Most buyers assume they need a 20% deposit before they can do anything. That is not true in 2026. Depending on your situation, you could be buying with as little as 2% to 5% down, and there are government schemes specifically designed to help you get there without Lenders Mortgage Insurance (LMI).
So how much cash do you actually need sitting in your account before you call a broker? The honest answer depends on three things: the price of the property, which scheme (if any) you qualify for, and whether you have a guarantor. Let us break it down.
How much deposit do you need to buy a house in Sydney?
The minimum deposit to buy a house in Sydney is 5% of the purchase price if you qualify for the First Home Guarantee, or as little as 2% through the Help to Buy shared equity scheme. Without any scheme, most lenders want at least 10%, and you will need 20% to avoid paying LMI.
That is the short version. The longer version is that "deposit" and "what you need to save" are two different numbers. Your deposit only covers the purchase price gap. You also need money for stamp duty (or to check if you are exempt), legal fees, inspections, and a cash buffer. More on those below.
To use our home loan service, you do not need a 20% deposit. But you do need a clear picture of your numbers before you start making offers.
The 20% benchmark: why it exists and when it matters
Twenty percent became the standard because it is the threshold where most lenders stop charging LMI. LMI is an insurance policy that protects the lender (not you) if you default. The premium gets added to your loan and can range from around $10,000 to more than $30,000 depending on your loan size and deposit percentage.
So if you are buying a $1,000,000 property in Sydney and you have a 10% deposit ($100,000), the lender may charge you LMI of roughly $15,000 to $20,000 on top. That said, paying LMI is not always the wrong move. If you are in the right suburb and prices are rising, getting in 18 months earlier can cost you less than waiting to save another $100,000.
With RBA cash rate at 4.35% and variable rates sitting in the high-5% to low-6% range right now, the maths on LMI versus waiting is genuinely close. A broker can run those numbers for your specific situation.
The deposit gets you through the door. The rate and the loan structure are what you live with for the next 30 years.
Deposit by price point: what you actually need to save
These are examples only. Sydney prices vary dramatically by suburb. Use the borrowing power calculator to model your specific income and loan size.
| Property price | 5% deposit | 10% deposit | 20% deposit |
|---|---|---|---|
| $800,000 | $40,000 | $80,000 | $160,000 |
| $1,000,000 | $50,000 | $100,000 | $200,000 |
| $1,300,000 | $65,000 | $130,000 | $260,000 |
Remember: these are deposit figures only. Add stamp duty, legal fees, and your cash buffer on top. The total cash you need at settlement is always higher than the deposit alone.
A buyer's market note: Sydney prices are sitting about 2.1% below the November 2025 peak as of mid-2026. That softness can work in your favour if you negotiate well, though no one can promise what prices do next.
Low-deposit paths: your real options in 2026
First Home Guarantee (5% deposit, no LMI)
The First Home Guarantee lets eligible first home buyers purchase with a 5% deposit and the government guarantees the remaining 15%, so lenders waive LMI entirely. In Sydney, the price cap is $1.5 million in 2026. There is no income limit and no cap on the number of available places.
This is the most practical scheme for Hills District buyers looking at properties in the $800,000 to $1.3 million range. Read the full breakdown in our First Home Guarantee 2026 guide.
Help to Buy (about 2% deposit, shared equity)
Help to Buy is a federal shared equity scheme where the government co-purchases up to 40% of your property (for new builds) or 30% (for existing homes). You only need a deposit of around 2% of your share of the purchase price. Income and price caps apply, so check eligibility carefully with a broker. This scheme suits buyers with stable income but limited savings.
Guarantor loans (effectively zero cash deposit)
A guarantor loan lets a family member (usually a parent) use the equity in their own property to guarantee part of your loan. In practice, this can mean you borrow the full purchase price without any cash deposit, though you still need funds for upfront costs like stamp duty and legal fees.
Guarantor loans suit buyers whose family has equity to offer but who have not yet had time to save a deposit. The risk sits with the guarantor, so this is a conversation to have as a family before approaching a lender.
