Sacrifice & Save Hard- The classic way to get your home loan deposit ready

For many first-home buyers, saving for a deposit feels like climbing a mountain with no end in sight. Rising living costs, high rent, and everyday expenses can make it feel impossible to put money aside. But the truth is, one of the most reliable ways to build your deposit is also the oldest and simplest: sacrifice and save hard.

It might sound boring (and yes, sometimes painful), but building up a disciplined savings plan is often the key that unlocks your dream of homeownership. And importantly, it’s not just about the money itself—it’s about showing lenders that you can commit to consistent savings, which is one of the strongest signals of financial responsibility.

In this article, we’ll break down:

• Why “saving hard” works for first-home buyers.
• How to set up a savings plan that actually works.
• The sacrifices that move the needle most.
• Real-life examples of what it takes.
• How this strategy fits with other deposit-boosting options.
• FAQs about genuine savings and deposit requirements.

Why “Sacrifice and Save” Still Works

It’s obvious, right? Cut your spending, boost your savings. But let’s dig deeper into why this approach is still powerful in 2025:

• It creates genuine savings: Most lenders want to see that you’ve built up your deposit through your own consistent savings, not just one-off gifts or loans. Typically, this means 3 months of regular contributions into a savings account.
• It builds financial discipline: If you can show you’ve saved consistently, it proves you’ll be able to manage regular mortgage repayments.
• It puts you in control: While government schemes and family support can help, saving on your own means you’re not relying on others—it’s your own achievement.

💡 Pro tip: Even if you plan to use a family gift or a scheme like the First Home Super Saver Scheme, combining it with genuine savings makes your loan application stronger.

How to Create a Savings Plan That Actually Works

Saving for a deposit is easier if you turn it into a clear plan rather than just “trying to save.” Here’s how:

1. Know your target

Most lenders require a minimum of 5% deposit, and with the federal government’s 5% Deposit Scheme, I encourage all first home buyers to take full advantage of this scheme, while it’s on offer.

Example:

• House price: $600,000
• 5% deposit: $30,000 (but previously required you to buy expensive Lender’s Mortgage Insurance (LMI)
• So previously a first home buyer would need to have $50,000 saved for that deposit, or if lucky, some banks would allow you to capitalise your LMI on top of your home loan.

2. Break it down

If you need $50,000 in 3 years, that’s about $1,400 a month or $350 a week. Breaking it into smaller chunks makes the goal feel achievable.

3. Automate your savings

Set up an automatic transfer into a separate “deposit account” the day you get paid. If you don’t see the money in your everyday account, you won’t spend it.

4. Use high-interest accounts or term deposits

Shop around for high-interest savings accounts, or use term deposits to keep yourself disciplined.

5. Track your spending

Apps like Frollo, Pocketbook, or even your bank’s own budgeting tools can highlight where your money leaks away.

Smart Sacrifices That Make the Biggest Difference

It’s not about cutting every coffee—it’s about making changes that really move the needle. Here are some common areas first-home buyers can trim back:

• Rent: Moving back in with family, sharing with housemates, or downsizing can cut your biggest expense.
• Cars: Selling a second car, refinancing your car loan, or switching to public transport can save thousands per year.
• Subscriptions: Do you really need three streaming services plus a gym membership? Consolidating can free up hundreds annually.
• Lifestyle expenses: Nights out, takeaways, holidays—all worth trimming while you’re on the savings journey.
• Launch a side hustle- Got a famous family jam recipe, money making idea or service you could start selling on weekends? First test on a small scale, and if it goes well, ramp it up!

 

💡 Remember: You don’t need to cut everything. Focus on big-ticket items first, then trim smaller costs where it doesn’t hurt too much.

 Insight from Pink Elephant Broker Shane: “From my own experience, I believe that saving your first $10,000 is the hardest, and the #1 big milestone first home buyers should aim for. Saving that first 10k requires you to make some crucial adjustments in your spending habits, and when that happens, you’ll quickly notice how much easier it was to go from 10k to having $20,000 saved and beyond.

If you’re just starting to save, then my advice is to always try to earn more money, but most importantly, make cuts to your spending in ways that may seem uncomfortable at first, but after 2-4 weeks, you’ll notice how easily you survived and feel satisfied having considerably more money saved in your bank account.”

Real-Life Example

Sarah and Josh were renting a $500/week apartment while saving for their first home. At that rate, their savings were moving slowly. They made two big changes:

1. They moved in with Josh’s parents for 12 months, cutting their rent to zero.
2. They sold their second car, saving $4,000 a year in repayments and insurance.

Combined, they boosted their savings rate from $1,000 a month to $3,000 a month. In just over a year, they saved $36,000—enough for their deposit and costs.

How “Saving Hard” Fits With Other Strategies

Sacrificing and saving doesn’t have to be the whole plan. Many first-home buyers combine it with:

• First Home Super Saver Scheme (FHSSS): Contribute pre-tax income to super for tax benefits.
• Family support: Gifts, equity release, or guarantor loans.
• Funds-to-complete loans: Borrowing the deposit under specific circumstances.

By starting with a strong savings base, you’re in a better position to layer on these other options.

Common Questions About Saving for a Deposit

Q: What counts as genuine savings?

A: Usually money you’ve saved yourself over at least 3 months, held in a savings account. Regular contributions are key.

Q: Can gifts count as a deposit?

A: Yes, some lenders accept family gifts, but often they’ll still want to see some genuine savings.

Q: How long will it take me to save a deposit?

A: It depends on your target and your savings rate. Tools like a deposit savings calculator can help you work out your timeline.

Q: Do I need 20% deposit to buy?

A: Not always. With a 5% deposit, you can still buy, but you’ll likely pay Lenders Mortgage Insurance. The government’s 5% Deposit Scheme can help reduce this.

Final Thoughts

Sacrificing and saving hard might not be the most glamorous deposit strategy, but it’s the backbone of almost every first-home buyer journey. By building a clear savings plan, cutting back where it counts, and showing consistent discipline, you’ll not only hit your deposit goal but also prove to lenders that you’re mortgage-ready.

👉 Want to know how much you really need and what’s achievable for you? Chat with Pink Elephant Home Loans today. We’ll run the numbers, explore other strategies you can combine with your savings, and help you take the first real step towards your new home.

Read strategy 2 - The First Home Super Saver Scheme.

https://pinkelephanthomeloans.com.au/articles/how-the-first-home-super-saver-scheme-can-boost-yo/131