When to Start Saving for Your First Home

When Should You Start Building Your Deposit

Start saving at least 18 to 24 months before you intend to purchase. Lenders require evidence of genuine savings, typically held for at least three months, and business owners face stricter documentation requirements than wage earners.

Consider a buyer who runs a landscaping business on the Northern Beaches. Their ABN is three years old, tax returns show consistent income, and they've been setting aside $1,800 per month into a dedicated savings account. By the time they apply for a home loan, they have $43,000 saved over 24 months. That consistent pattern of savings, combined with stable business income, gives lenders confidence in their ability to service a loan.

Business owners need to plan for a longer savings runway because lenders typically assess two full financial years of tax returns. If your business is less than two years old, you may still be eligible under some lender policies, but your deposit and savings history become even more important. Starting early allows you to demonstrate both savings discipline and income stability across multiple tax years.

The three-month genuine savings rule applies to funds you've accumulated through regular deposits, not lump sums from bonuses or asset sales. If you receive a large payment and deposit it all at once, most lenders won't count it as genuine savings unless it's been held for three months or longer.

How Much You'll Need to Save as a Business Owner

Your deposit is only part of what you need upfront. Settlement costs, including stamp duty (where applicable), legal fees, building inspections, and lender fees, typically add another $10,000 to $20,000 depending on the property value and location.

Under the Australian Government 5% Deposit Scheme, eligible first home buyers can purchase with a 5% deposit without paying Lenders Mortgage Insurance. In New South Wales, the property price cap is $1,500,000 for capital city and regional centres. That scheme removes one of the largest upfront costs, LMI, which can run into tens of thousands of dollars on low deposit loans.

Business owners often ask whether they can use their offset account or redraw facility to park savings while also reducing interest on an existing loan. The answer depends on your lender. Some lenders will accept offset funds as genuine savings if the account has been maintained consistently. Others require a standalone savings account with no withdrawals. Confirm your lender's policy before structuring your savings strategy.

In New South Wales, first home buyers can access a full stamp duty exemption on properties valued up to $800,000, with a sliding concession available between $800,001 and $1,000,000. If you're purchasing in the Northern Beaches, where the median price typically sits above that threshold, you'll need to factor stamp duty into your upfront budget unless you're purchasing vacant land or a new build that qualifies for a different concession.

Using the First Home Super Saver Scheme for Business Owners

The FHSS Scheme allows you to make voluntary concessional contributions into your super fund and later release up to $50,000 to put toward your deposit. Concessional contributions are taxed at 15%, which can be significantly lower than your marginal tax rate.

For a business owner earning a taxable income that places them in the 37% or 45% tax bracket, the FHSS Scheme offers a tax-effective way to accelerate savings. You can contribute up to $15,000 per financial year and release the total after at least one financial year has passed since your first eligible contribution.

One limitation is timing. You need to apply to the ATO for a determination before signing a purchase contract, and processing times can vary. If you're planning to purchase within the next 12 months, start the FHSS process now so the funds are available when you need them. You cannot make contributions and release them in the same financial year.

Business owners who structure income through a company or trust may have limited capacity to make personal concessional contributions if their super is funded through employer contributions. Speak to your accountant about contribution caps and whether the FHSS Scheme fits your structure.

Combining Low Deposit Options with State Concessions

The 5% Deposit Scheme can be used alongside most state grants and stamp duty concessions. In New South Wales, you can access both the scheme and the stamp duty exemption, provided you meet the eligibility criteria for each.

If you're purchasing a new home or building on vacant land, the $10,000 First Home Owner Grant applies to properties valued up to $600,000 for homes, or a combined value of $750,000 for land and build contracts. The grant does not apply to established homes in New South Wales.

For a buyer purchasing a unit in Manly or Dee Why, an established property would not attract the grant, but the stamp duty exemption would apply if the property is valued under $800,000. A new apartment in the same area could potentially qualify for both the grant and the exemption, depending on the purchase price.

Lenders offering loans under the 5% Deposit Scheme include most major banks and several non-bank lenders. Each lender has its own credit policy, and business owners may find that some lenders are more flexible with self-employed income assessment than others. Work with a mortgage broker who understands how different lenders assess business income and which participating lenders suit your circumstances.

Fixed Rate, Variable Rate, and Offset Features on Low Deposit Loans

Loan structure matters, particularly for business owners whose income can fluctuate. A variable rate loan with an offset account allows you to park surplus funds and reduce interest without locking those funds away. This flexibility can be valuable if your business has seasonal cash flow or irregular income.

Some lenders participating in the 5% Deposit Scheme offer offset accounts and redraw facilities, while others do not. If offset functionality is important, confirm availability before applying.

A fixed rate loan provides certainty over repayments for a set term, typically one to five years. If you're purchasing during a period of rising rates, fixing can protect your cash flow. Once the fixed term ends, the loan typically reverts to a variable rate unless you negotiate a new fixed term.

Split loans allow you to fix a portion of your loan while keeping the remainder variable. A buyer might fix 60% of their loan to lock in repayments and leave 40% variable with an offset account for flexibility. This structure is available through most lenders, including those participating in government schemes.

Pre-Approval and the Application Timeline for Self-Employed Buyers

Pre-approval gives you a conditional commitment from a lender before you make an offer. For business owners, pre-approval can take longer than it does for wage earners because lenders need to assess two years of tax returns, business financials, and sometimes additional documentation like BAS statements or profit and loss reports.

Apply for pre-approval at least four to six weeks before you intend to start looking at properties. This gives your broker time to gather documents, liaise with the lender, and address any issues that arise during assessment.

Pre-approval is typically valid for three to six months, depending on the lender. If your circumstances change during that period, such as a drop in business income or a new liability, you'll need to notify the lender and may need to reapply.

Once you've made an offer and signed a contract, the lender will conduct a formal valuation and assess final conditions before settlement. Settlement periods in New South Wales typically range from 30 to 90 days, though longer terms can be negotiated depending on the sale contract.

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Frequently Asked Questions