First Home Buyer Guide Sydney 2026: Grants, Deposits & How to Get Approved

By Jay Perron, YML Finance  |  First Home Buyer Specialist  |  9 min read

Buying your first home in Sydney in 2026 is genuinely exciting — and genuinely complicated. Prices are high, lenders are cautious, and there is a lot of misinformation floating around about what grants you qualify for and how much deposit you really need.

This guide cuts through all of it. We will cover every grant currently available in NSW, what deposit you need (and how to get away with less), how lenders assess first home buyer applications, and the step-by-step process from “I want to buy” to “I have the keys.”

Grants Available to First Home Buyers in NSW in 2026

First Home Owner Grant (FHOG)

NSW offers a $10,000 First Home Owner Grant for the purchase or construction of a new home valued up to $600,000 (or up to $750,000 for construction). This applies to new builds only — established properties do not qualify for the FHOG.

First Home Buyer Assistance Scheme (Stamp Duty Exemptions)

This is the big one. As of 2024–25:

For established homes, the same exemptions apply for properties up to $800,000. This is one of the most underutilised savings available to Sydney first home buyers — on an $800,000 property you save over $30,000 in stamp duty that you would otherwise have to fund.

First Home Guarantee (Federal)

The federal government’s First Home Guarantee allows eligible first home buyers to purchase with as little as 5% deposit, with the government guaranteeing up to 15% of the loan — meaning you avoid Lenders Mortgage Insurance (LMI) entirely. In Sydney, the property price cap was raised to $1,500,000 for all property types following the October 2025 expansion. Income caps were also removed entirely — there is no longer any income limit for this scheme. Places are now unlimited (the previous annual cap has been removed). You must be an Australian citizen or permanent resident purchasing your first owner-occupied home.

Regional First Home Buyer Guarantee

A separate scheme for buyers purchasing outside major cities. Property price caps are lower (typically $600,000 depending on the area) but the structure is the same — 5% deposit, no LMI.

Help to Buy (Shared Equity — launched December 2025)

Help to Buy launched on 5 December 2025. Under this scheme, the federal government takes a shared equity stake in your property — up to 40% for newly built homes and 30% for existing properties. This reduces the loan amount you need and lowers your repayments. You don’t pay rent on the government’s equity share, but when you sell, the government receives its proportional share of the proceeds. Sydney price cap: $1,300,000. Income caps apply: $100,000 for individual applicants, $160,000 combined for joint applicants. A minimum 2% deposit is required. This scheme is specifically targeted at lower-to-moderate income buyers.

First Home Super Saver Scheme (FHSS)

The FHSS allows you to make voluntary concessional contributions to superannuation and then withdraw them (plus associated earnings) for a first home deposit. The maximum releasable amount is $50,000 per person — for a couple purchasing together, each can access up to $50,000 from their own super ($100,000 combined). You can contribute a maximum of $15,000 per financial year toward the FHSS cap. The tax treatment makes this a highly efficient way to build a deposit for eligible buyers who can plan ahead.

Family Home Guarantee

Designed for single parents or single legal guardians with at least one dependent child. The government guarantees up to 18% of the deposit, meaning you need only 2% yourself and avoid LMI entirely. Income cap: taxable income must not exceed $125,000 per annum. Sydney property price cap: $1,500,000. This scheme is available to both first home buyers and previous homeowners who do not currently own a property.

How Much Deposit Do You Actually Need?

Standard: 20% deposit

With a 20% deposit you avoid LMI entirely and get access to the best rates. On a $1,000,000 Sydney property that is $200,000. For most first home buyers, this is not realistic without family help.

5% deposit with guarantees

Using the First Home Guarantee scheme, 5% is sufficient — but places are limited and price caps apply. On a $1,000,000 Sydney property, 5% is $50,000, which is far more achievable — and with the price cap now at $1,500,000, more properties qualify under the scheme.

5% deposit with LMI

Without a government guarantee, buying with less than 20% triggers Lenders Mortgage Insurance (LMI). LMI is a one-off premium that protects the lender (not you) in the event you default. On a $900,000 purchase with 10% deposit, LMI could be $12,000–$18,000 depending on the lender. On a $1,200,000 purchase, it can be considerably higher. Some lenders allow LMI to be capitalised into the loan, meaning you do not pay it upfront.

Family guarantee loans

A parent or close family member with equity in their own property can act as guarantor for part of your loan. This allows you to buy with little or no deposit, avoid LMI entirely, and sometimes borrow the full purchase price plus costs. The guarantor does not need to contribute cash — they use their property equity as additional security.

Step-by-Step: From Decision to Keys

1. Get a borrowing power assessment. Before you look at a single property, understand exactly how much you can borrow. This shapes your search and prevents heartbreak.
2. Check grant eligibility. Confirm which grants apply to your situation — new build vs established, price range, whether you’ve ever owned before.
3. Get pre-approval. A formal pre-approval letter from a lender gives you confidence to make offers and shows vendors and agents you are serious.
4. Find your property. With a realistic budget and pre-approval in hand, you can search with clarity.
5. Exchange contracts. Once your offer is accepted, you exchange contracts and typically pay a 10% deposit (or whatever is negotiated).
6. Formal loan approval. Your broker submits the full application with the contract details. The lender conducts a valuation and issues formal approval.
7. Settlement. Typically 42 days after exchange, settlement occurs and you get the keys.

What Do Lenders Look For in First Home Buyer Applications?

Lenders assess your application on several dimensions:

• Income and stability: PAYG income is easiest. Self-employed first home buyers face more scrutiny.
• Genuine savings: Most lenders want to see that at least 5% of the deposit has been held in your account for 3+ months — not gifted or borrowed.
• Credit history: Defaults, missed payments, or multiple credit enquiries reduce your options.
• Living expenses: Lenders assess your committed expenditure and lifestyle costs to ensure you can service the loan comfortably.
• Employment: Being in a probationary period (less than 3–6 months in a new job) can complicate approval with some lenders.

Common First Home Buyer Mistakes

Searching before getting pre-approved

Falling in love with a property you cannot afford — or worse, making an offer without knowing your limits — leads to painful outcomes. Always get a borrowing power assessment and pre-approval first.

Going straight to your bank

Your bank will only offer you their own products. A mortgage broker compares 20+ lenders simultaneously and can identify grants, schemes, and rates your bank will never proactively tell you about.

Underestimating purchase costs

Beyond your deposit, budget for: legal/conveyancing fees ($1,500–$3,000), pest and building inspections ($400–$700), loan application costs (varies), moving costs, and council/water rates adjustment at settlement. Total purchase costs beyond the deposit are typically $3,000–$7,000 for a first home buyer in Sydney.

Using your entire savings as deposit

Lenders may want to see a buffer of funds left after settlement. Going to zero leaves you exposed if anything unexpected happens in the first months of ownership.

Grant amounts and eligibility criteria are subject to change. Always confirm current conditions with Revenue NSW or your broker. General information only — not financial advice. YML Finance — ACL 398415.