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Links Property Finance · Home loans for first home buyers: Can I Buy a House With a 5% Deposit in Sydney?

Yes. An eligible first home buyer can buy with a 5 per cent deposit under the 5% Deposit Scheme on a Sydney property up to $1.5 million, with no LMI and no income cap.

Reviewed by Charles Touma Updated 18 October 2026

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Can you buy a house with a 5% deposit in Sydney?

Yes, if you are an Australian citizen or permanent resident, have not owned property in the last ten years, will live in the home and buy under the $1.5 million cap. There is no income cap.

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The catch is borrowing power: the loan is 95 per cent of the price, and stamp duty applies above $800,000.

Part of the first home buyer loans guide.

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What could a 5% deposit get you?

What could a 5% deposit get you?

$800,000
$40,000 A 20% deposit would be $160,000

No LMI: an estimated $22,800 premium avoided (a broad guide; real premiums vary by lender and loan).

Stamp duty: $0 for eligible NSW first home buyers (saves $30,187).

Indicative only. The deposit excludes stamp duty, legal and inspection costs, and a participating lender, not this calculator, confirms 5% Deposit Scheme eligibility.

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Charles Touma, mortgage broker at Links Property Finance
5.0 from 32 Google reviews

Real outcomes for real borrowers.

★★★★★
Paperwork and finances were never my strong suit. He has made this process as simple and dummy proof for me as humanly possible. This is not the first time I use a mortgage broker, however it was the easiest and most pleasant.
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★★★★★
Highly recommend Charles! Professional, knowledgeable and very easy to work with. He helped us navigate the home loan process and found a great solution that suited our needs. Excellent service from start to finish.
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Charles looked after us really well and his knowledge gave us the confidence to purchase our property. He wasn’t pushy and always ensured we felt comfortable with the repayments.
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What does a 5% deposit purchase cost in Sydney?

Eligible first home buyer, 5 per cent deposit, no LMI, NSW duty rules applied.

$650,000Deposit $32,500. Loan $617,500.
$800,000Deposit $40,000. Loan $760,000.
$900,000Deposit $45,000. Loan $855,000.
$1,000,000Deposit $50,000. Loan $950,000.
$1,200,000Deposit $60,000. Loan $1,140,000.

Income figures from the site calculator assumptions for a single applicant with no debts; a couple on two incomes needs less combined. Duty from the Revenue NSW rates: exempt to $800,000, concession to $1 million, standard above. Checked against these sources on 12 October 2026.

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Who qualifies for the 5% Deposit Scheme?

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  • First home buyers, or buyers who have not owned in the last ten years.Australian citizens or permanent residents, over 18, buying to live in the home.
  • No income cap and no place limit.Since the scheme was widened, eligibility no longer depends on income or on securing one of a fixed number of places.
  • A property under the price cap.$1.5 million in Sydney and the regional centres listed by Housing Australia; lower elsewhere in NSW.
  • A participating lender.The guarantee is issued through the lender, so the lender’s own rules on size, building and postcode still apply.

Where does 5% work in Sydney, and where does it strain?

The scheme works best where the price and the income line up: an apartment or a semi under $800,000 for a couple on two ordinary incomes, where there is no duty, no LMI and a repayment the income carries.

It strains at the top of the cap. A $1.4 million house on 5 per cent is a $1.33 million loan that needs around $290,000 of household income on our assumptions, plus about $58,300 in transfer duty paid in cash. At that level a larger deposit or a guarantor is usually the better structure.

The 5% Deposit Scheme checker confirms the cap for the suburb, and the NSW schemes guide shows how the scheme stacks with the duty exemption and the First Home Owner Grant on a new build.

A couple sitting among moving boxes

What are the two risks of a 95% loan?

Both are manageable; both are worth knowing before the auction.

  • Valuation shortfallThe loan is 95 per cent of the lower of price and valuation. If the valuer lands under the price, the gap is yours. Charles orders the valuation before the contract is unconditional where he can.
  • A thin equity cushionWith 5 per cent equity, a small price fall puts the loan above the value. It matters only if you have to sell early; most buyers ride it out.
  • A larger repaymentA 95 per cent loan costs about 19 per cent more each month than an 80 per cent loan on the same price. The assessment at the buffered rate already allows for it.
  • The residence ruleScheme and duty relief both require you to move in and live there, usually for the first year.

Official sources for the figures on this page: Housing Australia, Australian Government 5% Deposit Scheme · Revenue NSW, First Home Buyers Assistance Scheme. Rules change; the official pages are the final word. Checked against these sources on 12 October 2026.

Frequently asked questions

What does 5 per cent down cost near the $1.5 million Sydney cap?

An illustrative couple of first home buyers, both professionals, buy a four-bedroom house in a middle-ring suburb for $1,450,000, just under the scheme’s Sydney cap. Their 5 per cent deposit is $72,500 from savings, and the $1,377,500 loan carries no lenders mortgage insurance.

The catch is duty. Above $1 million the first home buyer concession ends, so they pay the standard $61,037, almost as much again as the deposit. With costs, about $138,000 has to come from their own money.

The repayment is about $8,260 a month, and the lender tests it at about $11,080, so the income has to be high as well. This is an illustrative example, not a Links client: figures are rounded, at the 6% example rate over 30 years.

Can I buy a house in Sydney with a 5% deposit?

Yes, as an eligible first home buyer under the 5% Deposit Scheme on a property up to $1.5 million, with no LMI. Outside the scheme, a guarantor achieves the same result; without either, a 5 per cent deposit usually means LMI and a smaller lender panel.

What is the price cap for the 5% Deposit Scheme in Sydney?

$1.5 million for Sydney and the listed regional centres. The cap applies to the purchase price, and the lender’s own policy on the property applies as well.

Do I pay lenders mortgage insurance with a 5% deposit?

Not under the scheme: the government guarantee replaces LMI. Without the scheme or a guarantor, LMI on a 95 per cent loan is substantial and is usually added to the loan.

Is there an income limit for the 5% Deposit Scheme?

No. The income caps and place limits were removed. Eligibility now turns on first home buyer status, residency, the price cap and living in the home.

How much income do I need to buy with 5% in Sydney?

About $136,000 for a single applicant on a $650,000 purchase, on our calculator assumptions, and less combined for a couple: the 95 per cent loan is what the income has to carry.

What if the valuation comes in low?

The loan is based on the lower of the price and the valuation, so you cover the difference. Checking comparable sales before you bid, and ordering the valuation early, keeps the gap small.

Check eligibility with the 5% Deposit Scheme checker, see what a 95 per cent loan costs on the repayments calculator, and read the low deposit guide for the routes outside the scheme.

Get a straight answer for your situation

Charles confirms your eligibility, checks the property against the cap and the lender’s rules, and tells you the price you can bid at. Free, no credit check.

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A family in front of the sold sign at the home they bought together

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Charles Touma, mortgage broker at Links Property Finance
Reviewed by Charles Touma Director & Mortgage Broker · MFAA member · Credit Representative 579003 under ACL 389328 About Charles · First home buyers · MFAA register · ASIC register · Complaints processEvery page is reviewed by Charles before it is published and checked against current lender policy and the official scheme pages linked where figures appear.

General information only, not credit or financial advice. Scheme thresholds and lender policies change; the figures are illustrations on stated assumptions, not a quote. Links Property Finance holds an Australian Credit Licence authorisation and confirms eligibility against current rules in an assessment.