How to start saving for a house deposit in your 20s |
How to start saving for a house deposit in your 20s
February 22, 2026 — 5:00am
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When it comes to the depressing morass that is the Australian housing market, there’s very little joy to be had. House prices are set to keep on rising 5 to 7 per cent (even with the RBA raising rates) and rents are also skyrocketing, placing us firmly in a “housing supply crisis”, which has to be one of the worst crises to be in after that Cuban missile one.
Does that mean aspiring homebuyers should throw it all in and go live in an off-grid commune with 30 to 50 feral hogs? Don’t threaten me with a good time!
But in all seriousness, getting onto the property ladder without a parental leg-up currently is a tough ask, and even if you do rely on the bank of mum and dad, that doesn’t guarantee you’ll actually be able to find a suitable or affordable place. This is despite efforts from the government to improve housing affordability for young people through things such as the 5 per cent deposit scheme.
What’s the rising Aussie dollar good for? Quite a lot, really
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But this hasn’t deterred a significant chunk young people from setting their sights on the great Australian dream, with a Westpac survey at the end of last year showing 35 per cent of Gen Zs plan to buy a first home in the next five years.
And indeed, this very newsletter was inspired by a 21-year-old reader who asked me how they could start saving for a home while they were still studying and working part-time.
What you can do about it
There are plenty of good strategies to start saving for that deposit, even if it all feels a bit overwhelming. Here’s where to begin:
Determine your timeline: Before thinking about any of the nuts and bolts of actually saving for a house, it’s important to get some general guardrails in place first. Ideally, in how many years time would you like to buy? Are you keen on buying an apartment, or an actual home? Ronit Fazekas, financial educator at My Money Practise, suggests taking these questions a step further: “What are your money values? Does home ownership align with those values? Is buying a home about security, lifestyle, or the idea of not ‘paying someone else’s mortgage’?,” they say. “And the tougher question – can you afford a home, maintain the lifestyle you want, and invest for your future?” This might all seem like fluffy, thought-exercise sort of stuff, but getting clear on these things will help you make the right decisions when it comes to the actual savings part.
Start scheming: Thanks to the government’s frequent efforts to improve housing affordability, there are a bevy of schemes that first homebuyers should be aware of, some of which can significantly cut down the amount you need to save. First of these is the scheme that allows you to purchase with just a 5 per cent deposit, with the government acting as guarantor for the remaining 15 per cent. There are some catches though – you can only buy houses up to a certain value, and, as money educator Jessica Brady says, it can leave you with a mortgage you might not be able to afford. “A smaller option can be great to get you in earlier, but you’re going to have a rather large mortgage on your shoulders, so think through what is realistic,” Brady says. “You’re young and whilst its awesome you want to get ahead, you also don’t want to sign up to a mortgage that means you have zero left over for anything else you want to do. It’s an extremely difficult dance to do.” Other schemes to be across are the Help to Buy shared equity scheme, first homeowner grants and stamp duty exemptions, and the First Home Super Saver Scheme (FHSSS) – a bit more on that below.
Pick how you’ll save: There are three(ish) main options here when it comes to choosing how to stash your cash away according to Lexi Smith, financial adviser at Wealth Maximiser. If you’re planning to buy in the next five or so years, finding the highest interest savings account possible and putting your money in there is likely the best move, she says, as it gives you maximal flexibility over how and when you can access your funds. If you have a longer timeframe of seven or more years, you might consider investing your deposit funds, though that does come some crucial caveats. “If you were to invest your deposit, you risk markets falling when you’re ready to buy – and that can derail your plans,” Smith says. “You want to avoid being forced to sell your investments at unfavourable times.” Finally, there’s the FHSSS, which allows you to make voluntary super contributions ($15,000 a year up to a total of $50,000) and later withdraw them to use toward a first home deposit. These contributions are taxed at only 15 per cent, which is usually less than most people’s marginal income tax rate, and you also get to withdraw all earnings you make on those contributions. However, this scheme can be less useful for those who are only working part-time, Smith warns, as the tax savings may end up only being marginal.
Start saving: Once you’ve worked all this out, it’s time to start the actual hard work: saving. The question here is always “how much should I be saving”, to which the realistic answer is “as much as you can afford to”. Any amount you can put in is going to make a difference, and as long as you’re regular about it, you’ll start to see results. If you really want to be diligent and set yourself hard goals, work backwards: pick your deposit amount and work out how much you’ll need to save each month to realistically hit that goal. And finally, don’t beat yourself up if it takes you longer than you think, and you don’t save as much as you want to. Remember, the whole system sucks and is stacked against you, so whatever you can achieve is better than nothing. Good luck!
Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.
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