I read an article recently where a young woman was bemoaning the fact that at the start of the year she had approval for a 95 per cent loan to buy a property priced about $400,000. But now that a larger deposit is required by the banks, she can't afford to buy the home she wanted.

She went on to say that she didn't have that much saved and would now need to save more or scale back what she buys.

In this case, the young woman wanted something she couldn't afford and was honest enough to admit she hadn't saved much.

And therein lies the problem.

The Government's First Home Owners Scheme is helping young people get their first home and that's commendable. So when the Government is kind enough to give you $14,000 you don't need much savings if your bank will lend you 95 per cent.

Do the maths. On a $400,000 home you would only need to come up with $6000 if you get the First Home Owners Grant (plus, you may also need to pay stamp duty).

In this day and age that's not a lot to have saved. Say it was saved over 10 years of a young person's first years of working, that's only $600 a year.

But hang on, what are the repayments on a $380,000 loan?

It's about $28,000 a year over 25 years. So if you only saved $600 a year it's not hard to see that you're going to have a little bit of trouble servicing 45 times that much ... for the next 25 years.

Of course those figures are history now. The reality is much harder today as most lenders will only lend up to 90 per cent of the purchase price.

Some years ago the banks wanted their customers to have a "decent" deposit, anything up to 25 per cent was normal.

They believed the deposit demonstrated the saving capacity of the borrower which in turn would translate into repayment capacity.

That's a fair assumption, because if you can budget to save you can also budget to repay. But if you haven't saved, well you may have some difficulty.

It seems that the aspect of examining what is affordable has been lost as the wealth of this country has increased.