- Saving less than 20% usually means paying lender’s mortgage insurance (LMI), unless you qualify for a government scheme or a lender waiver
- Stamp duty, legal fees and building inspections are paid on top of your deposit, so your savings target needs to cover more than the deposit alone
- A smaller deposit could potentially get you into the market sooner, while a larger one reduces your loan size and ongoing repayments.
Your lease renewal has just landed in your inbox, your savings account finally has a number you’re proud of and a colleague mentions that 20% of Sydney’s median dwelling value now works out to more than $244,000. That figure can feel like a door closing. It isn’t always. Plenty of buyers get into the market with a much smaller deposit for a Sydney property than the traditional 20%.
Sydney deposit expectations vs reality
A 20% deposit is often treated as the standard in Sydney, but it isn’t a requirement for every buyer. Many lenders accept deposits of 5% or 10%, usually with lender’s mortgage insurance (LMI) added unless a government scheme or waiver applies. The right deposit for a Sydney property depends on your savings, target price and how quickly you want to buy.
Sydney’s median dwelling value sits at $1,222,718 according to Cotality’s September 2026 Home Value Index, with houses at $1,494,878 and units at $878,176 (correct at time of writing). Prices vary widely, though. Areas such as Mount Druitt ($947,930) and Campbelltown ($967,625) have median dwelling values under $1,000,000.
A realistic target can make saving feel manageable.
“A lot of first home buyers come to me convinced they can’t do anything until they’ve saved 20%. Often they’re already sitting on a workable deposit and just need to know which tier suits their income and timeline,” said Selmina Aganovic of Loan Market Double Bay.
Sydney deposit scenarios: 5%, 10% and 20%
Your deposit size shapes your loan amount, whether LMI applies and how long you may need to save. The table below uses a hypothetical $1,000,000 Sydney purchase to compare each tier side by side.
|
Deposit tier |
Deposit amount |
Loan size |
Loan-to-value ratio (LVR) |
LMI likely? |
Estimated transfer duty |
Deposit plus transfer duty |
|---|---|---|---|---|---|---|
|
5% |
$50,000 |
$950,000 |
95% |
Yes, unless eligible for a government scheme or waiver |
$39,187 |
$89,187 |
|
10% |
$100,000 |
$900,000 |
90% |
Yes, unless eligible for a government scheme or waiver |
$39,187 |
$139,187 |
|
20% |
$200,000 |
$800,000 |
80% |
Generally no |
$39,187 |
$239,187 |
Source: Illustrative example only. Values are indicative and exclude LMI premiums and first home buyer concessions. Transfer duty is estimated using Revenue NSW 2026–27 general rates, correct at time of writing. Loan amounts are subject to lender eligibility.
5% deposit: faster entry with trade-offs
A 5% deposit could potentially get you into the market years sooner than waiting for 20%. On a $1,000,000 purchase, that means saving $50,000 and borrowing $950,000. The trade-off is a larger loan, higher monthly repayments and LMI in most cases. The 5% deposit Sydney first home buyers hear about is often linked to the Australian Government 5% Deposit Scheme, which can remove LMI for eligible buyers. Rate movements also hit harder on a bigger loan.
10% deposit: a middle-ground approach
A 10% deposit sits between faster entry and lower borrowing costs. LMI usually still applies, although the premium is generally lower than at 5% because you’re borrowing a smaller share of the property’s value. A 10% deposit Sydney purchase at $1,000,000 means saving $100,000 and borrowing $900,000. That’s double the savings required at the 5% tier, a big jump when rent is stretching the budget. Some buyers find it a practical compromise between waiting longer and paying more in LMI.
20% deposit: no LMI but a longer wait
Reaching a 20% deposit Sydney lenders see as low risk generally removes the need for LMI. You’d also borrow less, which could potentially reduce your monthly repayments and the total interest paid over the life of the loan. The catch is time. Saving $200,000 on a $1,000,000 home, or more than $244,000 at the city’s median dwelling value, can take many years while prices keep shifting. Rent keeps adding up in the meantime.
Additional upfront costs to account for
Budgeting for a deposit for a Sydney property is only part of the picture. Transfer duty, conveyancing and inspections also fall due before or at settlement. Plan for them early.
