Genuine savings is deposit money a borrower has saved or held over a set period, which lenders use as evidence of their ability to meet repayments. A gift can fund a purchase while failing a lender’s savings-history test. Rental history can replace that test on eligible applications, but the borrower still needs money for settlement.
What Genuine Savings Means to a Lender
Genuine savings shows how a borrower accumulated or retained part of the deposit before applying for a home loan. The lender also assesses income, spending and debts. Passing the savings test alone does not establish repayment capacity.
The requirement commonly arises on high loan-to-value ratio (LVR) lending. The trigger can be above 85% LVR, while other policies start above 90%. Each lender sets the trigger and the required share of the purchase price. A mortgage insurer’s deposit rules can add another test.
Consider a hypothetical $600,000 purchase with a $540,000 loan. The borrower needs a $60,000 deposit plus $15,000 in assumed purchase costs. If the lender requires 5% genuine savings, the qualifying amount is $30,000.
The borrower has $35,000 in qualifying savings and a recent $40,000 parental gift. Together they cover the $75,000 needed. The savings exceed the $30,000 test, even if the gift counts only as other funds. Purchase costs in this example are illustrative and exclude any financed insurance premium.
For the wider choice of products, compare low deposit home loan options.
What Counts as Genuine Savings
Savings held or accumulated over the lender’s holding period are the usual starting point. Three months is a common minimum, although the policy determines which sources qualify.
Macquarie’s credit guidelines accept the following sources:
- Personal savings or term deposits held or accumulated for at least three months.
- Shares or managed funds, including sale proceeds, after a minimum three-month holding period.
- Equity in real estate.
- Qualifying extra loan repayments.
For an off-the-plan deposit paid more than three months earlier, Macquarie can consider the amount with a deposit receipt. For other deposits already paid to an agent, trace the original savings and retain the receipt. Paying an agent does not itself establish savings history.
First Home Super Saver (FHSS) money needs separate evidence. The ATO’s FHSS procedure requires a determination followed by a release request. Retain the determination, release records and receiving-account transaction.
Helia lists FHSS funds as an acceptable deposit source for mortgage insurance. Lenders apply their own savings rules too. Ask the lender’s credit team how it treats the released amount before relying on it to satisfy a holding period.
Non-Genuine Savings and Funds That Do Not Count
Recent lump sums can help pay for a home without meeting a lender’s savings-history requirement. Pepper Money’s deposit guide explains that funds held for less than three months commonly fall into this category.
Recent gifts or inheritances often fail a holding-period test. Bonuses, tax refunds and government grants such as the First Home Owner Grant also need separate classification. Borrowed money creates a debt and must be disclosed in the application.
There is an important difference between a lender’s genuine savings rule and an insurer’s acceptable deposit-source rule. Helia’s underwriting guidelines accept several lump-sum sources, including employer bonuses, tax refunds, inheritances and the First Home Owner Grant. Its standard deposit rule above 90% base LVR requires 5% from acceptable non-borrowed funds.
Once the required genuine portion is met, other accepted funds can cover the remaining deposit and costs. A borrower who has $30,000 qualifying savings against a $30,000 requirement can still use an accepted gift for the balance.
Rent as Genuine Savings
Rental history can replace savings history when the lender accepts it and the application meets its loan and property conditions. Rent already paid does not become cash available for the deposit.
Policies can ask for six to twelve months of on-time payments through a managing agent. Obtain the agent’s rent ledger showing the tenants, property and payment history. Add the lease and bank transactions if they are needed to connect the borrower to the payments.
Westpac accepts rental history for eligible owner-occupied applications. Its detailed broker policy conditions describe six months of continuous rent through a licensed agent and exclude family or private rentals. All tenants must be borrowers, subject to its spousal-borrower naming provision.
Westpac’s first-home-buyer summary also mentions three months, while its detailed conditions and consumer guidance use six. Obtain the applicable credit-policy assessment before using the shorter period. Its mortgage-insured savings test applies above 90% base LVR, and its first-home-buyer material describes lending up to 95% including lenders mortgage insurance (LMI).
A private landlord’s letter or a set of bank transfers can establish that rent was paid. It does not satisfy a policy that requires an agent-managed lease. For that borrower, assess another accepted savings source or a different loan policy.
Gifted Deposits and the Gift Letter
A gifted deposit can count as genuine savings when the lender accepts its source and the money meets the required holding period. Macquarie allows gifts and inheritances held for at least three months. A more recent gift can still contribute to the purchase under the lender’s other-funds rules.
