For most first home buyers in Western Sydney, the hardest part isn't the repayments. It's the deposit. Saving 20% on a $900,000 home means finding $180,000 before you even think about stamp duty. The Australian Government 5% Deposit Scheme changes that maths, and since it was expanded in October 2025 far more people qualify.
What the scheme does
Normally, if your deposit is under 20%, the lender charges lenders mortgage insurance (LMI), a one-off premium that can run into tens of thousands of dollars in Sydney. Under the scheme, the government guarantees part of your loan to the lender, so you can buy with as little as 5% down and pay no LMI. Read more about how LMI works and when it applies.
You still borrow 95% of the price, so your repayments are higher than if you'd saved 20%. The scheme doesn't reduce what you owe; it removes the insurance cost and lets you buy sooner.
Who qualifies in 2026
- Australian citizens or permanent residents aged 18 or over, buying alone or with one other person.
- First home buyers, or people who haven't owned residential property in Australia in the last 10 years.
- You must intend to live in the property. Investment purchases don't qualify.
- There are no income tests and no waiting list, following the October 2025 changes.
The Sydney price cap
For Sydney and major NSW regional centres, the property price cap is $1.5 million. That comfortably covers most houses and units in suburbs like Blacktown, Pendle Hill, Mount Druitt and the north-west growth areas.
How it works with NSW stamp duty
The scheme is federal, while stamp duty relief comes from the NSW Government. Many buyers qualify for both. On a home up to $800,000, eligible first home buyers pay no transfer duty, which can save around $30,000. See our NSW first home buyer stamp duty guide for the full thresholds.
| Purchase price | 5% deposit | Deposit for 20% (no scheme) |
|---|---|---|
| $650,000 | $32,500 | $130,000 |
| $850,000 | $42,500 | $170,000 |
| $1,100,000 | $55,000 | $220,000 |
Deposit figures only. You'll also need funds for conveyancing, inspections, lender fees and any stamp duty that applies.
Traps to check before you rely on it
- Participating lenders only. Not every bank offers the scheme, and the rate and features vary between those that do. A broker can compare them.
- Serviceability still applies. The scheme helps with the deposit, not your borrowing power. Test your numbers with our borrowing power calculator.
- Valuation risk. If the lender values the property below the price, you may need a larger deposit to make up the gap.
- Refinancing later. Moving the loan to a non-participating lender before you reach 20% equity can mean paying LMI at that point.
Next steps
Start with pre-approval through a participating lender so you know your real budget. Then read our first home buyer checklist for Western Sydney and, if you're buying locally, our suburb guides for Pendle Hill and Blacktown.
Want to know if you qualify?
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