Key takeaways
Sydney renters could spend years paying rent equivalent to a home deposit, depending on today's rental costs and property prices.
Comparing a 20% deposit with a 5% deposit shows how different savings pathways may look for eligible buyers.
Saving a deposit is only one part of buying a home. Borrowing power and repayments matter too.
Buying a home in Sydney can feel like a moving target.
Many Sydney renters are balancing rising living costs while trying to save for a deposit, making it difficult to know whether home ownership is something to plan for now or further down the track.
One question worth asking is: how much does your rent add up to over time?
Looking at your annual rent alongside today's property prices won't tell you exactly when you'll be ready to buy. Saving a deposit is only one part of the home buying journey. Borrowing capacity, ongoing repayments, and your broader financial situation all play an important role too.
However, comparing today's rental costs with the savings needed for a home deposit can help put your goal into perspective. It may also highlight how different deposit requirements could change the amount an eligible buyer needs to save before purchasing a home.
In this guide, we'll compare what Sydney renters may pay in rent over time with the savings needed for a 20% deposit and a 5% deposit under the Australian Government 5% Deposit Scheme.
We'll also explain how the scheme works, what to consider before planning around it, and why understanding your borrowing power is just as important as saving a deposit.
What your rent in Sydney could add up to over time
Sydney remains Australia's most expensive housing market, which means both home prices and rental costs can significantly influence how long it may take to save for a deposit.
While rent is an essential living expense rather than money that could simply be redirected into savings, comparing your annual rent with today's property prices offers another way to understand the scale of a typical deposit.
It's important to remember that this comparison is illustrative only. Everyone's ability to save depends on factors such as income, household expenses, financial commitments, and personal savings goals. Property prices and rental costs also change over time.
Using Sydney property values from Cotality's Home Value Index (May 2026) and Sydney rental data from SQM Research (week ending 20 July 2026), the example below compares the median dwelling value with the amount needed for a 20% and 5% deposit, and how those figures compare with a year's worth of rent.
Example comparison | Amount |
|---|---|
Sydney median dwelling value | $1.28 million |
Sydney median weekly rent | About $916/week |
Annual rent | About $47,650 |
20% deposit | About $256,400 |
Equivalent years of rent | About 5.4 years |
5% deposit | About $64,100 |
Equivalent years of rent | About 1.3 years |
Sources: Cotality Home Value Index (May 2026) and SQM Research Weekly Rents (week ending 20 July 2026)
Looking at your rent this way won't tell you exactly when you'll be ready to buy, but it can help put today's property prices and different deposit options into perspective.
The comparison isn't designed to suggest that renters could save every dollar they spend on housing. Instead, it highlights the difference between two common deposit scenarios using today's market figures.
Understanding how today's rental costs compare with different deposit amounts can help you put your savings goal into perspective.
But before making plans based on any deposit amount, it's equally important to consider whether you could comfortably afford ongoing home loan repayments, as well as other costs of buying and owning a home.
How a 20% deposit compares with a 5% deposit
A 20% deposit has traditionally been considered a common benchmark when buying a home.
Saving 20% of the purchase price generally means borrowing less and, in many cases, avoiding lenders mortgage insurance (LMI), which is usually payable when borrowing more than 80% of a property's value.
For some buyers, taking longer to save a larger deposit may also mean lower ongoing repayments and less interest paid over the life of the loan.
However, saving a 20% deposit in Sydney can take time, particularly when property prices and living costs are high.
For eligible buyers, a smaller deposit may also be an option.
The Australian Government 5% Deposit Scheme allows eligible first home buyers to purchase a home with as little as a 5% deposit without paying LMI, because the Australian Government provides a guarantee for part of the home loan to participating lenders.
You might also be interested in: 5% deposit vs Help to Buy vs Aussie Boost
At a glance: 20% deposit vs 5% deposit
20% deposit | 5% deposit under the Australian Government 5% Deposit Scheme |
|---|---|
Higher upfront savings required | Lower upfront deposit required |
Borrow less overall | Typically borrow a larger loan amount |
May avoid paying LMI | Eligible buyers can avoid paying LMI through the government guarantee |
Available to eligible borrowers who meet a lender's requirements | Subject to lender approval, eligibility criteria and property price caps |
While the difference between a 20% and 5% deposit can be significant, it's important to remember that a smaller deposit doesn't automatically make buying more affordable over the long term.