- NSW transfer duty (stamp duty): Under general rates, transfer duty on a $1,000,000 purchase works out to $39,187. Eligible first home buyers could pay no transfer duty on homes valued up to $800,000 under the First Home Buyers Assistance Scheme, with a concessional rate for homes above $800,000 and below $1,000,000
- Conveyancing and legal fees: A conveyancer or solicitor reviews your contract, handles searches and manages settlement. Fees vary between providers
- Pest and building inspections: These reports can flag structural problems or pest damage before you commit. Strata reports may also be worth ordering for apartments
- Registration and lender fees: Mortgage and title registration fees apply at settlement, and some lenders also charge application or valuation fees.
A first home buyer paying exactly $1,000,000 falls outside the concession and would generally pay the full $39,187. By contrast, Sydney’s median unit value of $878,176 sits inside the concessional band. Buying under a threshold could potentially cut your upfront bill, subject to eligibility.
Settlement can bring surprises.
“The deposit is the number buyers watch for years, but settlement costs are what catch them off guard. I’d rather someone knew their full cash figure before bidding,” said Rod Johnson of Loan Market Hornsby.
Options for buying with a smaller deposit
Several pathways could help you buy without a full 20% deposit or reduce the cost of LMI. Each has its own eligibility rules and risks. Choosing the smallest deposit isn’t always the right move.
- Australian Government 5% Deposit Scheme: Formerly the Home Guarantee Scheme, this lets eligible first home buyers purchase with a minimum 5% deposit and no LMI. Since the scheme was expanded in October 2025, income caps have been removed and the Sydney property price cap is $1,500,000
- Guarantor home loans: A family member offers equity in their property as extra security for your loan. This could potentially help you avoid LMI, although your guarantor takes on real risk and should consider independent legal advice before agreeing
- LMI waivers for certain professions: Some lenders may waive LMI for eligible professionals such as doctors, lawyers or accountants. Lender criteria apply.
Ready to explore your deposit options?
Deposits of 5%, 10% and 20% each have different implications for your loan size, LMI and upfront costs. Comparing Sydney deposit scenarios early could help you understand the savings required at each level and set a realistic target.
Working out how much deposit for a Sydney home you need depends on your individual situation, borrowing power and property goals. A Loan Market broker can walk you through potential deposit pathways, check your eligibility for government schemes and help you find a loan that fits your plans. To discuss your options, contact a Loan Market broker today.
Frequently asked questions
Can you buy a Sydney property with a 5% deposit?
Yes, it’s possible to buy in Sydney with a 5% deposit, subject to lender eligibility. Eligible first home buyers may be able to use the Australian Government 5% Deposit Scheme to avoid LMI on properties up to the $1,500,000 Sydney price cap. Buyers who don’t qualify can still borrow with a 5% deposit Sydney lenders accept, although LMI will usually apply. Either way, you’ll need extra savings for transfer duty and other upfront costs.
How much extra money do I need on top of my deposit in Sydney?
It depends on the purchase price, the property type and whether you qualify for first home buyer concessions. The biggest extra cost is usually NSW transfer duty, which eligible first home buyers may avoid on homes valued up to $800,000. You’ll also need to budget for conveyancing, pest and building inspections and, if applicable, LMI. A broker or conveyancer can help you estimate the total before you start making offers.
Is it better to pay LMI or keep saving for a 20% deposit?
There’s no single right answer, because it depends on your finances, your timeline and where the market heads while you save. Paying LMI could potentially get you into the market sooner, which may suit buyers paying high rent or concerned about prices rising. Holding out for a 20% deposit Sydney purchase avoids LMI and reduces your loan size, but it can take years. Comparing both paths against your budget is a sensible first step.
How much deposit for a Sydney home do you need at the median price?
Based on Cotality’s Sydney median dwelling value of $1,222,718 (correct at time of writing), a 5% deposit works out to roughly $61,136, a 10% deposit to about $122,272 and a 20% deposit to around $244,544. These figures cover the deposit only and exclude transfer duty, legal fees and LMI. Many buyers purchase below the median, so your own target could be considerably lower. Working out how much deposit for a Sydney home you need starts with the price range you’re realistically targeting.
Can the 5% Deposit Scheme be used to buy an apartment in Sydney?
Yes. According to the Australian Government’s first home buyers website, the scheme covers eligible property types, including apartments, subject to the scheme requirements and applicable price cap. Both the purchase price and the lender’s valuation must sit at or below the $1,500,000 Sydney cap. With Sydney’s median unit value at $878,176, many apartments could potentially fall within that limit.
