The genuine savings rule: 5% in savings over 3 months

"Genuine savings" is a lender policy requirement that proves you can save money, not just that you have money. Most lenders require first home buyers (and any borrower at LVR above 85%) to demonstrate 5% of the purchase price in genuine savings held for at least 3 months. This tripwire catches more applications than any other criterion.

What counts as genuine savings

• Cash held in a savings, offset, or term deposit account in your name for 3 months
• Shares held in your name for 3 months (partially; some lenders discount to 80% of value)
• Regular salary sacrifice contributions beyond the concessional cap that have been parked in a separate account for 3 months
• Rental payments over 3 months that can evidence consistent weekly or monthly payments are accepted by some lenders as equivalent to genuine savings

What does NOT count as genuine savings

• Tax refunds received within the last 3 months
• Inheritance received within the last 3 months
• Gifts from family received within the last 3 months (counts as "gifted deposit", a separate category)
• Sale of assets (car, motorbike) within the last 3 months
• Bonus or back-pay within the last 3 months
• First Home Super Saver withdrawal - funds released under FHSSS are not considered genuine savings (though they can fund the deposit, they just can't tick the genuine-savings box)
• Cryptocurrency (with very limited exceptions)

The timing trap

Many first home buyers accumulate a deposit through a mix of savings and one-offs. A typical buyer story: $30k savings + $15k tax refund + $20k parent gift = $65k deposit for a $650k purchase (10% deposit). On the face of it they have the funds. But genuine savings is only the $30k - which is 4.6% of the purchase price, below the 5% threshold.

Solution: park the tax refund and parent gift in your savings account for 3 months before applying. After 3 months, the entire balance counts as genuine savings.

Lenders with relaxed genuine savings rules

• CBA and Westpac: strict 5% genuine savings for LVR >85%
• NAB: 5% genuine savings plus rental history can substitute
• Macquarie: will accept gifted deposit plus 3 months rental history evidencing the ability to service
• ING: strict on genuine savings, limited flexibility
• Pepper, Liberty, Bluestone: more flexible, will accept gifts and short-term savings without the 3-month hold

The rental history substitute

If you have been renting for 12+ months with on-time payments, several lenders will accept your rental payment history as equivalent to genuine savings, on the grounds that a reliable tenant has demonstrated the ability to service debt. This is worth asking about if your deposit is genuine but the 3-month hold isn't satisfied.

Requirements:

• 12 months continuous rental in the same property (6 months for some lenders)
• Payments made through real estate agent (not private landlord)
• Proof via rental ledger from agent

The pragmatic path

For first home buyers planning a purchase 6-12 months out, set up a dedicated savings account and direct deposit 10-15% of net income into it. After 3 months, every additional dollar in that account counts as genuine savings when you apply. The discipline of the regular contribution is, by the way, also what lenders look for in serviceability.