Borrowing a larger amount generally means higher loan repayments and more interest paid over the life of the loan.
That's why it's worth considering not only how much deposit you need to save, but also whether the repayments fit comfortably within your budget.
While saving a deposit is an important milestone, it's only one part of buying a home. It's also important to budget for other costs, including stamp duty (where applicable), legal and conveyancing fees, building and pest inspections, as well as ongoing home loan repayments.
Thinking of buying in Sydney? Here's what the Australian Government 5% Deposit Scheme could change
For eligible first home buyers, the Australian Government 5% Deposit Scheme can reduce the amount needed upfront to purchase a home.
Rather than requiring a 20% deposit, eligible buyers may be able to purchase a property with a deposit of at least 5%, while avoiding LMI through the Australian Government guarantee.
However, the scheme doesn't change how much you can borrow or whether a lender will approve your application.
You'll still need to meet a participating lender's lending criteria, demonstrate that you can comfortably afford the repayments, and satisfy the scheme's eligibility requirements.
Dean Hammond, Franchise Principal at Aussie Ashfield, says the Australian Government 5% Deposit Scheme has also changed many of the conversations he's having with first home buyers.
"I think the First Home Guarantee Scheme [5% Deposit Scheme] nullifies a lot of that argument more so than it did in the old days. Because of that scheme, that's pretty much all I'm seeing."
It's also important to remember that property price caps apply. The maximum purchase price depends on where you're buying, with caps set by postcode rather than an entire city or state.
Before making plans around the scheme, check the latest property price caps using the Australian Government's official postcode checker, as these may be reviewed over time.
You might also be interested in: Understanding mortgage affordability beyond borrowing power
Before relying on the scheme, check:
Whether you're eligible for the Australian Government 5% Deposit Scheme.
Whether the property you're considering falls within the relevant postcode price cap.
Whether you can comfortably afford the repayments based on your income and expenses.
Any additional upfront costs involved in buying a home.
The participating lenders and their lending requirements.
If you're unsure where to start, speaking with an Aussie Broker can help you understand the options available based on your individual circumstances.
A deposit is only one piece of the puzzle
Whether you're aiming for a 20% deposit or exploring the Australian Government 5% Deposit Scheme, it's important to remember that a deposit is only one part of buying a home.
Before deciding whether you're ready to buy, it's worth considering a few other factors that can influence both your borrowing capacity and your ongoing costs.
Hammond also shares that many first home buyers are looking for clarity around what's achievable for their circumstances, rather than simply aiming for a particular deposit amount.
"They fall into two camps. It's either, 'That's too much, we don't need that much money,' or, 'We need more money.'"
These may include:
Your borrowing power. Lenders assess factors such as your income, expenses, existing debts, and financial commitments to determine how much you may be able to borrow.
Your repayments. A smaller deposit can reduce the time it takes to save, but borrowing more may result in higher monthly repayments and more interest paid over the life of the loan.
Upfront buying costs. Depending on your circumstances, you may also need to budget for costs such as stamp duty (where applicable), conveyancing, inspections and moving expenses.
Changes in property prices and interest rates. Property values, lending conditions and interest rates can change over time, so it's important to base your plans on current information rather than past market conditions.
Everyone's circumstances are different, which is why there's no single answer to how much deposit you should save before buying a home.
For some buyers, continuing to save towards a larger deposit may suit their long-term plans.
For others, purchasing sooner through an available government scheme may be worth exploring if they meet the eligibility criteria and can comfortably afford the repayments.
An Aussie Broker can help you understand your borrowing power, compare home loan options from a panel of lenders, where available, and explain what may be available based on your individual circumstances.
You might also be interested in: Why some buyers may have more room to negotiate in today’s property market
Before you start saving, start planning
If you're trying to work out whether buying a home in Sydney is realistic, comparing today's rent with the deposit needed for a home purchase can be a useful starting point.
But it's only one part of the picture.
Understanding how much you could borrow, what your repayments might look like and whether you meet the eligibility requirements for the Australian Government 5% Deposit Scheme can help you make a more informed decision about your next steps.
Whether you're planning to buy in the near future or simply want to understand what's possible, checking your borrowing power is a practical place to start.
You can also use our home loan repayment calculator to estimate what your repayments could look like based on different property prices, loan amounts and interest rates.
