A typical first-home buyer in Sydney in 2026 needs between $100,000 and $200,000 in upfront funds depending on the property price, deposit size, and available concessions. At the lower end, a buyer purchasing a $600,000 new apartment with the First Home Owner Grant and the NSW stamp duty exemption could enter the market for as little as $34,000 upfront with a 5% deposit. At the higher end, a buyer targeting a $900,000 existing house in Western Sydney with a 20% deposit needs closer to $200,000. The three biggest cost components are the deposit, stamp duty, and Lenders Mortgage Insurance (LMI). The good news is that NSW first-home buyer concessions can eliminate stamp duty entirely on properties up to $800,000 and significantly reduce it on properties up to $1 million. Understanding each cost component and how they interact is essential to building a realistic savings plan.
The True Cost of Buying Your First Home in Sydney
Most first-home buyers focus on the purchase price, but the total upfront cost is much higher. Beyond the deposit, you need to account for stamp duty, LMI if your deposit is below 20%, legal fees, building and pest inspections, and loan application fees. Then there are government concessions that can offset some of these costs — but each has its own eligibility rules and property price caps.
In Sydney’s 2026 market, where the median unit price hovers around $820,000 and the median house price exceeds $1.4 million (CoreLogic, Q1 2026), most first-home buyers are looking at apartments, townhouses, or houses in outer suburbs. The stamp duty exemption threshold of $800,000 under the First Home Buyers Assistance Scheme (FHBAS) aligns well with entry-level units, but pushes buyers toward new builds or well-located established apartments rather than houses.
Understanding your total upfront cost means working through each line item. Let us go through them one at a time.
Stamp Duty: What First Home Buyers Pay (or Save)
Stamp duty — officially called transfer duty — is a state government tax calculated on the purchase price. In NSW for the 2025-26 financial year, the standard rates are:
- Properties up to $18,000: 1.25% of the purchase price.
- $18,001 to $38,000: $225 plus 1.5% of the amount over $18,000.
- $38,001 to $103,000: $525 plus 1.75% of the amount over $38,000.
- $103,001 to $387,000: $1,662 plus 3.5% of the amount over $103,000.
- $387,001 to $1,290,000: $11,602 plus 4.5% of the amount over $387,000.
- $1,290,001 to $3,870,000: $52,237 plus 5.5% of the amount over $1,290,000.
- Over $3,870,000: $194,137 plus 7% of the amount over $3,870,000.
For a first-home buyer, these standard rates rarely apply. Under the FHBAS, eligible buyers receive a full exemption on properties up to $800,000 and a partial concession on properties between $800,001 and $1,000,000. The concession phases out linearly: at $900,000, for example, you receive a 50% discount on the standard duty, and at $1,000,000, the concession reduces to roughly 45% of the full rate.
For the $900,000 existing house scenario, the standard stamp duty calculates as $11,602 plus 4.5% of the amount over $387,000 — that is $11,602 plus 4.5% of $513,000, giving $34,687. With the FHBAS phase-out, you pay half: approximately $17,344. That is a saving of over $17,000 compared to a non-first-home buyer.
For properties at or below $800,000, the saving is 100%. A $750,000 townhouse or a $600,000 apartment attracts zero stamp duty under the FHBAS. This alone can reduce your upfront cost by $25,000 to $32,000 compared to someone buying without first-home buyer status.
For more detail on NSW stamp duty rates and exemptions, see our guide at /posts/nsw-stamp-duty-2026-27-rates-exemptions/. Foreign buyers face an additional 8% surcharge; read more at /posts/foreign-buyer-stamp-duty-surcharge-australia-2026/.
The Deposit: How Much You Really Need
The deposit is the largest single upfront cost for most buyers. While the standard benchmark is 20% of the purchase price, many first-home buyers enter with a smaller deposit.
A 20% deposit on a $600,000 apartment is $120,000. On a $750,000 townhouse, it is $150,000. On a $900,000 house, it is $180,000. Saving these amounts on a median Sydney household income of approximately $125,000 per year can take five to ten years, even with disciplined saving.
A 5% deposit lowers the bar dramatically: $30,000 for a $600,000 property, $37,500 for $750,000, and $45,000 for $900,000. However, a deposit below 20% triggers Lenders Mortgage Insurance (LMI), which we cover in the next section.
Some buyers access government schemes that allow a 5% deposit without LMI. The federal Home Guarantee Scheme (formerly the First Home Loan Deposit Scheme) provides a government guarantee for up to 15% of the property value, meaning eligible buyers with a 5% deposit can avoid LMI entirely. Property price caps apply — $900,000 for existing homes in Sydney and $1,050,000 for new builds as of 2026. Income caps are $125,000 for singles and $200,000 for couples. See our full guide at /posts/first-home-buyer-guide-sydney-2026/.
