Saving and Budgeting
If Chapter 1 was about clearing your head, this one is about filling your bank account. Saving for a first home in Victoria is less about dramatic sacrifice and more about knowing exactly what number you're aiming for, then building a system that gets you there without turning your life into a spreadsheet of misery.
The single biggest mistake people make at this stage is saving for "a deposit" without knowing the other costs that arrive on top of it. So that's where we start.
The total cost picture, not just the deposit
When people say "I'm saving for a deposit", they usually mean the down payment on the price of the property. But your bank balance on the day you sign a contract needs to cover a set of costs, and the deposit is just the largest of them.
| Cost | What it is | Rough order of magnitude |
|---|---|---|
| Deposit | Your contribution to the purchase price. 5, 10 or 20 percent are common reference points, and the percentage affects whether lenders mortgage insurance applies. | 5 to 20 percent of the purchase price |
| Stamp duty (transfer duty) | Victorian duty on the transfer. Eligible first home buyers buying a principal place of residence pay no duty below $600,000 and a scaled concession between $600,000 and $750,000. | $0 with the exemption, rising to full standard duty at $750,000 and above |
| Lenders mortgage insurance | A one-off insurance protecting the lender when the deposit is under 20 percent. Often capitalised into the loan. | Varies by lender and insurer; commonly thousands of dollars |
| Conveyancing | The legal work: title searches, Section 32 review, the settlement itself. | Around $1,500 to $3,000 for a standard purchase, plus disbursements |
| Building and pest inspections | Independent reports on the condition of the property before you commit. | Roughly $400 to $800 combined for a typical home, varying by size and inspector |
| Government fees | Mortgage registration and transfer fees. | A few hundred dollars in total |
| Insurance | Home and contents cover, usually required by your lender from settlement. | Varies widely by property and sum insured |
| Moving and connection | Removalists, cleaning, utility connections, mail redirect. | Roughly $500 to $2,000 or more depending on distance |
Indicative ranges for general education, correct as at September 2026. Always confirm current amounts with the State Revenue Office Victoria, your lender and your service providers.
Two patterns are worth noticing in that table. First, the exemption on duty below $600,000 means an eligible first home buyer at that price point saves a five figure sum, which is one of the more generous concessions in the country, and Chapter 3 covers it in detail. Second, the smaller costs add up quietly. Conveyancing, inspections, fees, insurance and a move can easily total $5,000 to $8,000 before you've paid a cent of the deposit.
Illustrative composite scenario
Priya and Daniel are renting in Footscray and targeting a $650,000 apartment. Their deposit at 10 percent is $65,000. Stamp duty sits in the concession range at that price, so they budget around $4,500 for it. Conveyancing quotes come in near $2,200, inspections and reports near $700, and they allow $3,000 for the move and connections. Their real target is about $75,400, not $65,000.
When they later considered a $580,000 unit instead, the duty exemption meant that cost disappeared entirely, and the total target fell by more than $70,000 of price difference plus duty. Both are composite examples, not real people, but the arithmetic pattern is common.
Setting your savings target
A target that works backwards from a real price range tends to survive longer than a vague one. A common approach looks like this: research two or three realistic suburbs and property types, get a feel for the price band, then pick a conservative number within it. From there, the deposit percentage and the extra costs give you the total. The tools hub has a deposit estimator that does the Victorian duty maths for you, and a savings planner that turns a total into a monthly figure and a timeline.
One decision worth thinking about early is the deposit percentage you're aiming for, because it changes the target dramatically:
| Deposit level | On a $650,000 property | What generally comes with it |
|---|---|---|
| 5 percent | $32,500 | LMI applies, and only some lenders and schemes operate at this level. The Victorian Homebuyer Fund and federal guarantee schemes can change the equation, see Chapter 3. |
| 10 percent | $65,000 | LMI usually applies but is cheaper than at 5 percent. A common first home buyer landing point. |
| 20 percent | $130,000 | Generally no LMI, and lenders tend to price the loan more favourably. The longest saving journey. |
Illustrative examples only. What a lender will actually accept depends on your full situation.
