You may need far less than 20%. Here are the real numbers at every price point — including the schemes that get you in with 5%.
The classic advice says "save a 20% deposit." In Sydney, that advice can cost you years. Here's what deposit you actually need in NSW — and the schemes that shrink it.
The Three Deposit Tiers
20% deposit — the no-LMI path
With 20% down you avoid Lenders Mortgage Insurance entirely and unlock the sharpest interest rate tiers. On an $800,000 property that's $160,000 plus purchase costs.
8–15% deposit — pay LMI, buy years sooner
Most lenders lend to 90–95% of the property value. You pay LMI (a one-off insurance premium protecting the lender), but you enter the market years earlier. On an $800,000 purchase with 10% down, LMI is typically in the $8,000–$18,000 range depending on lender and can usually be added to the loan.
5% deposit — the First Home Guarantee path
Eligible first home buyers can purchase with just 5% and pay no LMI at all — the federal government guarantees the gap. Since October 2025 the scheme has no place caps and no income caps, with property price caps up to $1.5 million in Sydney.
Worked Examples
| Purchase price | 5% deposit | 10% deposit | 20% deposit |
|---|---|---|---|
| $650,000 | $32,500 | $65,000 | $130,000 |
| $800,000 | $40,000 | $80,000 | $160,000 |
| $1,000,000 | $50,000 | $100,000 | $200,000 |
Don't Forget Purchase Costs
On top of the deposit, budget for stamp duty (first home buyers are exempt up to $800,000 in NSW), legal/conveyancing ($1,500–$3,000), and building and pest inspections ($500–$1,000). A general rule: allow 5–7% of the purchase price for all costs — less if you qualify for first home buyer concessions.
Ways to Shrink the Cash You Need
- First Home Guarantee — 5% deposit, no LMI, uncapped places
- Guarantor loan — a parent's equity can replace the deposit entirely
- First Home Super Saver Scheme — withdraw up to $50,000 of voluntary super contributions
- Genuine savings alternatives — some lenders count rent history instead of savings history
The right combination depends on your income, the property, and timing — that's precisely what a free broker assessment works out.
Beyond the Deposit: Your Full Cash Position
Lenders assess your "funds to complete" — deposit plus every purchase cost. For an $800,000 first home purchase using the First Home Guarantee, the full picture looks like: $40,000 deposit, $0 stamp duty (exempt under $800,000 — check current thresholds at Revenue NSW), roughly $2,000–$2,500 in conveyancing and searches, ~$700 in inspections, and lender/government fees near $1,000. Total: about $44,000 — a long way from the $190,000+ the old "20% plus costs" rule demanded.
Non-first-home buyers add stamp duty back in (run your figure on our NSW Stamp Duty Calculator) and should hold a post-settlement buffer — most lenders like to see at least a few thousand dollars remaining, and three months of repayments is a healthier target.
How Lenders Verify Your Deposit
Expect to show 3–6 months of statements for every account contributing funds. Lenders trace large deposits, so document gifts early with a signed letter. If your savings history is thin but your rent record is strong, several lenders accept 12 months of clean rental ledger as genuine savings — a policy detail that changes outcomes for renters, and exactly the kind of lender-matching we do in a free assessment.
Which Path Fits Which Buyer?
The 5% First Home Guarantee path suits eligible first-home buyers purchasing under $1.5M in Sydney. The guarantor route suits buyers with family equity but under 5% saved. Paying LMI suits buyers above scheme caps who'd rather buy now than save on — see our LMI guide for when that trade is rational. And the First Home Super Saver Scheme can add up to $50,000 of tax-advantaged savings to any of them. Your borrowing side of the equation matters too — check our Borrowing Capacity Calculator to see what repayments the deposit actually unlocks.
Timeline: From Deposit Saved to Keys in Hand
Once your deposit is in place, the sequence runs: free assessment and lender selection (days), pre-approval (2–5 business days once documents are in), property search on a firm budget (weeks to months — pre-approvals typically last 3–6 months and can be renewed), then exchange, unconditional approval within days, and settlement roughly 4–6 weeks later. Buyers consistently underestimate one step: getting documents ready. Two payslips, ID, three months of statements for every account, and — for the self-employed — up-to-date financials. Assembling these the week you start looking, rather than the week you find a home, is the difference between winning and losing a property in a fast market. Auction buyers especially need unconditional-ready finance; a pre-approval subject to valuation still carries risk on auction day, which is another lender-selection detail we manage. Start the paperwork conversation early via a free assessment and the rest of the process runs at your pace, not the market's.
Frequently Asked Questions
Can I really buy with a 5% deposit in NSW?
Yes. Lenders routinely lend to 95% with LMI, and eligible first home buyers can use the First Home Guarantee to buy with 5% and no LMI at all, with Sydney price caps up to $1.5 million.
Does my deposit need to be genuine savings?
Many lenders want 5% held or saved over 3 months ("genuine savings"), but several accept alternatives — including a 12-month clean rental history, gifts held for 3 months, or an inheritance. Lender choice matters.
Can my parents gift me the deposit?
Yes — gifted deposits are widely accepted, usually with a signed gift letter confirming it is non-repayable. Some lenders still want to see a small genuine savings component alongside the gift.
Last reviewed 27 July 2026 by Sam Elvitigala, MFAA Accredited Mortgage Broker. General information only — not personal financial or credit advice.