BAMA Loans is a Sydney-based mortgage broker operating under Red Rock Group Pty Ltd (ACL 405961). In short: most first home buyers in Australia need either a 20% deposit, or a 5% deposit combined with the government's First Home Guarantee to avoid Lenders Mortgage Insurance (LMI). This guide covers deposits, schemes, stamp duty and the buying process step by step.
How Much Deposit Do You Actually Need?
The standard benchmark is a 20% deposit. Below that, lenders generally charge Lenders Mortgage Insurance (LMI) — a one-off premium that protects the lender (not you) if you default. LMI can add thousands to tens of thousands of dollars to your upfront costs depending on your loan size and deposit gap.
Eligible first home buyers can avoid LMI entirely with a 5% deposit through the First Home Guarantee (see below), or reduce it with state grants and concessions. A smaller deposit means a larger loan and higher total interest paid over the life of the loan, so it's a trade-off between getting into the market sooner and the long-term cost.
Government Schemes for First Home Buyers
- First Home Guarantee (HGS) — Buy with a 5% deposit, no LMI. Limited places each financial year, and property price caps apply depending on the region (Sydney has a higher cap than regional NSW).
- First Home Owner Grant (FHOG) — A one-off grant for new builds or substantially renovated homes, amount and eligibility varies by state.
- First Home Super Saver Scheme (FHSS) — Lets you make voluntary contributions into super and withdraw them (plus deemed earnings) to put toward your first home deposit, taxed concessionally.
- Family Home Guarantee — For eligible single parents, allows purchase with as little as a 2% deposit without LMI.
- Help to Buy — A shared equity scheme where the government co-invests in your home in exchange for an equity share, reducing the loan (and repayments) you need. Check current scheme status and place availability.
Scheme rules, price caps and place numbers change — always confirm current details on the Housing Australia or NSW Government websites, or ask during your consultation.
Stamp Duty in NSW
NSW offers duty exemptions or concessions for eligible first home buyers under the First Home Buyer Assistance Scheme, with the benefit tapering off above a certain purchase price threshold. Because thresholds are updated periodically, confirm the current figures with NSW Revenue (or with us) before budgeting your upfront costs.
How Lenders Assess Your Application
Beyond the deposit, lenders assess your borrowing capacity using your income, regular expenses (benchmarked against the Household Expenditure Measure, or HEM), existing debts including credit card limits and HECS/HELP debt, and a serviceability buffer set by APRA guidance — currently lenders must test your ability to repay at roughly 3 percentage points above the actual loan rate. This buffer exists so borrowers aren't overextended if rates rise.
Typical documents required
| Category | Examples |
|---|---|
| Identity | Driver's licence, passport, Medicare card |
| Income | Recent payslips, employment letter, tax returns if self-employed |
| Savings & deposit | Bank statements showing genuine savings history (usually 3 months) |
| Liabilities | Statements for credit cards, personal loans, BNPL, HECS balance |
| Property | Contract of sale once you've found a property |
The Step-by-Step Process
- Step 1 — Discovery call. Review your income, expenses, deposit and goals to estimate borrowing capacity.
- Step 2 — Pre-approval. Get conditional approval from a suitable lender so you can shop with confidence at auctions and inspections.
- Step 3 — Find your property and make an offer. Your pre-approval guides your budget.
- Step 4 — Formal approval. The lender values the property and issues unconditional approval.
- Step 5 — Settlement. Legal transfer of ownership; you receive the keys.
Frequently Asked Questions
Related reading: First Home Buyer Loans · How Much Can I Borrow? · Home Loans Sydney