Most first home buyers in Sydney start by asking how much they can borrow. It is the wrong first question. The one that decides whether you buy this year is how much cash you need on the table, and that number is always larger than the deposit.
Deposit is one line. Transfer duty, legal fees, inspections, lenders mortgage insurance and the lender’s own charges are the rest, and they do not appear in the figure a bank quotes you.
This guide sets out the real cost of buying, why applications get declined when the income looks fine, how the NSW and federal schemes stack together, and the order to do things in so you are not scrambling after you have already bid.
There are five separate costs. Only one of them is the deposit.
| Cost | Who charges it | When it is due | Can it be avoided |
|---|---|---|---|
| Deposit | You, to the vendor | 10% at exchange, balance at settlement | No, but the percentage can be reduced |
| Transfer duty | Revenue NSW | Within three months of exchange | Yes, if you qualify as a first home buyer under the thresholds |
| Lenders mortgage insurance | The insurer, via your lender | Capitalised at settlement | Yes, through a scheme place, a guarantor or a profession waiver |
| Conveyancing and searches | Your solicitor or conveyancer | Across the purchase | No |
| Building and pest, strata report | Inspectors | Before you exchange | Technically yes. Do not. |
The deposit is the only one most people budget for. The others together routinely add tens of thousands to the cash required, and they are the reason a buyer with a deposit still cannot proceed.
Declines are rarely about income. They are about what sits around the income.
Every item on that list is fixable, and most of them take two to three months. That is why the work starts well before you look at a property. The full list is in why home loans get declined.
Four separate programmes exist and they are not alternatives. Several can apply to the same purchase.
| Scheme | What it does | Who runs it |
|---|---|---|
| First home buyer duty exemption | Removes transfer duty entirely up to $800,000, with a concession tapering out below $1 million | Revenue NSW |
| Vacant land duty exemption | Full exemption to $350,000, concession to $450,000 | Revenue NSW |
| 5% Deposit Scheme | Lets eligible first home buyers purchase with a 5% deposit without paying lenders mortgage insurance, within a price cap | Housing Australia |
| First Home Super Saver | Lets you withdraw voluntary super contributions, and their earnings, toward a deposit | ATO |
The duty thresholds above are published by Revenue NSW under the First Home Buyers Assistance Scheme and have applied to contracts exchanged since 1 July 2023.
The price cap on the 5% Deposit Scheme is the one that decides most Sydney purchases, because a Sydney median sits uncomfortably close to it. Caps are reviewed, so confirm the current figure before you rely on it. Background is in first home guarantee scheme eligibility, the NSW duty exemption and the First Home Super Saver scheme.
Steps one to four happen before you look at a single property. Buyers who reverse that order are the ones who lose a deposit or miss a settlement.
Add deposit, duty, legal, inspections and lender fees. That total is your entry price. Use the deposit calculator and the stamp duty calculator together rather than separately.
Close unused cards, reduce limits on the ones you keep, clear buy now pay later accounts. Do this three months before applying so the statements reflect it.
Most lenders want to see five per cent of the purchase price accumulated and held for at least three months. Lump sums that appear the week before an application invite questions.
Online calculators ignore your actual liabilities and your lender’s specific policy. A broker assessment tells you which lenders will take your income, not an average.
Scheme place, guarantor, profession waiver or paying the premium. This decision changes which lenders are available, so it comes before the application, not after.
A real pre-approval involves a credit check and an assessor. A system-generated indication does not. Ask which one you have, because only one of them means anything at auction.
Contracts need reviewing before exchange, not after. At auction there is no cooling-off period, so the review has to happen first.
Building and pest for a house, strata report for an apartment. A strata report showing a pending special levy changes the price you should pay.
Ten per cent is standard. A smaller deposit at exchange can sometimes be negotiated, but it is a vendor decision, not a right.
Your lender and conveyancer handle the mechanics. Your job is to not change employment, not apply for new credit, and not move money around between exchange and settlement.
Working through the Sydney first home purchase steps in this order is what keeps the finance ahead of the contract rather than chasing it.
