Deposit Requirements: Avoid These 4 Mistakes Concreters Make

Most concreters know how to pour a solid foundation, but plenty get tripped up when it comes to building the deposit for a home loan.

The difference between getting approved and getting knocked back often comes down to how you structure your savings, how you show your income, and whether you understand what lenders actually want to see. If you're running your own concreting business or working as a subcontractor, the rules shift.

How Much Deposit Do You Actually Need?

For most owner-occupied home loans, you need at least 5% of the purchase price as genuine savings, plus enough to cover stamp duty and settlement costs. Lenders want to see that 5% has been in your account for at least three months, because it proves you can save consistently rather than just borrowing money from a mate the week before you apply.

Some lenders will accept a smaller deposit if you qualify for the Home Guarantee Scheme, which lets eligible buyers purchase with as little as 5% down without paying Lenders Mortgage Insurance. If you're putting down less than 20%, you'll typically pay LMI, which protects the lender if you default. That cost can add thousands to your loan amount, so understanding how to avoid or reduce LMI matters.

Consider a concreter who has saved $30,000 over two years. That might cover a 10% deposit on a property in a regional area, but in a metro market it might only get you to 5%. The loan amount, your borrowing capacity, and the property's location all determine whether that deposit is enough.

Showing Income When You're Self-Employed or on an ABN

You need at least two years of tax returns if you're self-employed, and lenders average your declared income across those years. If your most recent year shows a dip because you bought new equipment or took time off for an injury, that lower figure drags down your borrowing capacity even if your actual cash flow is solid.

In our experience, concreters often reinvest profit back into trucks, equipment, or extra labour during busy periods. That's smart for the business, but it shrinks your taxable income on paper. Lenders don't care that you bought a new mixer or ute. They care what you declared to the ATO. If you're planning to apply for a home loan in the next 12 months, talk to your accountant before lodging your next return. Sometimes delaying a deduction by a few months makes a $50,000 difference in how much you can borrow.

For concreters working as employees on a PAYG basis, income verification is simpler. Recent payslips and a letter from your employer usually cover it. But if you're doing side work on an ABN while employed, lenders will want to see how you're declaring that income too.

Genuine Savings vs Gifted Deposits

Lenders distinguish between money you've saved yourself and money someone else has given you. Genuine savings need to sit in your account for at least three months. If your parents transfer $20,000 into your account a week before you apply, most lenders won't count it as genuine savings unless it comes with a signed gift letter confirming it's not a loan.

Some lenders accept a gifted deposit as part of your overall contribution, but they still want to see that you've demonstrated the ability to save. A concreter who has saved $15,000 over 18 months and receives a $10,000 gift from family is in a stronger position than someone who shows up with $25,000 that appeared last month.

First home buyers sometimes qualify for grants or stamp duty concessions depending on the state and the property value. Those benefits can reduce the cash you need at settlement, but they don't replace the requirement to show genuine savings.

The Mistakes Concreters Make With Deposit Timing

The first mistake is waiting until you're ready to buy before checking what you actually need. If you realise six weeks before auction that your $25,000 deposit isn't enough, your options shrink fast. Get pre-approval early so you know exactly where you stand.

The second mistake is mixing business and personal funds in the same account. Lenders want to see a clear picture of your savings, and if your account shows $40,000 one week and $8,000 the next because you're paying suppliers and receiving job payments, it looks like poor money management even if your business cash flow is fine. Keep your deposit in a separate account that only moves in one direction.

The third mistake is thinking a 5% deposit always means a 5% deposit. Some lenders require 5% genuine savings plus another 2% to 3% for costs. If you've saved exactly 5% and nothing more, you might not have enough to actually settle.

The fourth mistake is not understanding how your loan to value ratio affects your interest rate and your options. Borrowing at 95% LVR gives you fewer lenders to choose from and higher rates than borrowing at 80% LVR. Sometimes waiting another six months to build your deposit from 10% to 15% saves you more in the long run than rushing in with the minimum.

What Happens If Your Deposit Sits in an Offset Account?

If you already own an investment property or have a business loan with an offset account, you might have savings sitting there instead of a standard savings account. Lenders will accept funds from an offset as part of your deposit, but you'll need statements showing the balance over time. The three-month genuine savings rule still applies.

Some concreters use their offset to reduce interest on existing debt while they save. That's fine, but make sure you're not drawing the balance down for business expenses in the months leading up to your application. Consistent growth matters more than a high balance that fluctuates.

How Lenders Assess Deposit Requirements for Investment Loans

If you're buying an investment property rather than a home to live in, lenders typically want a larger deposit. Most require at least 10% genuine savings, and some won't lend above 90% LVR for investment purposes at all. The income from the property can help your borrowing capacity, but it doesn't replace the need for a solid deposit.

Concreters looking to build a portfolio often start with an owner-occupied purchase, then convert it to an investment property later while buying another place to live in. That approach can work, but you need to structure your loans correctly from the start so you're not paying owner-occupied rates on what becomes an investment loan.

If you're after specific guidance on how your concreting income affects your borrowing power, the team at Tradie Home Loans works with self-employed tradies every day. Call one of our team or book an appointment at a time that works for you.

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