Lenders Mortgage Insurance (LMI): When It Applies
LMI is a one-off insurance premium that protects the lender — not you — if you default on the loan and the property sells for less than the outstanding balance. It typically applies when your deposit is below 20% of the purchase price.
LMI cost scales with the loan-to-value ratio (LVR) and the loan amount. For a $570,000 loan (95% LVR on a $600,000 property), LMI can cost approximately $12,000 to $15,000. For a $712,500 loan on a $750,000 property, expect $16,000 to $20,000. These are not out-of-pocket charges — they are usually capitalised into the loan, meaning you pay interest on them over the life of the mortgage. But they still increase your total debt and monthly repayments.
There are two ways to avoid LMI. The first is to save a 20% deposit, which eliminates the requirement. The second is to qualify for the Home Guarantee Scheme mentioned above, where the government acts as your guarantor. A third, less common path is a family guarantee loan where a parent or relative uses their own property equity as security, though this carries its own risks.
If you do pay LMI, factor it into your total cost and recognise that it is not refundable if you refinance later.
FHOG: The $10,000 First Home Owner Grant
The NSW First Home Owner Grant (FHOG) provides $10,000 toward the purchase of a new home. It is not available for established (existing) properties. Key eligibility requirements are:
- The property must be a new home — defined as a newly built dwelling that has not been previously occupied or sold as a place of residence.
- The purchase price must not exceed $600,000.
- The buyer (or at least one buyer in a joint purchase) must be an Australian citizen or permanent resident.
- You must move into the property within 12 months and live there for at least six continuous months.
For a $600,000 new apartment in a development like Parramatta or Homebush, the $10,000 FHOG effectively reduces your cash requirement by that amount. In our worked example below, a buyer with a 20% deposit sees their upfront need drop from $122,000 to $112,000 after applying the grant. With a 5% deposit and LMI, the grant can mean the difference between $44,000 and $34,000.
The FHOG cannot be used for established homes. A townhouse or apartment that has been previously occupied — even if it is only a few years old — does not qualify, regardless of the price.
Other Upfront Costs
Beyond the deposit, stamp duty, LMI, and FHOG, several smaller costs add up to a meaningful total.
Legal and conveyancing fees typically range from $1,500 to $2,500. Your solicitor or conveyancer reviews the contract of sale, conducts title searches, arranges settlement, and handles the transfer of ownership. Budget $2,000 as a safe midpoint.
Building and pest inspections cost between $400 and $800. These are essential for houses and townhouses; for apartments, a strata report ($300 to $500) is more relevant. Never skip this step — a major structural defect or pest infestation can cost tens of thousands to remediate.
Loan application and establishment fees vary by lender. Many lenders waive these fees for first-home buyers or during promotional periods, but where charged they range from $300 to $600. Some lenders also charge a valuation fee ($200 to $500) and a settlement fee ($150 to $300). Always ask your mortgage adviser to itemise these before signing.
Moving costs, utility connections, and initial furnishing are easy to overlook. Budget $1,000 to $3,000 depending on whether you are moving from a furnished rental or starting fresh.
Council and water rates are adjusted at settlement. The seller credits you for rates already paid past the settlement date, but you should budget around $500 to $1,500 for the adjustment, depending on the timing.
Taken together, these costs add $3,500 to $7,000 to your upfront requirement over and above the deposit and stamp duty.
Worked Examples
Scenario 1: $600,000 New Apartment in Parramatta
You are buying a brand-new two-bedroom apartment in a Parramatta development for $600,000. As a first-home buyer, you qualify for the full FHBAS stamp duty exemption and the $10,000 FHOG.
If you have a 20% deposit ($120,000), add legal fees of $2,000 and subtract the $10,000 FHOG. Your total upfront cost is $112,000. No LMI applies at 80% LVR.
If you have only a 5% deposit ($30,000), LMI of approximately $12,000 applies. Add legal fees of $2,000 and subtract the $10,000 FHOG. Your total upfront cost is $34,000. The loan amount becomes $582,000 ($570,000 principal plus $12,000 capitalised LMI).
In both cases, stamp duty is zero.
Scenario 2: $750,000 New Townhouse in the Inner West
You are buying a newly built two-storey townhouse in the inner west for $750,000. The FHBAS full exemption applies because the price is under $800,000, so stamp duty is zero. However, the FHOG does not apply because the price exceeds the $600,000 cap.
With a 20% deposit ($150,000) and legal fees of $2,000, your total upfront cost is $152,000.
With a 10% deposit ($75,000), LMI of roughly $15,000 applies. Add legal fees of $2,000. Total upfront is $92,000, and your loan becomes $690,000 ($675,000 plus $15,000 capitalised LMI).
This scenario highlights the value of the FHBAS exemption: a non-first-home buyer would pay approximately $29,000 in stamp duty on the same property.