There's no universally correct answer. Some buyers weigh the LMI cost and years of rent against the time needed to reach 20 percent, and decide a smaller deposit suits them. Others prefer the lower ongoing cost that comes with a bigger deposit and accept a longer wait. Both can be reasonable, as long as the choice is made with eyes open rather than by default.
Budgeting without misery
Budgets fail when they're built on aspiration rather than observation. A pattern that works for many people is to spend a few weeks tracking what actually leaves your account, with no changes at all, before writing a single rule. Most people find two or three surprises, and fixing a surprise is far less painful than banning a habit you enjoy.
From there, a simple structure people find sustainable is to divide money into three buckets: fixed needs (rent, transport, bills), a guilt-free spending allowance for the things that make life worth living, and savings. The savings bucket gets transferred on payday, not at the end of the month. Money that isn't in your spending account is money you don't have to resist spending.
A few practical observations from people who've done this successfully:
- Attacking the big three, housing, transport and food, moves the needle more than a hundred small sacrifices. A cheaper rent or an extra housemate can be worth more than every coffee ever skipped.
- Keeping the savings in a separate account, ideally a different bank, creates enough friction to protect it.
- Reviewing monthly rather than daily keeps the effort sustainable. Obsessing over every transaction is a fast track to giving up.
- Building in a buffer for irregular costs, car rego, dental, gifts, stops the whole plan collapsing each time one arrives.
Where to hold the money
For money you expect to need within the next few years, the two qualities that matter most are that it stays safe and that it stays accessible. Common options include high interest savings accounts, which often pay a bonus rate when you deposit regularly and withdraw rarely, and term deposits, which trade flexibility for a fixed rate. Some buyers keep the deposit in more than one place, with a small emergency cushion separate from the house fund so a broken washing machine doesn't touch the deposit.
Money needed soon is generally kept out of volatile assets, because a short timeframe doesn't give a fall in value time to recover. Some first home buyers also make voluntary superannuation contributions under the First Home Super Saver scheme, which is taxed more favourably on the way in but comes with release rules and timing that need care. Chapter 3 covers the mechanics, and the Australian Taxation Office link in the resources hub is the place to confirm current limits.
Ways to speed it up
Beyond trimming spending, a few levers commonly shorten the timeline:
- Tax refunds and bonuses directed straight to the house account, before they dissolve into general spending.
- Extra income from a second role or freelance work, even for a defined season. A six month sprint with a clear end date is easier to sustain than an open ended one.
- Housing changes, taking a housemate, moving somewhere cheaper for a year, or family arrangements where rent is reduced. This is usually the single biggest lever available.
- Family assistance. Gifts from family are common and generally acceptable to lenders, though lenders ask about the source of your deposit and documentation matters. It's worth telling your broker or lender early rather than at the last minute.
On the family point, there's a difference between a gift and a loan that a lender will want clearly stated, and a vague "we'll probably pay it back" can complicate an assessment. Getting the intent in writing early, even informally between family members, saves confusion later.
Staying the course
Saving for a deposit is usually a multi year project, and motivation fades in the middle. A few things help: milestones that get celebrated (the first $10,000 often matters psychologically more than the last $10,000), a visible tracker on the fridge or in a spreadsheet, and quarterly reviews of the plan rather than constant attention.
It also helps to remember what the money is for. Buyers who connect the savings to a specific picture, a particular suburb, a Sunday morning routine in a particular kind of home, tend to find the monthly transfer easier than those chasing an abstract number. Chapter 3 looks at the schemes that can shrink the target itself, which is sometimes worth as much as another year of saving.
Figures correct as at September 2026. Always confirm current amounts and thresholds with the State Revenue Office Victoria or a licensed conveyancer before relying on them.
Quick knowledge check
1. Roughly how much is a 10 percent deposit on a $650,000 property?
2. Which statement about costs on top of the deposit is most accurate?
3. What is a common first step people take when getting a budget under control?