A $1 million Sydney property does not automatically mean you need $200,000 sitting in the bank. When buyers ask, “how much deposit do I need in NSW?”, the practical answer is usually between 5% and 20% of the purchase price – plus the costs of buying. The right figure depends on your income, the property, your credit position, whether you are a first-time buyer, and how lenders assess your application.
A 20% deposit can give you more choice and help you avoid lenders mortgage insurance. But it is not the only way forward. For eligible buyers, a 5% deposit may be enough to buy sooner. The key is understanding the full cash requirement before you make an offer.
How much deposit do I need in NSW?
For most standard owner-occupied home loans, these are the common deposit levels:
- 20% deposit: Often the cleanest position. You borrow 80% of the property value, known as an 80% loan-to-value ratio (LVR), and generally avoid lenders mortgage insurance (LMI).
- 10% deposit: A realistic middle ground for many buyers. You may pay LMI, although the cost and lending options vary by lender and borrower profile.
- 5% deposit: Possible for eligible first-time buyers through selected low-deposit pathways, including government-backed programs and some lender products. Approval is still based on your capacity to repay the loan.
Using a $900,000 purchase as an example, a 20% deposit is $180,000, a 10% deposit is $90,000, and a 5% deposit is $45,000. Those figures are the deposit only. They do not include transfer duty, legal fees, inspections, lender fees, or moving costs.
For buyers in Sydney and other higher-priced NSW markets, waiting to save 20% can take years. A smaller deposit may make sense if your income is stable, the repayment remains comfortable, and the extra borrowing costs are acceptable. On the other hand, putting down more can reduce your loan size, monthly repayments, and interest paid over time.
A 20% deposit: more flexibility, lower upfront loan costs
A 20% deposit remains a useful target because it puts you below the usual LMI threshold. LMI protects the lender, not the borrower, if a property is sold for less than the outstanding loan. It can be paid upfront or added to your loan, depending on the lender and product.
Avoiding LMI can save a meaningful amount, particularly on a larger Sydney purchase. A stronger deposit can also improve the range of lenders and loan products available to you. That does not mean every borrower with 20% receives the same rate or approval outcome. Employment type, existing debts, expenses, credit history, and the property itself still matter.
There is a trade-off. If saving the final portion of a 20% deposit means delaying your purchase for a long time, you may face rising prices or higher rent in the meantime. The better decision comes from comparing the total cost of buying now with a smaller deposit against the cost and risk of waiting.
Can I buy a home in NSW with a 5% deposit?
Yes, in the right circumstances. Some first-time buyers can purchase with as little as 5% through an eligible low-deposit government-backed arrangement. These programs are designed to help eligible buyers avoid paying LMI, even though they have less than a 20% deposit.
Eligibility rules can apply to income, owner-occupier status, property price caps, and whether you have previously owned property. Places can also be limited or subject to program conditions. A lender will still assess whether you can afford the repayments after allowing for interest rate buffers, living expenses, credit limits, and other commitments.
A 5% deposit is not automatically the cheapest path, but it can be a practical one. You borrow more, so your repayments and total interest are higher than with a 20% deposit. It is worth checking whether you would be comfortable if rates rose, your household income changed, or you needed to cover an unexpected expense after settlement.
Your deposit is not your total cash to buy
One of the most common first-time buyer surprises is discovering that the deposit is only part of the money needed. In NSW, you should also allow for transaction costs, which may include transfer duty, conveyancing, building and pest inspections, strata reports for apartments or townhouses, lender charges, and moving expenses.
Transfer duty can be one of the largest items. Eligible first-time buyers may receive a duty exemption or concession under NSW assistance rules, depending on the property type and price. The First Home Owner Grant may also assist eligible buyers purchasing or building a new home, but it is not a universal payment for every first purchase and does not replace the need for a deposit.
As a planning guide, buyers often keep additional funds beyond their deposit for costs and a post-settlement buffer. The exact amount varies substantially. A new apartment, an established house, and an off-the-plan purchase can each have different cost profiles.
Do not rely on a rough percentage alone. Before you bid at auction or sign a contract, have the full figures calculated for the specific property and loan structure.
What lenders look for besides the deposit
A large deposit helps, but it does not guarantee approval. Lenders look at the whole application. They want to see that the loan is affordable now and remains manageable if rates increase.
Your employment and income are central. A permanent salary is straightforward, but self-employed applicants, contractors, and borrowers with bonuses or commissions can also be considered with the right documentation. Lenders will review your existing debts, including credit cards, personal loans, car finance, and buy now, pay later accounts. Even unused credit card limits can affect borrowing capacity.
Your credit report and savings history also matter. Many lenders want evidence that you can manage money consistently. This is often called genuine savings, although the definition differs between lenders. Regular savings from income are the clearest example. In some situations, a gift from family, proceeds from selling an asset, or equity from another property can form part of the contribution, subject to lender policy.
The property matters too. A well-located established home is generally simpler to finance than a very small apartment, a rural property, or a property with unusual construction. Higher-risk properties can require a larger deposit or reduce the lenders willing to consider the loan.
Using equity instead of cash for your next purchase
If you already own a home, your next deposit may come from equity rather than a savings account. Equity is the difference between your property’s value and the amount you still owe on the mortgage.
For example, if your current home is worth $1,200,000 and the loan balance is $650,000, you have $550,000 in total equity. A lender will not usually let you access all of it. Many structures aim to keep the lending against your existing home at or below 80% of its value to avoid LMI. In this example, 80% is $960,000, leaving up to $310,000 potentially usable before costs and servicing are considered.
This can support an upgrade or investment purchase, but it increases the debt secured against your existing property. The structure needs to be clear, particularly where you are buying before selling or keeping the current home as an investment. Separating loan splits can make future refinancing and tax record-keeping easier.
A practical way to set your deposit target
Start with a purchase price range based on a realistic borrowing assessment, not just a property search filter. Then compare the cash needed at 5%, 10%, and 20%, including purchase costs in each scenario. This gives you a decision based on real numbers rather than an arbitrary savings goal.
Next, test the repayments at a higher interest rate and leave room for life after settlement. A home should not leave you without an emergency buffer or force every dollar of your income toward the mortgage. Finally, obtain preapproval before you become emotionally committed to a property. Preapproval helps identify lender requirements early, though the final approval also depends on the property valuation and full application review.
With access to more than 40 lenders, Credific Finance can compare deposit options, assess available first-time buyer support, and manage the application process through settlement. The most useful deposit is not always the largest one. It is the one that gets you into the right property with a loan you can confidently manage long after you receive the keys.
