Deposits and Genuine Savings: What Lenders Need to See

The short answer

Your deposit is just one part of the money you need to buy a home. Lenders also want to see where your funds came from, and sometimes that you’ve built them up yourself over time. This is known as genuine savings.

The good news is that there’s more flexibility than most people think. Gifts, rental history, and even cash saved at home can all play a part with the right lender.

Your deposit is only part of it

When you buy, you need enough funds to cover the full cost of completing the purchase, not just the deposit. This usually includes:

• Your deposit: the share of the purchase price you contribute.
• Stamp duty: varies by state and can be a significant cost. First home buyers may be eligible for concessions or exemptions.
• Legal and conveyancing fees: for the contract, searches and settlement.
• Lender fees: such as application or settlement fees, depending on the loan.
• LMI: if your deposit is under 20% and it isn’t added to your loan.
• Moving and setup costs: easy to forget, but worth budgeting for.

We’ll work out your total funds needed upfront, so there are no surprises at settlement.

Genuine savings

Genuine savings show a lender you can save regularly and manage your money, which suggests you’ll handle loan repayments too.

• What it usually means: around 5% of the purchase price, saved or held in your account over about three months.
• When it applies: typically when you borrow above 85% of the property’s value. Below that, most lenders just need to verify where your funds came from.
• Policies vary: each lender sets its own rules on how much, how long, and what counts.

Rental history as an alternative

Renting already? Your rental history may count. Some lenders accept a clean rental ledger, often covering 12 months, in place of genuine savings. Paying rent on time every month shows the same discipline as saving.

Example: Daniel has been renting for two years and always pays on time. His deposit came mostly from a family gift, so he can’t show three months of genuine savings. A lender that accepts his rental ledger can still approve him above 85% LVR.

What can make up your deposit

Your deposit doesn’t have to come from one savings account. Common sources include:

• Savings: money in your everyday or savings accounts.
• Investments: shares, managed funds or term deposits.
• First Home Super Saver Scheme: eligible first home buyers can release voluntary super contributions, up to a limit, towards a deposit.
• Gifts from family: see below.
• Inheritance or asset sales: with supporting documents.
• Equity in another property: if you already own property, its equity can fund your deposit.

Gifted funds

Many buyers get help from family, and lenders generally accept it with the right paperwork.

• Proof it’s a gift: usually a gift letter or statutory declaration confirming the money doesn’t need to be repaid.
• Timing matters: some lenders want the gift held in your account for a period before it counts, especially if you also need genuine savings.
• Gift vs loan: if the money needs to be paid back, it’s a debt, and lenders will treat it that way.

Cash saved at home

Physical cash can be harder to verify, so many lenders are cautious with it. But with the right explanation of where it came from, and once it’s deposited into your account, some lenders can accept it as genuine savings.

Deposit it into your bank account, keep a record of where it came from, such as savings from your wages or the sale of an item, and let us know. We can help you document it properly and find a lender that will accept it.

How lenders verify your funds

Lenders review your bank statements to confirm your funds are genuine and where they came from.

• Large or unusual deposits: expect questions about any big or unexplained amounts, such as transfers from family or sale proceeds.
• Keep a paper trail: contracts of sale, gift letters and investment statements make these questions easy to answer.
• Be upfront: explaining your funds clearly from the start avoids delays later in the application.

The deposit at exchange and deposit bonds

When you sign the contract, you usually pay a deposit to the seller’s agent, often 10% of the price. This can sometimes be negotiated down to 5%, and practices vary by state.

If your funds are tied up, for example in a term deposit, an existing property or equity you’re releasing, a deposit bond can help. It’s a guarantee from an insurer that stands in for the cash deposit until settlement, for a fee.

Not sure if your savings will count?

With access to over 40 lenders, our team of lending specialists can work out your total funds needed, and find a lender that accepts how you’ve saved, whether that’s gifts, rental history or cash.

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General information only. This article does not consider your objectives, financial situation or needs and is not credit, financial or tax advice. Lender policies vary and change regularly. Examples are illustrative. Seek advice from a licensed credit adviser before acting. Insight Property Finance.