Genuine Savings: The Hidden Key to Getting Your Home Loan Approved

Jaeneen Cunningham
Sep 23
4 min read

Buying a home is often described as one of life’s biggest milestones — and for many, the deposit is the toughest hurdle. Scraping together 20% is hard enough, but if you’re buying with less, lenders mortgage insurance (LMI) kicks in and suddenly your bank starts looking for something else: genuine savings.

It’s not the most exciting phrase, but if your deposit is under 20%, understanding genuine savings could be the difference between an approved loan and a polite “come back later.”

What Exactly Are Genuine Savings?

Put simply, genuine savings are funds you’ve built up yourself over time — usually in a bank account held for at least three months. They demonstrate to the lender that you can consistently manage your money and aren’t reliant on one-off windfalls.

Think of it as a financial fitness test. The bank doesn’t just care about the size of your deposit; they want to see that you’ve developed the habits to manage a mortgage over decades.

The Common Misunderstanding

Here’s where many buyers get caught out. You might be sitting on $40,000 from:

A parental gift
An inheritance
A tax refund or work bonus
Selling a car or shares

That feels like a deposit, right? But most lenders won’t consider those as genuine savings. Without at least 5% of the purchase price saved and held in your own account for three months, your application can stumble.

Take Emma and Jack, a couple in their late 20s. They were gifted $30,000 by Jack’s parents to help buy a townhouse. They thought the hard part was over — until their broker explained the bank would only accept $10,000 of their own savings as “genuine.” Their application stalled until they could prove a larger portion came from disciplined saving, not just generosity.

Why Do Lenders Care?

At first glance, it feels harsh. Money is money — why should it matter where it comes from? But from a lender’s perspective, it’s about risk.

A borrower who has slowly saved $25,000 by putting aside $500 a month is showing:

Consistency in managing their budget
A willingness to sacrifice and prioritise
The ability to live below their means

These are the exact traits that reduce the likelihood of default.

On the other hand, someone who gets a lump sum gift may have the deposit but not the proven discipline to service a long-term loan. It’s not a moral judgment — it’s just the way banks measure risk.

How Much Genuine Savings Do You Need?

Typically, lenders want at least 5% of the property purchase price in genuine savings if your deposit is under 20%.

So, for a $600,000 property:

Minimum deposit = $120,000 (to avoid LMI)
With LMI, you might get away with a 10% deposit = $60,000
But at least $30,000 of that must be genuine savings

Anything above that could come from gifts, grants, or other sources.

What Counts as Genuine Savings?

The rules vary slightly between lenders, but generally the following count:

Regular deposits into a savings account, held for 3+ months
Term deposits you’ve built up
Shares or managed funds held for 3+ months
Salary saving plans (if you can prove regular contributions)

What usually doesn’t count:

Cash gifts (unless held in your account for 3+ months)
Short-term windfalls (e.g. bonus, tax refund)
Borrowed funds (e.g. a personal loan for a deposit)

Turning Non-Genuine into Genuine

The good news? Non-genuine savings can often be converted into genuine savings with time. For example:

A $20,000 gift from parents can “become” genuine savings if it sits untouched in your account for three months.
Selling your car and banking the $15,000 proceeds can count, again if held for three months.

It’s about showing stability — not just having the money, but keeping it.

The Exceptions

Not all lenders are the same. Some will accept strong rental history in place of genuine savings — reasoning that if you’ve been paying $500 a week rent for two years, you’ve already proven you can handle mortgage repayments.

Others may take into account:

Extra repayments on personal loans or credit cards (showing repayment discipline)
Contributions to superannuation beyond compulsory levels
A combination of savings and consistent income surplus

This is where a good mortgage broker earns their keep — knowing which lenders are more flexible in recognising your financial story.

Practical Tips to Build Genuine Savings

Start Early – Even if you’re 12–18 months away from buying, open a high-interest savings account and set up automatic transfers.
Keep It Simple – Lenders like to see a clear pattern: regular deposits, not random transfers.
Don’t Shuffle Too Much – Constantly moving money between accounts makes it harder to prove consistency.
Plan for Three Months Minimum – Any deposit funds should ideally be sitting untouched for at least 90 days.
Talk to a Broker – They’ll know which lenders have stricter or more flexible rules.

Why Genuine Savings Could Be Your Secret Advantage

Yes, it can feel frustrating. But here’s the upside: once you’ve demonstrated genuine savings, you’ve essentially proven your ability to manage a mortgage. It gives lenders confidence, which can translate into:

A higher chance of approval
Access to more competitive loan products
Greater bargaining power down the line

It’s not just a hoop to jump through — it’s practice for the discipline you’ll need as a homeowner.

Final Thoughts

Genuine savings might sound like boring banking jargon, but it’s really about showing you’re financially ready for the responsibility of a mortgage. If your deposit is under 20%, think of it as your financial track record — evidence that you can handle the road ahead.

The trick is to plan early, be consistent, and don’t assume that a lump sum will do the job. If you can prove your savings discipline, you’ll stand out as a stronger applicant and smooth the path to homeownership.

And remember — every lender is different. A broker can help you navigate the fine print and match you with the right one for your situation.