Deposit Strategies: How to Save Smarter for the 20% You Need for Your Next Home

A 20% deposit is often seen as a milestone for home buyers because it may help reduce borrowing costs and avoid lenders mortgage insurance (LMI). However, it’s not a rule, rather, it’s a common benchmark that many buyers aim for. Saving for a deposit takes time, discipline, and a strategy tailored to your situation. While there’s no single approach that works for everyone, there are practical ways to improve your saving habits and build momentum toward your next home purchase.

Deposit-Strategies-How-to-Save-Smarter-for-the-20-You-Need-for-Your-Next-Home

Start With a Clear Savings Goal

Instead of aiming for a vague “big deposit,” work out a realistic target. For example, if homes in your preferred area range from $600,000–$750,000, then a 20% deposit could sit somewhere between $120,000 and $150,000. You don’t need an exact number at the beginning, but having a target range can help guide your planning and timeframes.

Track Your Spending and Identify Gaps

Most people underestimate where their money goes. Reviewing your last three months of transactions can help you understand:

  • How much you spend on essentials
  • Where unnecessary costs are creeping in
  • Which habits may be holding back your savings

Even small changes, like reducing unused subscriptions or adjusting discretionary spending, can create meaningful progress over time.

Set Up Automations to Make Saving Easier

Automating your savings removes the temptation to deviate from your plan.

You can consider:

  • Scheduling automatic deposits into a separate savings account
  • Using round-up features some banks provide
  • Setting “digital envelopes” to separate saving goals

Automation creates consistency, which is often more effective than relying on willpower alone.

Keep Your Deposit Savings Separate

Having your deposit money mixed in with your everyday spending account makes it harder to track progress, and easier to spend accidentally.

Keeping your savings in a separate account:

  • Creates a psychological barrier
  • Helps you visualise progress
  • Makes budgeting clearer

Reduce High-Interest Debt Where Possible

Debt repayments, especially on high-interest facilities like credit cards or unsecured personal loans, can heavily impact your saving capacity. Reducing or eliminating these debts may help free up more funds to allocate to your deposit goal. However, you should always consider your personal situation or seek independent advice before making significant financial changes.

Explore Government Support Options

Depending on your circumstances, you may be eligible for federal or state-based support programs, including first home buyer initiatives or deposit-related schemes. These programs change over time and often have specific eligibility criteria. A mortgage broker can provide general guidance only on what programs currently exist so you can seek personalised advice if needed.

Review Your Income Opportunities

While not always possible, some people increase their deposit savings by exploring additional income sources, such as:

  • Overtime or extra shifts
  • Freelance or contract work
  • Selling unused items
  • Business or hobby income

Any additional income should be assessed carefully, especially if it affects tax obligations or work–life balance.

Use a Structured Savings Plan

Breaking your deposit goal into monthly or fortnightly amounts can make the target feel more achievable. For example, saving $18,000 a year is equivalent to $1,500 per month or around $350 per week.

A structured plan provides:

  • Clarity
  • Measurability
  • Accountability

If the number feels too large, adjust the timeframe or review your budget for room to improve.

Work With a Mortgage Broker Early

You don’t need to wait until you’re “deposit ready” to speak with a broker. A mortgage broker can help you understand:

  • How lenders typically assess deposits
  • The difference between genuine and non-genuine savings
  • How living expenses impact your borrowing power
  • What documentation you may need later

At BrokerCo, we provide general guidance, helping you prepare for the process without offering specific financial advice.

Saving a 20% deposit is a big goal, but breaking it down into manageable steps makes the journey less overwhelming. By setting clear targets, managing expenses, reducing debt, and maintaining consistent saving habits, many Australian buyers build strong financial foundations for their next home purchase. The earlier you start planning, and the more structured your approach, the easier it becomes to stay on track.

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