Genuine savings home loan: how the requirement works

A genuine savings home loan is simply a home loan where part of your deposit is made up of genuine savings, meaning funds you have built up and held in your own name over time rather than received as a one off lump sum. When your deposit is small, many lenders want to see this saving habit before they approve the loan. It is one of the clearest signals that you can manage repayments, so it sits at the centre of a lot of first home loan applications.

This guide explains the genuine savings requirement from the borrowing side: how genuine savings affect a home loan application, how they connect to your deposit, your loan-to-value ratio and lenders mortgage insurance, what your options are if you have little or no genuine savings, and where schemes like the First Home Super Saver fit in. Figures here come from the Australian Securities and Investments Commission (ASIC) MoneySmart and the Australian Taxation Office (ATO). What each lender accepts depends on your circumstances and lender criteria, so treat the patterns below as the general rule, not a promise. If you want the plain definition and what does and does not count, our companion guide on What are genuine savings covers that ground in full.

What a genuine savings home loan actually means

When you apply for a home loan, the lender is deciding whether to carry the risk of that loan for decades. Where your deposit is small, it leans on other evidence that you can keep up repayments. A record of genuine savings is that evidence. The funds you have set aside yourself, steadily, over a period that is often around three months, tell the lender far more than a balance that arrived in a single transfer.

The genuine savings requirement is tied to how much you borrow against the property. Lenders measure this with the loan-to-value ratio (LVR), which ASIC MoneySmart defines as the amount of a loan as a percentage of the value of the asset it was used to buy, calculated by dividing the loan amount by the value of the asset. For example, a 450,000 dollar loan on a 600,000 dollar property is a 75 percent LVR. The smaller your deposit, the higher your LVR, and the more weight a lender places on a genuine savings record before it lends.

How much genuine savings a home loan may need

There is no single national figure for a genuine savings requirement, because it is a lender convention rather than a regulated rule, and it varies from lender to lender. The general pattern is that lenders look for a portion of your deposit, often around 5 percent of the property price, to be genuine savings held for a set period, commonly around three months. Confirm the exact figure with your lender or broker, since it depends on your circumstances and lender criteria.

What is clearer is how deposit size drives the rest of your application. According to ASIC MoneySmart, some lenders may accept a deposit as little as 5 percent of the property price. A deposit that small puts your LVR well above 80 percent, which is the band where a genuine savings record matters most and where lenders mortgage insurance usually comes into play.

Genuine savings, your deposit and LMI

Three numbers move together on almost every first home loan. Your deposit sets your LVR. Your LVR decides whether lenders mortgage insurance (LMI) applies. And your genuine savings record helps a lender feel comfortable lending in the higher LVR band.

ASIC MoneySmart explains that LMI protects the credit provider if a borrower is unable to repay the loan, and that it does not benefit the borrower, it only protects the lender. It is usually a one off cost, payable when the amount borrowed exceeds 80 percent of the value of the property. So if your deposit is under 20 percent, you are in the zone where both a genuine savings record and an LMI cost tend to apply at the same time.

A genuine savings history will not remove LMI on its own. LMI is driven by your LVR, not by how you saved your deposit. What genuine savings do is strengthen the part of your application that lenders weigh most when the deposit is small. A larger deposit is what reduces your LVR and may remove the LMI question, while a strong savings record is what supports approval inside that higher LVR band. If avoiding the LMI cost is your priority, our guide on How to avoid lmi walks through the options.

To see how different deposit sizes change what you might borrow and repay, try the borrowing power calculator before you settle on a target.

What if you have little or no genuine savings

This is where most genuine savings questions actually start. If the bulk of your deposit is a recent gift or a lump sum, you may be treated as having little or no genuine savings even with a healthy balance, because the funds have not been held and built up over the required period. That does not always close the door.

Some lenders offer a no genuine savings home loan pathway, sometimes described as a non genuine savings home loan. These usually come with conditions, such as a consistent rental history that a lender will accept as evidence of regular commitment, or a larger deposit that lowers the LVR and the lender’s risk. Whether one of these pathways is open to you depends on the lender and your situation, so it is worth talking through before you apply.

Where the First Home Super Saver scheme fits

If you are building a deposit from scratch, the First Home Super Saver (FHSS) scheme can help you save inside super. The ATO explains that the scheme lets you make personal voluntary contributions into your super fund to help save for a first home, and that you can release up to a maximum of 15,000 dollars from any one financial year and up to a maximum of 50,000 dollars in total across all years.

Money you contribute and later release under the scheme is real deposit money. How a lender treats it against a genuine savings requirement still depends on that lender’s policy, so confirm with your lender or broker how released FHSS funds sit alongside the savings you have held in your own account. The scheme and the genuine savings question are separate things that can work together.

How to build a genuine savings record

The most reliable way to meet a genuine savings requirement is to make saving automatic and start early. ASIC MoneySmart notes that regular saving shows you can budget and commit to repayments, and that even small, consistent deposits into a savings account make a difference. That is exactly the behaviour a lender is looking for.

A genuine savings record built this way does double duty. It can satisfy the genuine savings requirement, and it leaves you with a real deposit that lowers your LVR. If you are weighing a smaller deposit against a government supported option, our overview of Buying with 5 percent deposit explains how a guarantee can change the LMI picture for eligible buyers.

Talk it through with the team at Finance Lab

Genuine savings rules are not the same at every lender, and the right pathway depends on your deposit, your timeline and your goals. The team at Finance Lab can walk you through what different lenders may accept, how a no genuine savings pathway might work for you, and how to plan a deposit that supports your application. Reach out to the team at Finance Lab to talk it through.

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