First home buyer loans in Sydney
Buying your first home in Sydney can feel like the deposit is a moving target. This guide breaks the journey into the parts that matter: how much deposit you really need, the schemes that can help, the taxes and costs to budget for, and how to reach pre approval with confidence.
Last updated July 2026How much deposit do you need?
Lenders talk in terms of the loan to value ratio, or LVR, which is the loan divided by the property value. A 20 percent deposit means an 80 percent LVR, the level most lenders treat as the comfortable benchmark. You can often buy with less, but two things change as your deposit shrinks.
- Lenders mortgage insurance (LMI). With less than a 20 percent deposit, most lenders add LMI, a one off cost that protects the lender, not you. It can run into thousands and is often added to the loan.
- Borrowing capacity. A smaller deposit means a bigger loan and higher repayments, which the lender must still see as affordable after its serviceability buffer.
A larger deposit lowers your LVR, can remove LMI and usually improves the rates on offer. The trade off is the time it takes to save it. There is no single right answer, only the one that fits your numbers.
Schemes that can help
Government support changes over time and has eligibility rules, income tests and caps, so always confirm the current details on official sources before relying on them. As general background, first home buyers commonly look at:
| Support | What it does | Where to confirm |
|---|---|---|
| First Home Guarantee | Lets eligible buyers purchase with a smaller deposit while avoiding LMI, subject to caps and places | Housing Australia |
| First Home Owner Grant (NSW) | A grant for eligible buyers of new homes, subject to value limits | Revenue NSW |
| Stamp duty concessions (NSW) | Exemptions or reductions on transfer duty for eligible first home buyers | Revenue NSW |
| First Home Super Saver | Lets you save a deposit inside super with tax benefits, within limits | Australian Taxation Office |
Program names, thresholds and availability change. This is general information, not a statement of your eligibility.
Budget for the costs beyond the deposit
Your deposit is not the only upfront cost. Plan for:
- Stamp duty, if a concession does not fully cover it
- Conveyancing or legal fees
- Building and pest inspections
- Loan and lender fees, and possibly LMI
- Moving costs, connections and a starter buffer for the unexpected
The budget planner is a good place to pressure test whether the ongoing repayments will fit once these one off costs are paid.
The path to pre approval
- Know your numbers. Total your deposit, income and expenses so you understand your surplus and your genuine savings history.
- Tidy your credit. Reduce or close unused card limits and clear small debts, since limits count against you.
- Gather documents. Payslips, identification, bank statements and details of any other debts.
- Get pre approval. A lender reviews your position and gives conditional approval up to an amount, which sharpens your search and shows sellers you are ready.
- House hunt within that figure, remembering pre approval is conditional and still subject to a valuation and final checks.
Frequently asked questions
Is a 5 percent deposit enough to buy?
Sometimes. Certain lenders and schemes allow low deposits, though you may pay LMI unless a guarantee covers it, and your borrowing capacity must still support the larger loan.
What is LMI and who does it protect?
Lenders mortgage insurance protects the lender if a borrower defaults, not the borrower. It is a cost you pay, usually when your deposit is below 20 percent.
Does pre approval guarantee the loan?
No. Pre approval is conditional. Final approval depends on the property valuation and a final check of your circumstances at the time you buy.
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Master Mortgage Broker Sydney is an independent education website. It is not a mortgage broker, does not arrange loans and does not provide financial or credit advice. Content here is general in nature and does not consider your personal objectives, situation or needs. Always confirm details with a licensed professional before acting.