The figures below are illustrative and are included to show how the components interact. They are not drawn from a client file and are not a quote. Duty is shown on the NSW first home buyer basis for a purchase above the $800,000 exemption threshold and below the $1 million concession ceiling.
| Component | With a 20% deposit | With a 5% deposit and a scheme place |
|---|---|---|
| Purchase price | $850,000 | $850,000 |
| Deposit | $170,000 | $42,500 |
| Loan amount | $680,000 | $807,500 |
| Transfer duty | Concessional, tapered | Concessional, tapered |
| Lenders mortgage insurance | Not payable | Not payable under the scheme |
| Legal, searches, inspections | Approximately $3,000 | Approximately $3,000 |
| Cash required, excluding duty | $173,000 | $45,500 |
The gap between those two columns is $127,500, and it is the difference between buying this year and buying in four years. The trade-off is a larger loan and therefore a larger repayment, which is exactly the comparison the capacity assessment in step four is for.
The buyers who struggle are almost never the ones with the smallest deposit. They are the ones who found out what the total cash figure was after they had already bid.
Paritosh Wadhwani, Director and Principal Broker, APW Finance
It depends on the route you take rather than a single figure. A standard purchase without mortgage insurance needs twenty per cent of the price plus costs. With a scheme place, a family guarantee or a profession waiver, five per cent plus costs can be enough. The cash you need is always the deposit plus duty, legal fees and inspections, so work from that total rather than from the deposit alone.
Not if the property value is $800,000 or less, where a full exemption applies under the First Home Buyers Assistance Scheme. Between $800,000 and $1 million a concessional rate applies and tapers out as the price rises. Vacant land is exempt to $350,000 with a concession to $450,000. Eligibility conditions apply, including a residence requirement, so confirm your position with Revenue NSW.
Usually yes, because they do different things. The duty exemption reduces a government charge, the 5% Deposit Scheme removes lenders mortgage insurance, and the First Home Super Saver releases money you have already contributed to super. Each has its own eligibility test, so qualifying for one does not mean qualifying for another, and the combination needs checking against your specific purchase.
Genuine savings means money you have accumulated and held yourself, typically for at least three months, rather than a lump sum that appeared recently. Lenders use it as evidence that you can set money aside consistently, which is the same behaviour that services a mortgage. Gifts, tax refunds and inheritances can often still be used, but they are treated differently and need supporting documentation.
From starting preparation to settling, three to six months is realistic for most buyers. Cleaning up liabilities and establishing genuine savings is the slowest part and should be done first. Pre-approval typically takes one to three weeks depending on the lender and how complete the application is, and settlement in New South Wales is commonly six weeks from exchange.
Yes, and specifically a pre-approval that has been assessed by a person rather than generated by a system. Without one you do not know your actual ceiling, you cannot bid at auction with any confidence, and agents will treat your offer as less certain than a competing one. Pre-approvals generally last three to six months and can be extended.
Buying a first home in Sydney is not primarily a borrowing problem. It is a cash and sequencing problem, and both are solvable with enough lead time.
Start with the total cash figure, fix the liabilities that quietly reduce your capacity, then decide which deposit route suits you before you make an offer.
Read more about buying with a low deposit or how to avoid lenders mortgage insurance. You can also check what you may be able to borrow or read the difference between conditional and unconditional approval.
Talk to us about your first purchase.
Paritosh Wadhwani | Director and Principal Broker, APW Finance
Member of the Finance Brokers Association of Australia (FBAA). Arranging residential, commercial and specialist lending for Sydney clients across a panel of more than 50 lenders.
APW Finance Pty Ltd, 304/20a Lexington Drive, Bella Vista NSW 2153. Email: info@apwfinance.com. Phone: +61 447 959 546.
ACN 620 646 479 | ABN 79 620 646 479
This guide is general information only. It does not take into account your objectives, financial situation or needs, and it is not financial or credit advice. Lending criteria, interest rates, duty thresholds and government schemes change, and every application is subject to lender approval. Consider whether this information suits your circumstances and seek independent advice before acting. Figures quoted are current at the date below and should be confirmed before you rely on them. Last reviewed: October 2026.
APW Finance Pty Ltd delivers expert lending solutions with personalised service, empowering clients across residential, commercial, and business sectors.