Common Mistakes Saving for Your First Home

Saving Into the Wrong Account Structure

Your deposit needs to sit in a savings account that clearly shows genuine savings, not just recent transfers or cash deposits that appear without explanation. Lenders assess deposits in two categories: genuine savings and non-genuine savings. Genuine savings are funds that have been held in your account for at least three months and can be demonstrated through regular contributions. Non-genuine savings include gifts, tax refunds, bonuses, or any large one-off deposits that appear without a clear pattern. Most lenders require a minimum of 5% of the purchase price to come from genuine savings when you apply with a deposit below 20%. Some lenders increase that requirement to 10% genuine savings depending on your overall financial position.

Consider a Corporal saving while posted to RAAF Base Williamtown. After completing a six-month deployment, they return with $22,000 in saved allowances and immediately transfer the full amount into a new offset account linked to their parents' mortgage to start earning a return. When they apply for a loan four weeks later, the lender flags the deposit. The funds have not been held in the applicant's own account for three months, the transfer appears as a single large deposit rather than regular contributions, and the account is not held solely in the applicant's name. The lender classes the entire amount as non-genuine savings. The Corporal needs to wait another two months before reapplying or provide additional evidence of how the funds were accumulated, which in this case means pay statements and deployment records covering the period the savings were earned.

If you are returning from deployment or exercise with a lump sum, leave it in your own savings account under your own name for at least three months before applying for pre-approval. If you have been saving into an offset account linked to another person's loan, ask your broker whether your lender will accept that structure or whether you need to move the funds into your own account and restart the three-month clock.

Using a Gift Without Understanding How Lenders Treat It

A genuine gift from a parent or immediate family member can form part of your deposit, but it is treated differently to your own savings. Most lenders will accept a gifted deposit as part of the total deposit, but they still require you to demonstrate genuine savings separately. A gift does not replace the genuine savings requirement. If a lender requires 5% genuine savings on a property purchase, a $30,000 gift from your parents does not satisfy that requirement unless you also have your own funds that meet the genuine savings criteria.

Lenders require a signed statutory declaration from the person providing the gift confirming the funds are a gift with no expectation of repayment. The declaration must include the donor's full name, the amount gifted, the relationship to you, and confirmation that the funds are not a loan. Some lenders also require evidence of where the donor sourced the funds, particularly if the amount is large. This is an anti-money-laundering requirement and applies regardless of the donor's relationship to you. If your parents are gifting $40,000 and that money came from the sale of shares or the redraw on their mortgage, the lender may ask for evidence of that transaction.

Gifts are generally acceptable from parents, grandparents, or siblings. Gifts from friends, extended family, or non-relatives are treated with more scrutiny, and some lenders will not accept them at all. If you are planning to use a gift as part of your deposit, confirm with your broker which lenders will accept it and what documentation will be required before the funds are transferred.

Assuming the First Home Super Saver Scheme Solves Your Deposit Problem

The First Home Super Saver Scheme allows you to make voluntary contributions into your super fund and later withdraw those contributions, plus earnings, to put toward a home deposit. You can withdraw up to $15,000 of contributions from any one financial year, with a total lifetime cap of $50,000. Contributions are taxed at 15% rather than your marginal rate, which makes the scheme attractive if you are paying tax at 32.5% or higher. But the scheme does not eliminate the need for genuine savings held outside your super fund, and most lenders will not count funds still held in super as part of your deposit until they have been released and transferred into your bank account.

You need to apply to the ATO for a determination before you can access the funds. That determination tells you how much you are eligible to withdraw. Once you receive the determination, you have 14 days to request the release of funds, and the money is generally paid within 15 to 20 business days after that request. You cannot access the funds on the day you need to pay your deposit. If you are buying at auction or exchanging contracts with a short settlement period, the timing of the release may not align with your deposit due date.

The scheme works when you use it as one part of your overall deposit and combine it with genuine savings that are already accessible in your bank account. It does not work as a last-minute solution when you have no other savings in place. The Australian Government 5% Deposit Scheme allows Air Force members to buy with just 5% saved, but that 5% still needs to be demonstrated as genuine savings or an acceptable gift, and funds in super do not count toward that requirement until they have been released.