Scenario 3: $900,000 Existing House in Western Sydney
You are buying an established three-bedroom house in a Western Sydney suburb like Penrith or Campbelltown for $900,000. Because the property is existing (not new), the FHOG does not apply. The FHBAS partial concession applies because the price falls within the $800,001 to $1,000,000 phase-out band.
Standard stamp duty on $900,000 is $34,687. The FHBAS concession provides a 50% reduction: ($1,000,000 minus $900,000) divided by ($1,000,000 minus $800,000), multiplied by the full duty. You pay $17,344.
With a 20% deposit ($180,000), add stamp duty of $17,344 and legal fees of $2,000. No LMI applies. Total upfront is $199,344.
With a 10% deposit ($90,000), LMI of approximately $20,000 applies. Add stamp duty of $17,344 and legal fees of $2,000. Total upfront is $129,344, with a loan of $830,000.
This scenario shows why many first-home buyers gravitate toward properties at or below $800,000 — the full stamp duty exemption frees up tens of thousands of dollars that can go toward the deposit instead.
How APRA Rules Affect Your Borrowing Power
APRA, the banking regulator, sets two key rules that directly affect how much you can borrow as a first-home buyer in 2026.
The first is the 3% serviceability buffer, confirmed by APRA in May 2026. Lenders must assess your ability to repay the loan at your actual interest rate plus 3 percentage points. If your loan rate is 6.25%, the lender tests you at 9.25%. This means your borrowing capacity is significantly lower than what a simple online calculator at the advertised rate would suggest. On a household income of $125,000, the buffer can reduce your maximum loan by $100,000 or more compared to an assessment without the buffer.
The second rule, introduced in February 2026, limits high debt-to-income (DTI) lending. Loans where the DTI ratio is six or above are capped at 20% of each lender’s new lending portfolio. This means if you have a DTI of six or higher — common for Sydney buyers borrowing near their maximum — you may find some lenders have already used their quarterly allocation. Working with a broker who has visibility across multiple lenders becomes essential.
Together, these rules mean that even if you have saved the deposit and stamp duty, you may not be able to borrow as much as you expect. A mortgage adviser can run a full serviceability assessment before you start looking at properties, so you know your maximum budget with confidence.
FAQ
Can I use the FHOG and the FHBAS stamp duty exemption together?
Yes. They are separate schemes and can be combined. If you buy a new home priced at $600,000 or below, you can receive both the full FHBAS stamp duty exemption and the $10,000 FHOG, provided you meet the eligibility criteria for each.
What if I buy with a partner who has owned property before?
The FHBAS and FHOG require that all buyers are first-home buyers. If your partner has previously owned residential property in Australia, neither of you qualifies for either concession — even if you personally have never owned a home. The one exception is the federal Home Guarantee Scheme, which allows previous homeowners who have not owned property in the last 10 years to qualify.
Does LMI protect me if I lose my job?
No. LMI protects the lender, not you. If you default on the loan and the property sells for less than the outstanding balance, the lender claims the shortfall from the LMI insurer — and the insurer can then pursue you for that amount. LMI does not release you from the debt.
When do I need to pay stamp duty?
Stamp duty is due within three months of settlement for most properties. For off-the-plan purchases, the deadline can extend to 15 months if construction has not started. You need the funds available at settlement, not at exchange of contracts.
What happens if property prices change between now and when I settle?
Your stamp duty and deposit are calculated on the final purchase price, not the market value at settlement. If prices fall, your deposit as a percentage of market value effectively increases, but your loan amount and repayments remain the same.
Data Sources
This article draws on the following publicly available data sources, all current as of mid-2026:
- NSW Revenue Office — transfer duty rates and FHBAS thresholds for FY2025-26.
- Revenue NSW — First Home Owner Grant eligibility and payment amounts.
- APRA — serviceability buffer announcement (May 2026) and DTI lending cap (February 2026).
- CoreLogic — Sydney median dwelling, house, and unit prices (Q1 2026).
- Housing Australia — Home Guarantee Scheme property price caps and income thresholds for 2026-27.
- Australian Bureau of Statistics — median household income data for Greater Sydney.
Figures are rounded to the nearest dollar throughout. Worked examples are illustrative and assume standard lender policies; your actual costs may vary depending on your lender, conveyancer, and specific circumstances.
Next Steps
Working out your total upfront cost is the first step. The second is confirming how much you can borrow under APRA’s 2026 rules. Getting both numbers right before you start inspecting properties saves you from falling in love with a home you cannot finance.
Speak with an Arrivau mortgage adviser. We respond within one business day.
Disclaimer: This article is general information only and does not constitute financial or legal advice. Eligibility for the FHBAS, FHOG, and Home Guarantee Scheme depends on your individual circumstances. You should consult a licensed mortgage adviser and a qualified conveyancer or solicitor before making any purchase decision. Property prices, stamp duty rates, and government schemes may change. All figures are current as of July 2026.