First home buyer, but no genuine savings. How do you get a loan?


“Can you buy a house without any savings?”

There isn’t a straightforward ‘yes or no’ answer to this question. In short if you think you can buy a house without spending a penny, that is not possible.

Then, the answer to my question will be – yes, you do need savings to buy a house.

So, the logical next question would be – ‘how much money do you need to buy a house’? The maximum that you can borrow from any lender is 95% of the property price. Some of them let you add all or part of the lender’s mortgage insurance (LMI) on to the loan and some of them lend a max of 95% inclusive of LMI.

In short, banks want to see that you have saved at least 5% of the house price. And, they want to see that you have saved this money from your income. Often, you hear the term “genuine savings”.

What is genuine savings?

Genuine Savings is defined as a demonstrable savings pattern established over a minimum period of 3 months in the name of at least one borrower prior to the loan application being received.

Genuine savings can be from any of the following sources:

  • Savings pattern – established over 3 month period with regular or sporadic deposits
  • Gift – if held in the applicant’s account for 3 months or more
  • Sale proceeds of shares or managed funds
  • Equity in or from real estate
  • Additional loan repayments that are redrawable
  • Inheritance – if held in the applicant’s account for 3 months or more
  • Term Deposit – held for 3 months or more

A few banks have now identified that as a renter, it can be hard to save the 5% while you are paying rent. In some cases, where the 5% deposit may be a gift or a bonus or a lottery win, and if you have been renting for six to twelve months with good conduct, they will consider the 5% in your bank account as genuine savings, even though it has been in the account for less than 3 months. 

So, if you are a first home buyer with a deposit in your bank account for less than three months and want to buy your first property, contact us on (03) 9005 3983 to see how we can help you with your dream.