Buying a property in New South Wales is an exciting milestone, but one of the biggest questions buyers face is how much deposit is actually required. The answer depends on several factors, including the lender’s requirements, your financial situation, and whether you qualify for government assistance. Let’s break it down in simple terms.
Minimum Deposit Requirements in NSW
1. The Standard Deposit: 20% of the Purchase Price
Most lenders require a 20% deposit to avoid Lenders Mortgage Insurance (LMI). This means:
If you’re buying a $800,000 property, a 20% deposit would be $160,000.
If you’re buying a $500,000 property, a 20% deposit would be $100,000.
While a 20% deposit is ideal, it is not mandatory—there are ways to buy with a lower deposit.
2. Buying With a Smaller Deposit (5% - 15%)
If you don’t have a full 20% saved, many lenders allow you to buy with as little as 5% or 10% deposit. However, if your deposit is below 20%, you’ll likely have to pay Lenders Mortgage Insurance (LMI), which can add thousands to your costs.
💡 Example:
A 10% deposit on an $800,000 property = $80,000
A 5% deposit on a $500,000 property = $25,000
LMI costs vary depending on your lender, loan amount, and deposit size. Some lenders let you add LMI to your loan, reducing upfront costs but increasing your repayments.
3. No Deposit? Using a Guarantor Loan
If you don’t have a deposit, some banks offer guarantor loans, where a close family member (often a parent) uses their home equity to secure your loan. This can help you avoid both LMI and a large deposit.
Other Costs to Consider Beyond the Deposit
Even if you’ve saved your deposit, don’t forget the additional costs involved in buying a property:
✔ Stamp Duty – A major cost (but exemptions may apply for first-home buyers).✔ Conveyancing Fees – Budget $1,500 - $3,000.✔ Building & Pest Inspections – Around $500 - $1,000.✔ Loan Application Fees & Mortgage Costs – Varies by lender.
Government Assistance for First-Home Buyers
If you’re a first-home buyer in NSW, you may be eligible for government grants and stamp duty exemptions to reduce your upfront costs:
🏡 First Home Owner Grant (FHOG) – $10,000 towards a new home under $600,000.🏡 First Home Buyer Assistance Scheme – Stamp duty discounts or exemptions for homes up to $800,000.🏡 First Home Guarantee – Allows eligible buyers to purchase with just 5% deposit and avoid LMI.
For the latest information, visit Revenue NSW.
Final Thoughts: What’s the Right Deposit for You?
If you want to avoid LMI, aim for 20% deposit.
If you want to get into the market sooner, you may be able to buy with 5% or 10% deposit, but be aware of LMI costs.
If you have no deposit, a guarantor loan could be an option.
At SL Conveyancing, we help guide buyers through the legal process of purchasing property in NSW. Whether you’re a first-home buyer or a seasoned investor, we ensure a smooth, stress-free transaction.
💬 Need help with your property purchase? Contact us today for expert conveyancing services!
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