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A romantic couple embracing in the kitchen; image used for HSBC How to save up for a house deposit.

How to save up for a house deposit

Saving enough to make a deposit on a house is one of the biggest challenges to owning a home. But don't let that hold you back. There are things you can do to make this an easier process.

Let's start by looking at the big question: how much do you need to save?

At HSBC, there are certain circumstances where we can usually lend up to 90% of the value of the property, but you'd also need lenders mortgage insurance, which will protect the bank lending you the money. So whatever you are considering buying, you'll need to put in at least 10% of the purchase price. However, you should think beyond the minimum deposit for a home loan.

Most people set a target of saving 20% of the property price, because there will be other costs such as lenders mortgage insurance, conveyancing, legal fees and other expenses that might unexpectedly arise.

If you're a first home buyer, you may be eligible for the First Home Owner Grant (FHOG) and first home buyers stamp duty concession (availability vary depending on state and location)

Saving up that much money can seem daunting, but there are a few steps you can take that will make it a more manageable goal.

  • Set a budget to track your spending and cut costs
    Once you have figured out how much you need to save, set up a budget. This will help you track how much you're spending and find where you can cut back. This doesn't always have to be painful. For example, if you pick up a latte on your way to work every day, you could switch to making it at home. This small change could save you up to $840 a year. ($3.50 x 5 = $17.50/week or $70/month).

    Another way to save real money every month is to review your current subscriptions/plans. Take a look around for discounts, welcome offers and cheaper options on things like gym memberships, mobile subscriptions, utilities and insurance plans. It's worth taking the time for the longer term gain.

  • Reduce and consolidate your debts
    Consider consolidating anything you owe towards credit cards or personal loans. This simplifies your payment schedule because you won't have to worry about multiple payment dates and interest rates. Doing a credit card balance transfer or consolidating your debt into a personal loan can help you avoid multiple fees. You may also be able to reduce the amount of interest you pay, allowing you to pay off your debt faster. Find out more about HSBC's credit cards and HSBC's personal loans1 here.

    Debt consolidation has another benefit, too: if you have fewer debts, banks are more likely to look favourably on you when the time comes to deciding your home loan application.

  • Use a savings account
    Leaving your savings sitting in your everyday transaction account can make it too easy to spend. One great way to ensure you meet your savings goal is to set up a designated savings account for your house deposit. You can compare all of the savings accounts we offer to see which one is right for you.

    An HSBC Bonus Savings account is a good option here. because you'll even get a Monthly Bonus rate2 every month your balance is $300 more than the previous month. To make it easier, you can even set up a regular payment to automatically send a percentage of your salary each month. It's a good step towards your savings goal.

    Another option that might reduce your temptation to spend is a term deposit. By locking away a minimum of $5,000 for anywhere from 1 month to five years, you get the certainty of a fixed interest rate for that entire length of time.

    Before you choose the length of your term deposit, consider when you plan to make your property purchase, because you could face a break cost for early withdrawals.

We've got lots of other great tips in our informative guide for buying your own home. And when you're ready to make the big step, we've got a whole range of home loans that could help.

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  1. T&Cs, fees and charges and lending criteria apply.
  2. No interest is incurred on the portion of balances over AUD $5,000,000 or equivalent. Ensure that on the last business day of the month, your closing balance is at least $300 higher (excluding interest) than the opening balance on the first business day of that month. Both the monthly Bonus rate and the base rate are variable and are subject to change. Current rates can be viewed by visiting Monthly Bonus rate applies for the month the eligibility criteria is met, calculated from the first business day of that month. Interest is calculated daily on the total balance and paid monthly, on the first business day of the following month.