Ignoring Stamp Duty and Settlement Costs in Your Budget

Your deposit is not the only upfront cost when buying a home. Stamp duty, conveyancing fees, building and pest inspections, loan application fees, and valuation costs all need to be paid at or before settlement. In New South Wales, first home buyers receive a full stamp duty exemption on properties valued up to $800,000 and a reduced concession on properties between $800,001 and $1,000,000. In Victoria, the exemption applies to properties up to $600,000, with a concession available up to $750,000. In Queensland, new homes purchased from 1 May 2025 onward attract no stamp duty for first home buyers regardless of price, while established homes receive a concession that reduces duty but does not eliminate it entirely.

Settlement costs generally sit between $3,000 and $6,000 depending on the state, the lender, and whether you are buying an established home or building new. These costs are separate from your deposit and cannot be added to your loan in most cases. If you have saved exactly 5% of the purchase price and have no additional funds set aside, you will not be able to complete settlement even if your loan is approved.

Air Force members posted to Victoria or New South Wales should confirm the applicable stamp duty concession or exemption before committing to a purchase price. If you are buying in a state where no exemption applies, include the full duty cost in your upfront budget. Lenders do not lend you the money to pay stamp duty. You pay it from your own savings at settlement.

Not Seeking Pre-Approval Before You Start Looking

Pre-approval tells you how much a lender is willing to lend before you make an offer on a property. It is not a guarantee, but it gives you certainty around your budget and confirms that your deposit, income, and credit history meet the lender's requirements. Many Air Force members skip pre-approval and start attending inspections or making offers based on an online calculator or a rough estimate of what they think they can borrow. When they finally apply for formal approval, they discover their actual borrowing capacity is lower due to existing debts, a shorter employment history in their current rank, or expenses the calculator did not account for.

Pre-approval is particularly useful for ADF members because lenders assess your income differently depending on whether you receive allowances, whether you are permanent or reserve, and how long you have been in your current role. A broker experienced in ADF home loans will structure your application to include allowances that are ongoing and can be verified through pay statements, and will identify lenders that accept those allowances as part of your income assessment.

Pre-approval generally lasts between three and six months depending on the lender. If your circumstances change during that period, such as a change in rank, a new debt, or a posting to a different base, you need to update your broker so the pre-approval can be reassessed before you exchange contracts. A pre-approval from six months ago does not hold if your financial position has changed.

Focusing Only on Rate and Ignoring Loan Features

A low interest rate matters, but it is not the only factor that affects how your loan performs over time. Offset accounts, redraw facilities, and the ability to make extra repayments without penalty all influence how much interest you pay and how quickly you can reduce your loan balance. An offset account is a transaction account linked to your home loan. The balance in the offset account reduces the amount of interest charged on your loan without locking those funds away. If you have a $500,000 loan and $20,000 sitting in a full offset account, you only pay interest on $480,000. You still have access to the $20,000 at any time.

A redraw facility allows you to make extra repayments on your loan and then withdraw those extra payments later if you need them. Redraw is useful if you want to pay down your loan faster but still have access to your money in an emergency. Some lenders place conditions on redraw, such as minimum withdrawal amounts, processing times, or fees for each withdrawal. Other lenders allow unlimited free redraws with no restrictions. If you are likely to make extra repayments and want the flexibility to access those funds, confirm the redraw terms with your broker before you settle on a loan.

Some low deposit loans for ADF members include discounted interest rates but limit your ability to make extra repayments or do not include an offset account. If you are posted frequently and expect to accumulate savings between postings, a loan without an offset account costs you more in interest over time even if the advertised rate is lower. Ask your broker to compare the total cost of the loan over five years, not just the rate in year one.

Call one of our team or book an appointment at a time that works for you. We work with lenders that understand Air Force pay structures and will build a loan around how you earn and save, not around a standard employment template.

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