LMI waiver for certain professions
Some lenders waive LMI for doctors, dentists, lawyers, accountants, and other eligible professionals, even with a deposit as low as 10%. If you work in one of these fields, mention it to your broker because it changes which lenders are worth approaching.
What else do you need cash for?
This is the section most first home buyers underestimate. The deposit gets you the property. These costs get you to settlement.
Stamp duty (or not, if you qualify)
NSW stamp duty on a $1,000,000 purchase is roughly $40,585 for a standard buyer. For first home buyers in NSW:
- Properties under $800,000: full exemption from stamp duty.
- Properties between $800,000 and $1,000,000: partial concession on a sliding scale.
- Properties above $1,000,000: full stamp duty applies.
So the suburb and price point matter a lot. A $799,000 property could save you around $31,000 in stamp duty compared to an $801,000 property if you are a first home buyer. Use the stamp duty calculator to get your exact figure before you start searching. If you want the full picture on exemptions and how to minimise this cost, read how to avoid stamp duty in NSW.
Legal and conveyancing fees
Conveyancing in NSW typically costs $1,200 to $2,500 for a standard residential purchase. Budget toward the higher end if the contract is complex or there are issues flagged in the review.
Building and pest inspection
You should always get one before you exchange. A standard building and pest report in Sydney runs $450 to $700. Do not skip this to save money. A cracked foundation or active termite activity is not a negotiating chip. It is a deal-breaker or a very expensive fix.
Cash buffer
Lenders want to see that you can cover your repayments for at least three months after settlement. Aim to have $10,000 to $20,000 sitting untouched after you pay all your upfront costs. This also covers moving costs, connection fees, and the inevitable small repairs every new homeowner faces.
What lenders actually look for in your savings
A large deposit is not just about the loan-to-value ratio. It tells the lender something about you as a borrower.
Genuine savings: most lenders want to see that at least 5% of the purchase price has been saved over three months or more in a regular savings account. Gifts from parents do not count as genuine savings unless they have been in your account long enough. A First Home Guarantee application can sometimes be more flexible on this, but you should ask your broker before assuming.
Savings pattern: it is not just the total. A lender looking at your application wants to see regular deposits going in and sensible spending coming out. A savings history that shows $0 to $60,000 in three months via a windfall is viewed differently from $1,200 added every fortnight over four years.
No recent credit applications: applying for a new credit card or personal loan right before a home loan application will hurt your case. If you are planning to buy in the next six months, freeze any new credit products now.
How to get to your deposit faster
A few things that genuinely move the number:
First Home Super Saver Scheme (FHSS): you can make voluntary contributions to your super and then withdraw them (plus earnings) as part of your deposit. The withdrawal limit increased in recent years. This can be tax-effective for people on higher incomes. Check with a financial adviser, not just a broker, before using this.
High-interest savings accounts: with the cash rate at 4.35%, some savings accounts are paying 5% or above for introductory periods. If you are 12 to 24 months away from buying, park your deposit in the best available rate and review it every quarter.
State government grants: the NSW First Home Owner Grant ($10,000) applies to new homes only, including house-and-land packages. It does not apply to established properties. Do not count on this if you are buying an existing house.
Read our first home buyer checklist for NSW for a step-by-step savings and buying timeline.
How deposit size affects your interest rate
More deposit almost always means a better rate. Lenders price risk through their loan-to-value ratio (LVR) bands. Here is roughly how it works:
- 80% LVR or below (20%+ deposit): lowest rates, no LMI.
- 85% LVR (15% deposit): slightly higher rate, possible LMI depending on lender.
- 90% LVR (10% deposit): LMI applies for most lenders, rate premium applies.
- 95% LVR (5% deposit): LMI applies unless you are using the First Home Guarantee; rate is typically higher.
The rate difference between a 90% LVR loan and an 80% LVR loan can be 0.2% to 0.5% depending on the lender. On a $900,000 loan, that is $1,800 to $4,500 per year in extra interest. Worth knowing when you are weighing up whether to wait and save more.
