Genuine Savings for a House Deposit?
Saving a deposit for your first home is about more than reaching a target balance. For some Australian home loans, lenders may also want to understand how your savings were built and how long you have held them.
This is commonly referred to as genuine savings. Understanding the concept early can help you prepare your finances before applying for a home loan.
A Deposit Is Not Always Just a Number
If you have saved money towards your home, that savings history can be an important part of understanding your financial position. Lender requirements vary, so it is useful to know what may be considered genuine savings before choosing a loan.
Build It Yourself
Regular money saved from your income can help demonstrate a consistent savings habit.
Keep a Clear History
Maintaining records of your savings can make it easier to explain where your deposit funds came from.
Know the Lender's Rules
Different lenders can have different policies around genuine savings and acceptable deposit funds.
Your Savings Have a Story
Imagine you are preparing a $80,000 house deposit. The balance itself is important, but depending on the lender, the way you accumulated those funds may also matter.
How Genuine Savings Can Fit Into Your Deposit
Here are some of the key things to understand when preparing savings for an Australian home loan.
What Are Genuine Savings?
Genuine savings generally means money you have accumulated yourself and held over a period of time. Depending on the lender, this can include regular savings built from your income and maintained in an eligible account.
Why Can Genuine Savings Matter for a House Deposit?
Some lenders use genuine savings as one way of assessing whether a borrower has demonstrated the ability to save and manage money over time.
It can therefore be useful to understand the requirements before you decide which lender or home loan may suit your circumstances.
For Example: A $100,000 Deposit
Having $100,000 available for a home purchase does not necessarily mean every lender will assess those funds in exactly the same way. The source and history of the money can matter depending on the lender's policy.
What Could Be Considered Genuine Savings?
The exact rules vary between lenders and loan products. Personal savings that have been accumulated and maintained over an appropriate period may be considered, subject to the lender's criteria.
What About Gifts or Other Deposit Funds?
Not every dollar used towards a house deposit is necessarily treated as genuine savings. Gifted money, borrowed funds and other forms of assistance can be assessed differently.
This does not automatically mean these funds cannot be used for a property purchase. It means the lender's specific requirements should be checked before relying on them.
Preparing Your Savings Before Applying
Good Habits to Keep
- Continue making regular savings contributions.
- Keep your deposit funds clearly documented.
- Maintain records showing where your funds came from.
- Understand the deposit requirements of your chosen lender.
- Avoid assuming every lender uses identical criteria.
Things to Check
- How long your savings have been held.
- Whether gifted funds are acceptable.
- Whether borrowed funds can form part of the deposit.
- What evidence the lender may request.
- The current genuine savings policy for your loan.
Turn Your Savings Into a Stronger Starting Point
Genuine savings is about more than simply reaching a deposit target. Your savings history can help show how you have built and managed your money over time.
Because Australian lender policies can differ, understanding the requirements early can help you avoid surprises when you are ready to apply.