Prepare a gift letter that identifies the donor and borrower, the amount and their relationship. It must state that repayment is not required and that the donor receives no interest in the property. Include the donor’s signature and the date signed. Use the lender’s form or a statutory declaration where its application requirements call for one.
Macquarie specifically requires written donor confirmation of the amount and that it is not repayable. A family advance with repayment terms must be disclosed as a loan.
Match the debit in the donor’s account to the credit in the borrower’s account. Keep the transfer reference and an explanation of any difference, such as an exchange fee. A letter describing an intended gift does not prove the money has arrived.
Home Loans With No Genuine Savings
A borrower can avoid a savings-history test where the lender’s loan policy does not require it, or qualify through an accepted substitute. A loan at or below the relevant LVR trigger can remove that particular test. A family guarantee can also change the security position and deposit assessment.
Compare the risks and structure in the family equity home loan guide before treating a guarantee as the solution.
Pepper Money accepts non-genuine savings and advertises home loans up to 95% of the purchase price on some options. Its eligible purchase lending can reach 98% LVR including its Lender Protection Fee. The fee, property, income and credit conditions still affect eligibility and cost.
Liberty also states that it accepts gifted deposits. Gift acceptance alone does not establish eligibility for a 95% loan. Match the product’s maximum LVR and funding costs to the borrower’s actual file.
A loan described as having no genuine savings requirement still needs an acceptable deposit source and enough funds to complete. Where LMI applies, include the insurer’s conditions and premium in the assessment. The LMI guide explains the separate insurance question.
The former Home Guarantee Scheme, now the Australian Government 5% Deposit Scheme, does not remove the genuine savings requirement. Housing Australia’s scheme rules require the minimum deposit to comprise genuine savings assessed under participating-lender policy. They disregard a lender’s usual exemption below an LVR threshold. The minimum is 5% for the general stream or 2% for eligible single parents and single legal guardians.
Genuine Savings Policy by Lender
Lender policy determines whether a deposit source qualifies, while scheme participation and mortgage insurance can change the assessment. The table separates specific savings rules from broader deposit assistance.
| Lender | Savings Trigger or Deposit Route | Holding Period and Rent | Gift Treatment |
|---|---|---|---|
| NAB | Scheme applicants need 5% genuine savings, or 2% for eligible single parents | Scheme assessment follows NAB policy | Classify the gift against the scheme savings requirement |
| CommBank | Family assistance can help fund the deposit | Product and application conditions govern the savings test | Its deposit guide describes a family gift or interest-free loan |
| Westpac | Mortgage-insured loans above 90% base LVR require 5% genuine savings | Detailed rent conditions use six months through a licensed agent | Other deposit funds remain subject to credit assessment |
| ANZ | Family funds can assist with the deposit | Own savings evidence can still be required | A gift or family loan does not automatically replace savings evidence |
| Pepper Money | Non-genuine savings accepted on eligible loans | Savings history is not the only deposit route | Assess the source under the selected product |
| Liberty | Gifted deposit route available | Product conditions determine eligibility | Accepts gifted deposits |
For a NAB worked example, take an eligible first-home-buyer scheme applicant purchasing for $600,000. NAB’s published scheme wording calls for at least 5% genuine savings. That is $30,000, plus the funds required for costs. Its wording does not mean every ordinary NAB loan has the same trigger. The NAB lender-policy guide covers the wider assessment.
Evidencing Genuine Savings on the Application
Give the assessor a continuous record of the qualifying funds and a separate calculation of the total money needed for settlement. A closing balance alone can hide the source and age of the deposit.
- Collect account history covering the required holding period. Keep the borrower’s name and account details visible on the documents.
- Trace transfers between the borrower’s accounts. Retain both sides so a recent consolidation does not appear to be newly received money.
- Label each deposit source in the fact find. Separate qualifying savings from gifts, grants and any borrowed contribution.
- Attach the supporting records. Include investment statements, agent receipts, gift evidence or the rental ledger relevant to the chosen policy.
- Reconcile the total against the deposit and costs. Explain the qualifying amount and the remaining contribution in the lender notes.
For the hypothetical $600,000 purchase, the notes can identify $35,000 qualifying savings and a $40,000 gift against a $75,000 total contribution. Attach the savings history and gift transfer evidence beside that calculation.
A large unexplained credit needs its source document, such as a bonus payslip or estate distribution statement. A newly opened account needs the preceding account’s history. A gift awaiting transfer needs receipt evidence before it can be treated as available funds.
Before submission, confirm that the statement history proves the required amount throughout the relevant period and that every material credit has an explanation. The assessor must be able to follow the qualifying savings from their source to the funds available for settlement.
