You typically need a deposit between 5% and 20% of the purchase price to buy your first home in Sydney, depending on whether you use the government guarantee scheme and how much risk and monthly repayment you are comfortable with. In 2025, new federal schemes mean many first home buyers can enter the Sydney market with as little as a 5% deposit on properties up to $1.5 million, but aiming higher than the bare minimum often provides better borrowing power and financial resilience.
Deposit Under the Contract
This article is concerned with the amount of money you need to pay towards the property’s purchase price. Bear in mind that under the Contract, you will need to pay a 10% deposit (or 5% if agreed) and this money is usually held by the selling agent, in their trust account, pending settlement.
How Lenders View “Minimum” Deposits
Most banks still regard a 20% deposit as the gold standard because it reduces their risk and removes the need for Lenders Mortgage Insurance (LMI). However, for first home buyers:
- A 10–15% deposit is increasingly common in Sydney, balancing time to save with manageable repayments.
- A 5% deposit is now widely accepted when combined with the federal government guarantee, which also removes the need for LMI.
From 1 October 2025, the national guarantee framework was expanded so that any eligible first home buyer who has saved at least a 5% deposit can apply, with no cap on the number of places. This has materially changed what “minimum deposit” means in practice for Sydney purchasers.
Government 5% Deposit Scheme: What It Means in Sydney
The expanded Australian Government 5% Deposit Scheme allows first home buyers to purchase with a minimum 5% deposit while avoiding LMI, because the government guarantees up to 15% of the property value to the lender. For Sydney and other NSW capital city locations, the property price cap under the scheme is $1.5 million from October 2025.
This means:
- On a $900,000 unit, a 5% deposit is $45,000.
- On a $1.2 million terrace, a 5% deposit is $60,000.
- On a $1.5 million property (the Sydney cap), a 5% deposit is $75,000.
Without the scheme, purchasing at the traditional 20% benchmark on a $1.2 million home would require $240,000 upfront, plus costs, so the scheme significantly reduces the amount of deposit required thereby shortening the saving timeline.
Other Low-Deposit Options and Shared Equity
Alongside the 5% guarantee, there are targeted support measures:
- Single parents may be able to buy with as little as a 2% deposit under tailored federal support, again with government backing to remove LMI.
- A separate “Help to Buy” shared equity program allows eligible buyers to purchase with a minimum 2% deposit, with the government taking an equity stake of up to 30–40%, reducing the size of the mortgage needed.
These programs can reduce the barrier to entry for first home buyers in high-priced markets such as Sydney, but they come with specific eligibility criteria, property caps, and long‑term equity sharing implications that should be reviewed with a broker or adviser.
Beyond the Deposit: Allowing for All Upfront Costs
Your true cash requirement is more than just the deposit. As first home buyers in Sydney, you also need to plan for:
- Stamp duty (although some first home buyers may access state exemptions or concessions, depending on property price and usage).
- Legal and conveyancing fees.
- Building and pest inspections and strata reports (for strata property).
- Loan establishment and valuation fees.
- Moving, connection and initial furnishing costs.
Even under the 5% deposit schemes, experts caution that buyers need additional savings beyond the minimum deposit to cover these upfront costs and to avoid being financially stretched once they move in. In practice, many Sydney first home buyers using a 5% deposit product still aim to have 7–8% of the purchase price saved to account for on‑costs.
How Much Deposit You Should Aim For in Sydney
The “right” deposit is not just what a lender will accept; it is what keeps you financially secure once you own the property. In the current Sydney environment:
- 5% deposit
Suitable if you:- Qualify for the 5% Deposit Scheme or similar guarantee.
- Are comfortable with a larger loan and higher repayments.
- Have a stable income and an emergency buffer on top of the deposit.
This option gets you into the market sooner and avoids LMI, but you will carry a higher debt for longer.
- 10% deposit
Often a good compromise:- Gives you more lender choice and may improve interest rate options.
- Reduces your loan size and long‑term interest, while still being achievable for many dual‑income Sydney households.
LMI may still apply unless covered by a guarantee.
- 20% deposit or more
Ideal if you:- Can afford to wait and save longer without being priced out.
- Want to avoid LMI entirely and reduce your monthly repayments.
With a 20% deposit, you start with more equity and are better insulated against short‑term price movements.
In a rising Sydney market, waiting to reach 20% can mean chasing a moving target, so the trade‑off between time and price growth should be carefully modelled for your budget and suburb shortlist.
Sydney-Specific Considerations for First Home Buyers
Sydney’s combination of high prices and limited supply makes deposit strategy especially important:
- Median dwelling values are among the highest in the country, so even 5% represents a substantial sum for many first home buyers.
- From October 2025 there are no income caps and no place limits on the national 5% scheme, so higher‑income first home buyers in Sydney can now access property buying without waiting to save for a larger deposit.
- Borrowing capacity remains constrained by serviceability assessments, meaning that your income and existing debts can be a bigger barrier than your deposit once you move beyond the 5% minimum.
For many buyers, this means:
- Choosing between a smaller property or unit in a preferred suburb versus a larger home further from the CBD.
- Using a 5–10% deposit to enter the market earlier in a well‑located area rather than waiting for a perfect 20% deposit while prices continue to move.
How We, as Buyers’ Agents, Can Help
At Buyer’s Domain in Leichhardt, we work closely with first home buyers across Sydney to align deposit strategy with suburb selection, property type and long‑term goals. We:
- Help you shortlist locations where your deposit and borrowing capacity are realistic for the local price points.
- Identify properties that offer strong value and capital growth prospects, so your initial equity can grow faster once you have purchased.
- Coordinate with mortgage brokers and advisers so that scheme eligibility, LMI implications, and total cash requirements are clearly understood before you start making offers.
While the headline message for 2025 is that you may only need a 5% deposit to buy your first home in Sydney, the more important question is how to structure that purchase so that you are comfortable and well‑positioned for the years ahead.
To discuss how much deposit you should target for your specific price range and preferred suburbs, connect with our team of experienced buyers’ agents for tailored, data‑driven guidance.
