The question we hear most from first home buyers is some version of “how much deposit do I need for a first home in Sydney?” The honest answer is: less than most people think, as long as you also plan for the costs that sit beside the deposit. This guide gives you the numbers for 2026, with worked examples at three price points.
The short answer: 5% to 20%
- 20% deposit is the traditional target. Borrow 80% or less and you avoid lenders mortgage insurance (LMI), get the sharpest rates and have the most lenders to choose from.
- 5% deposit is possible for eligible first home buyers under the Australian Government’s 5% Deposit Scheme (the First Home Guarantee). The government guarantees the lender for the gap, so you pay no LMI. Since the scheme was expanded there are no income caps, and the property price cap for Sydney and regional centres is $1.5 million. You need to live in the home, and you must be an Australian citizen or permanent resident.
- Between 5% and 20% outside the scheme usually means paying LMI, a one-off insurance premium that protects the lender (not you). On a $900,000 purchase with a 10% deposit it can run to tens of thousands of dollars, often added to the loan.
The deposit is not the only money you need
Buyers who save exactly 5% and nothing else get caught out. Budget for these on top of the deposit:
| Cost | Typical amount (Sydney, 2026) | Notes |
|---|---|---|
| Stamp duty (transfer duty) | $0 up to $800,000 for first home buyers; reduced to $1,000,000; full duty above | NSW First Home Buyers Assistance Scheme. Full duty on a $1,000,000 home is roughly $39,000. |
| Conveyancing / solicitor | About $1,500 to $3,000 | Includes searches and the contract review. |
| Building and pest inspection | About $400 to $700 | Houses. Order your own, not the vendor’s. |
| Strata report | About $300 to $400 | Units and townhouses. |
| Loan and government fees | A few hundred to about $1,000 | Application, valuation, mortgage registration, transfer fee. |
| Moving, connections, insurance | $1,000 to $3,000 | Building insurance should start by settlement. |
A sensible rule of thumb: allow 1.5% to 2% of the price for costs other than stamp duty, and add any duty on top.
Three worked examples
Example 1: an $800,000 townhouse in the Hills
Under the 5% Deposit Scheme you need a $40,000 deposit, no LMI and no stamp duty (first home buyers are exempt up to $800,000). Add about $12,000 to $16,000 for conveyancing, reports, fees and moving, and you need roughly $55,000 in cash to buy. With a 20% deposit you would need $160,000 plus the same costs.
Example 2: a $1,000,000 house in Western Sydney
5% is $50,000, but at $1,000,000 the first home buyer duty concession has run out, so stamp duty is about $39,000. Add $15,000 to $20,000 of other costs and you need roughly $105,000 to $110,000. This is why a $950,000 purchase can cost a first home buyer noticeably less to get into than a $1,000,000 one: the duty saving matters.
Example 3: a $1.3 million family home
Still inside the Sydney price cap for the 5% scheme, so a $65,000 deposit is possible if the bank will lend the balance. Stamp duty at the standard rate is about $53,000, so you would want around $140,000 in total. At 20% the deposit alone is $260,000.
Ways to get there faster
- First Home Super Saver Scheme: voluntary super contributions (within the annual limits) can be withdrawn to help with your deposit, taxed at a lower rate than regular savings. Ask your accountant or broker whether it suits you.
- Family gifts or a guarantor: a parental guarantee can remove the need for LMI without the scheme; it is a serious commitment for the guarantor, so get independent advice.
- Buy the right property type: a townhouse or villa in a strong suburb often needs $100,000 to $200,000 less deposit than a house on the same street, and still grows in value. Three of the Sydney homes in our success stories were bought this way.
- Do not pay the “learning tax”: overpaying by $40,000 at your first auction wipes out a year of saving. Set a walk-away price or have someone bid for you.
Frequently asked questions
Can I buy a first home in Sydney with a 5% deposit?
Yes, if you qualify for the 5% Deposit Scheme (owner-occupier, citizen or permanent resident, property within the price cap) and a participating lender approves the loan. Your broker confirms eligibility and reserves a place.
Do I pay stamp duty on my first home in NSW?
Not on homes up to $800,000, and a reduced amount between $800,000 and $1,000,000, if you meet the First Home Buyers Assistance Scheme conditions (including living in the home for at least 12 months). Above $1,000,000 full duty applies.
Is LMI always bad?
No. Paying LMI to buy two years earlier can be cheaper than waiting while prices move, but it is a real cost. Compare it with the 5% scheme first, which avoids LMI altogether.
Not sure what you can really afford? That is the first thing we work out together. Book a free 15-minute chat, or grab the free Sydney First Home Buyer’s Due Diligence Checklist, which includes an upfront costs worksheet.
General information only, current at November 2026. Stamp duty figures are estimates based on 2026-27 NSW rates; use the Revenue NSW calculator for your exact amount and confirm scheme eligibility with your broker.