When someone applies for a home loan, lenders like to see that the potential borrower has a deposit that stems from genuine savings.

If a borrower is able to put together a significant deposit through saving, it suggests they are a good candidate for a home loan, as they are likely to be able to pay that money back.

Lenders like to see that you have been able to save at least 5% of the purchase price for the property.

The remaining funds for the deposit can come from other sources, such as a gift or a windfall, an inheritance, a tax refund, the sale of another asset, or in the form of a bonus from your employer.

Example:

If you are looking to purchase a property for $500,000, most lenders will require you to have $25,000 in genuine savings (5%), or your loan will be declined.

Rent can be considered genuine savings in some circumstances. If you have been paying rent consistently over a period of 12 months, then that will indicate to a lender that you are able to manage money effectively.

It is also possible to have a lump sum considered as genuine savings if the funds have been in your account for longer than three months.