If you want to know exactly what your deposit needs to look like given your income, your savings, and the suburb you are targeting, book a free strategy call with our team. We are based in Norwest in the Hills District and we work with buyers across greater Sydney. A 30-minute conversation will tell you more than six months of Google searching.
Ready to work out your deposit number?
Every buyer's situation is different. The right deposit size for you depends on your income, your savings history, the price of the property you are targeting, and which schemes you qualify for. Our team at RyRo Loan Centre in the Hills District works with buyers across greater Sydney every day. If you want a clear picture of what you need to save and which path gets you there fastest, book a free strategy call and we will map it out with you. Phone us on 1300 11 7976.
Quick answers
Frequently asked questions
Yes. The First Home Guarantee allows eligible first home buyers to purchase with a 5% deposit and no LMI, up to a $1.5 million price cap in Sydney. There is no income limit in 2026 and places are not capped. You still need cash for stamp duty (if applicable), legal fees, and inspections on top of the 5%. A broker can check your eligibility and match you with participating lenders.
A 5% deposit on an $800,000 property is $40,000. With the First Home Guarantee, that is your minimum. Add to that: stamp duty (potentially nil if this is your first home and you qualify for the NSW full exemption under $800,000), legal fees of around $1,500 to $2,000, inspection costs of $500 to $700, and a cash buffer. Total cash at the door is likely $45,000 to $55,000 depending on your exact circumstances.
Lenders Mortgage Insurance is a one-off premium charged when your deposit is below 20% of the purchase price. It protects the lender, not you. On a $1,000,000 property with a 10% deposit, LMI can run from around $15,000 to $22,000 and is typically capitalised into your loan. The First Home Guarantee, Help to Buy scheme, and LMI waivers for certain professions are the main ways to avoid it without saving a full 20%.
Most lenders require at least 5% of the purchase price to come from genuine savings, which means funds held in your own account for at least three months. Money gifted by parents generally does not qualify unless it has been sitting in your account long enough to meet the lender's policy. Some lenders have more flexible policies, particularly for guarantor loans. A broker can tell you which lenders suit your savings history.
Stamp duty is paid separately, not from your deposit. It is due at settlement and must come from your own funds on top of the purchase deposit. In NSW, first home buyers pay no stamp duty on properties under $800,000 and a reduced rate on properties between $800,000 and $1,000,000. Above $1,000,000, full duty applies. Use the stamp duty calculator to get your exact figure early.
Help to Buy has price caps that vary by state and property type. Check eligibility carefully because the income and price cap requirements are more restrictive than the First Home Guarantee. The scheme is aimed at buyers who have steady income but have not been able to accumulate a large deposit. A broker can confirm whether a specific property qualifies.
On a median Sydney purchase price of around $1,100,000, a 10% deposit is $110,000. If you save $2,000 per month, that is roughly four and a half years without accounting for interest earned or changes in property prices. Using a scheme like the First Home Guarantee cuts that target to $55,000 for the same property, which is closer to two and a half years on the same savings rate. Getting your savings structure right from the start makes a material difference. Read our first home buyer checklist for NSW for a realistic timeline.
Yes, through a guarantor loan. Your parents use the equity in their own property as security, which can allow you to borrow the full purchase price without a cash deposit. You will still need funds for upfront costs like stamp duty and legal fees. The risk is that if you default, the lender can pursue your parents' property. This arrangement suits buyers whose parents have strong equity and are willing to take on the risk. Always get independent legal advice before setting up a guarantor arrangement.
There is no single right answer, but a practical starting point is 5% via the First Home Guarantee if you qualify, combined with enough cash to cover stamp duty (if applicable), legal fees, inspections, and a buffer. If you can save to 10%, you have more lender choice and a lower rate. If you are close to 20%, the LMI saving is significant on Sydney prices. Use the borrowing power calculator to model different deposit sizes against your income and work out which scenario gets you into the market at the best cost over time.
FHB specialists · No broker fees
Ready to buy your first home in Sydney?
We've helped hundreds of Sydney first home buyers get into the market with the right scheme stack. FHBAS, FHOG, FHSS, First Home Guarantee, Help to Buy. Talk to us before you go to the bank.
Book a Free Strategy Call
