrived last week is treated differently from the same sum saved across a period, and a gift is commonly accepted as deposit while not counting as savings on its own.

The other half of this is where the rest of the money is going. Money moving into a savings account and back out again a fortnight later shows a lender a balance rather than a habit, and the habit is the part being assessed.

What each route looks like when the deposit is still small, including what commonly counts as genuine savings and what does not, is set out at /guides/low-deposit-home-loan-perth/.

Look at your whole position before you set the plan

A savings plan built without looking at the rest of your finances often solves the wrong problem. Deposit and servicing are assessed separately, and for plenty of buyers the deposit is not the constraint at all.

So before you decide what to put away each month, get the whole picture in front of you. It is an uncomfortable hour, and it is the most useful one in the process.

• What actually lands in your account each month, after tax and counting nothing you could not rely on
• What leaves it, read off your statements rather than off memory
• Every debt you carry, including the card you no longer use and the buy-now-pay-later accounts
• The limits on your cards, because many lenders assess the limit rather than the balance
• What you pay in rent now, against what a repayment on the loan you are contemplating could look like
• Anything on the horizon, such as a car needing replacing or a stretch of lower income

Two things usually come out of that hour. Cutting a card limit or clearing a small debt could improve your borrowing position more than the same money saved would, and some of the spending you find is easier to stop than you expected.

Which of those matters most depends on your income, your commitments and the lender. The borrowing power calculator at /calculators/borrowing-power-calculator/ gives you a rough sense of the shape, and /guides/how-much-can-i-borrow/ explains what lenders count and what they shade.

Set a budget that survives a real month

A budget written for a perfect month falls over in the first ordinary one. The version that lasts is dull, automatic, and slightly generous about the things that always come up.

1. 1

   Save first, spend second

   Move the money on the day you are paid rather than at the end of the month. What happens to be left after a month of spending is not a savings plan, it is a hope.

2. 2

   Keep it somewhere separate

   A separate account, ideally without a card attached, keeps the deposit out of the day-to-day balance. It also means the pattern is obvious on a statement instead of being something you have to explain.

3. 3

   Pick an amount you could sustain

   A figure you could hold for a year beats one you abandon in the second month. Consistency is what builds the balance, and consistency is also what a lender is reading.

4. 4

   Budget for the irregular things

   Registration, insurance, Christmas and the annual bills are not surprises, they are just infrequent. Putting aside a monthly share of them stops the deposit account quietly funding them.

5. 5

   Review it every few months

   Incomes change, rents change, and so does what you are aiming at. A plan nobody has looked at in a year is usually out of date.

None of that is clever, and it is the part that gets abandoned first. The habit is worth considerably more than the interest the account pays.

The bigger changes, and what each one costs you

Trimming small expenses has a ceiling. The changes that move a deposit meaningfully are the large ones, and each carries a trade worth looking at squarely before you make it.

• Reducing what you pay for housing, whether by moving somewhere cheaper, taking a housemate, or moving back in with family for a period
• Selling or downgrading a car, which cuts a repayment, the insurance and the running costs at once
• Clearing high-cost consumer debt first, because the interest charged on it commonly outruns what a savings account pays
• Adding income through overtime, a second job or work on the side, remembering that many lenders want a history behind that income before they count it
• Postponing a large discretionary purchase or a holiday until after settlement
• Sending money that arrives outside your income straight at the deposit, whether that is a tax refund, a bonus, a gift, or an insurance or redundancy payout
• Buying something different from what you first pictured, whether that is a smaller property or a different suburb

A lump sum is the quickest way to move a deposit balance, and it is also the entry a lender is most likely to ask about. Keep the evidence of where it came from, because money that lands in one piece does not read as savings on its own — which is the genuine savings point above, seen from the other side.

The comparison at /calculators/rent-vs-buy-calculator/ is a reasonable way to see the shape of that trade. It runs on assumptions you choose, so treat what it returns as a way of thinking rather than a forecast.

Where help could come from, and where it could not

Not all of a deposit has to come out of your own income. Several routes exist, none of them are decided by a broker, and each has its own rules and its own decision-maker.

• A gift from family, which many lenders accept as deposit given a letter confirming it is a gift and not a loan
• A family guarantee, which uses equity in a relative's property as additional security in place of a larger cash deposit
• The Australian Government's deposit guarantee scheme, which supports eligible buyers to purchase with a smaller deposit
• The First Home Super Saver Scheme, which lets eligible people release voluntary superannuation contributions towards a first home and is administered by the Australian Taxation Office
• The WA first home owner grant and the first home owner rate of transfer duty, both administered by RevenueWA and separate from one another

Two things about the super saver scheme catch people out. Only voluntary contributions could be released, not the compulsory ones your employer pays, and a release has to be applied for and processed rather than drawn on at short notice.

The WA grant and the duty concession have their own guide at /guides/first-home-owners-grant-wa/, where the figures are dated to the government pages they came from. Whether any of these could apply to you depends on your circumstances, and for the lending routes on the lender's approval.

If you would rather aim at a real figure than a vague one, tell us your position and we could work the target through with you. What any lender would accept remains subject to their approval, to a valuation of the property you choose, and to your circumstances at the time you apply.