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How to Save for Your First Home

Buying a home is a big step and it’s easy to be daunted by the large sums of money involved. With careful budgeting, saving for your first home is made much easier.

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Kyle Tether

Property Consultant



Saving money for your first home may seem daunting, but you have a lot of help and advice available to you. 

Affinity’s expert tips are here to help you save for your first property. The more you save now, the easier it will be to afford and pay off your home in the long term. 

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Fastest Way to Build Your Home Deposit

Buying your first home is exciting and life-changing; saving for your first home is a little less fun.

Accordingly, you should make the process as easy for yourself as possible, starting with the deposit. 

The more money you put down upfront, the less you’ll have to borrow.  Here are some tips to help you put together the largest deposit possible when you buy. 

1. Set, Plan & Manage Your Savings Goals

Develop a plan to help you save your deposit. Work out how long it will take you to save the amount you need, and how much you'll have to put aside each pay.

2. Track Your Expenses & Cut Back on Extras

The easiest way to see where you can cut back is by doing a budget. Write down your essential costs, such as rent, bills, and food, and subtract this amount from your income. What is leftover is what you could potentially save for your deposit.

Give yourself some leeway - if your budget is too tight, it will be harder to reach your target. So don't cut out all your fun expenses. Also, it's a good idea to set smaller savings goals along the way and reward yourself with low-cost things you enjoy when you achieve them.

This way, saving for your first home isn't unbearable.

3. Move Back into the Family Home

While it may not seem that appealing, many young people choose to move back into the family home while they are saving for their first house. Rent is likely to be one of your biggest expenses. Thus, if you can cut this right down, you could increase your savings very quickly.

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4. Funnel Your Money Into A High-Interest Savings Account

Once you know how much you can save, make your money work for you. As such, don't keep your savings in your everyday account. Instead, use a high-interest savings account.  Money in your everyday account is very easy to spend. Remove the temptation by putting it into your savings account. Furthermore, using an everyday account means you will earn less interest than you would by transferring your savings to a high-interest savings account.  If you find a savings account that offers bonus interest for every month you don't make a withdrawal, you'll be less likely to touch the money unless it's an emergency.

5. Automate Your Savings

Boost the balance in your savings account by transferring money to it as soon as you get paid. You can set up automatic transfers to your savings account online.

Alternately, you can also ask your payroll department to send part of your pay to your savings account.

Automatic transfers allow you to "set and forget", knowing that your savings are growing without you having to transfer them manually every time you get paid.

6. Consider Investing

Have you thought about investing your savings in shares or a managed fund? This is a good way to increase your overall capital. However, this is only a good idea only if you plan to buy your home in a few years' time. This is because investments in shares or managed funds are suited to long-term goals. For more information see investing.

How Much to Save?

Once you have enough money for a deposit on a home, you will still need to continue to build your savings. Not only will you have to make monthly repayments on your mortgage, but you will also need to account for unforeseen expenses like property repair.  

Having a sizeable amount of money saved away is a wise financial decision, as it gives you the peace of mind to know you are insulated from financial emergencies. 

But how much should you save? Affinity has 3 expert tips to help determine how much to save for a house deposit and beyond. 

1. Work Out What You Can Afford

Be realistic. You may need to consider a smaller property, an older property, or a property in a different area, just to get you started in the property market.

2. Learn About The Property Market

The property market is always changing. To get an idea of property prices in the area you want to buy, we reccommend:

  • Have a look at online real estate websites’ for sale page
  • Go to auctions

3. Check Your Loan to Value Ratio

When thinking about how much to save, check your loan to value ratio (LVR). This is calculated by dividing the amount of your home loan by the purchase price (or appraised value) of the property.

Lenders use your LVR to gauge how risky it would be to give you a loan.  In general, the higher your LVR, the higher the risk the lender will not be repaid if you default on the loan and they have to sell the property.

Having a high LVR may also affect your ability to refinance your loan later on, and you may have to pay mortgage insurance again if the LVR on the new loan is high. Usually lender's mortgage insurance (LMI) is payable if your LVR is above 80%. This is a one-off insurance premium to protect the lender should you default on your home loan.

Some lenders also use your LVR to work out the interest rate on your home loan. For example, if your LVR is more than 80%, you could be charged a higher interest rate than a borrower with a lower LVR.

This could make a big difference to your repayments, so it is important to save as much as you can towards a deposit to reduce the size of your loan and try to get your LVR under 80%.

Voted North Brisbane’s  Caboolture's  Kallangur's  Murrumba Downs’  Leading Real Estate Agent For First Home Buyers

See the properties available for purchase on Affinity’s website. Alternatively, call us and we can discuss your plan for buying your first home. 

Or, call us now on 07 3293 9100

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