Genuine Savings: What Lenders Count

Key takeaways

• The usual test is funds held or accumulated over three months or more.
• It typically applies at higher LVRs, often above 85-90%.
• Rent paid on time is accepted by many lenders as an alternative.
• A gift can still fund your deposit even if it is not genuine savings.

What counts as genuine savings?

Note the pattern: the question is not where the money came from originally but whether you have demonstrated the behaviour of accumulating and holding it. Several categories that do not count initially do count once they have sat in your account long enough.

Why do lenders require it?

Because it predicts repayment behaviour. A borrower who has demonstrably saved a deposit over time has shown they can consistently direct income away from spending - which is precisely what a mortgage requires them to keep doing for decades.

That is why the requirement concentrates at higher LVRs. At 60% LVR the security carries the risk and the lender is relatively indifferent to how the deposit was assembled. At 95% the borrower's behaviour is doing most of the work, so evidence of that behaviour matters.

Rental history works as an alternative for the same reason: paying rent on time for twelve months demonstrates the same capacity to meet a recurring housing payment. Most lenders that accept it want a ledger from a licensed agent rather than payments to a private landlord.

What if your deposit is a gift?

A gifted deposit is entirely legitimate and very common. It just needs to be handled correctly.

1. Get a gift letter from the giver stating it is a non-repayable gift with no expectation of repayment and no interest in the property. Lenders have their own template.
2. Season the funds if you can - money held in your account for three months or more starts to satisfy genuine savings on its own at many lenders.
3. Combine with rental history, which many lenders accept as the genuine savings alternative.
4. Choose the right lender. Policy varies substantially, and some lenders have no genuine savings requirement at lower LVRs.
5. Do not disguise it as a loan. If it is repayable it is a liability and must be disclosed, and it will affect serviceability.

The distinction between a gift and a family loan matters legally as well as for the application. If the family intends to be repaid, that is a loan, and saying otherwise on a credit application is a false declaration.

Frequently asked questions

How long do funds need to be held to count as genuine savings?

Typically three months or more of consistent holding or accumulation, though the exact requirement varies by lender and by LVR. Some lenders require the balance to have grown over that period rather than simply sat there.

Does rent count as genuine savings?

Many lenders accept a satisfactory rental payment history as an alternative to genuine savings, usually requiring twelve months evidenced by a ledger from a licensed real estate agent. Payments to a private landlord are accepted less often.

Can I use a gift from my parents as a deposit?

Yes. A gifted deposit is common and acceptable, supported by a gift letter confirming it is non-repayable. It may not satisfy a genuine savings requirement on its own, but holding the funds for three months or combining it with rental history usually resolves that.

Do I need genuine savings if I have a 20% deposit?

Usually not. Genuine savings requirements are generally applied at higher LVRs where the borrower's behaviour carries more of the credit risk. Policy varies by lender.

Related reading

• Ways to Avoid LMI (and When to Pay It)
• Owner-Occupier vs Investor Pricing
• Portable Home Loans: Taking It With You

Sources

• Moneysmart - saving for a home deposit — ASIC
• Credit licensing: Responsible lending conduct (RG 209) — ASIC