How many months does it take to save a house deposit?
Every deposit calculator on the internet answers a fantasy version of this question — one where the house politely holds its price while you save. Start with $30,000, save $2,000 a month at 4.5%, and a 20% deposit on an $800,000 home takes 4 years 8 months... if prices freeze. Let the market grow a modest 5% a year and the honest answer is 6 years 7 months — nearly two extra years — by which time the deposit you're chasing has swollen from $160,000 to about $222,000. This calculator shows both numbers, side by side.
Savings compound monthly at the rate you set; the target compounds monthly at the growth rate. Ignores tax on interest, purchase costs (stamp duty, legal fees) and any deposit-guarantee scheme. General information, not financial advice.
Why the gap is worse than it looks
The race is compound growth versus mostly-linear saving. Your balance grows by a flat contribution plus a little interest; the target grows by a percentage of an ever-larger number. Early on your contributions dominate and the gap closes fast. But every month the target's growth is calculated on a bigger base, so the closing rate decays — the last 10% of the gap takes disproportionately long, and if the target's monthly growth ever exceeds your monthly saving, the calculator's "never catches up" verdict is simply the limit of that curve. It's the same mathematics as the mortgage's front-loaded interest, running in reverse.
The 20% convention, LMI, and the schemes that bend it
Nothing in law requires a 20% deposit. The figure is where Lenders Mortgage Insurance drops away — LMI being insurance you pay to protect the lender (not you) against default, typically capitalised onto the loan. Below 20%, LMI scales with how thin the deposit is; at a 5% deposit on a large loan it can run well into five figures. Government guarantee schemes for first-home buyers invert the deal: the government guarantees the gap so an eligible buyer at 5% pays no LMI. The strategic consequence for the calculator above: schemes and LMI don't change how fast you save — they shrink the target, which the "never catches up" cases show is often the only lever that matters.
Playing the honest version well
Three moves dominate. First, savings rate beats savings account gymnastics: on the example numbers, finding an extra $500 a month shortens the moving-target timeline by well over a year — more than any realistic interest-rate shopping. Second, the target price is a variable, not a constant: the same $2,000 a month reaches 20% of a $650,000 home years before it reaches 20% of $800,000, and buying the cheaper home sooner puts you on the compounding side of the price growth you were racing. Third, deadline the decision — pick the month you'll reassess renting versus buying versus a guarantee scheme, because "we'll buy when we have the deposit" is, as the widget occasionally reports, a date that can fail to exist.
Questions people actually ask
Do I really need 20%?
No — 20% is the threshold at which lenders stop charging Lenders Mortgage Insurance (LMI), not a legal minimum. Plenty of loans are written at 10% or 5% deposits; the trade-off is LMI running from a few thousand to tens of thousands of dollars, priced on the loan size and how far under 20% you are. Government guarantee schemes exist in several countries that let eligible first-home buyers borrow at 5% with the government standing in for LMI — eligibility caps and price limits apply and change frequently, so check the current scheme rules rather than a calculator.
Should my deposit savings be in shares instead of a savings account?
The standard reasoning against it: a deposit has a short, fixed horizon, and shares can spend years underwater — a 30% drawdown the year you planned to buy converts "months to deposit" into "start again." High-interest savings accounts and term deposits earn less but cannot hand you that outcome. The widget deliberately asks for a savings rate, not a market return, for exactly this reason.
What does "never catches up" mean in the calculator?
If the deposit target grows faster each month than your savings do (contributions plus interest), the gap widens forever at those settings. It is not a prophecy — it is the arithmetic telling you which lever to pull: save more per month, target a lower price or deposit percentage, or use a guarantee scheme to shrink the target itself.
Embed this calculator
Free to use on your own site — it links back here.
Sources
- Simulation on this page: savings compound monthly at your rate while the target compounds at the growth rate — the worked example (4y 8m frozen vs 6y 7m moving on $800k/20%/$2,000pm/4.5%/5%) is reproducible from those rules.
- Lenders Mortgage Insurance mechanics — standard Australian lending practice; LMI protects the lender and is typically payable below an 80% loan-to-value ratio.
- Housing ministries and treasury sites publish current first-home deposit-guarantee scheme rules and caps; these change often, which is why this page describes the mechanism rather than quoting today's caps.
Related
The deposit question was never "how many months" — it's "who's faster, you or the house," and this page is the stopwatch.