First Home Guarantee vs Stamp Duty Concession NSW: Which Saves You More?

First home buyers in NSW keep asking a version of the same question: should I use the Australian Government 5% Deposit Scheme (the expanded First Home Guarantee), or the NSW stamp duty exemption?

It’s a trick question — and the trick matters, because the honest answer is both, if you can. They’re run by different governments, they save you different money, and nothing stops an eligible buyer using them together on the same purchase. The real question is which scheme does the heavy lifting at your price point, because that changes sharply as you move from $700,000 to $1.5 million — and it should shape where you set your budget.

The rest of this article shows the actual numbers behind those brackets, with a worked example at $850,000. If you’d rather have someone run your exact position, talk to OLEND — it’s a free, no-obligation assessment.

What each scheme actually saves

The two schemes attack different costs of buying, which is exactly why they stack.

The 5% Deposit Scheme: it saves you LMI (and years of saving)

Under the Australian Government 5% Deposit Scheme, Housing Australia guarantees part of your loan so a participating lender can accept a 5% deposit without charging lenders mortgage insurance. Since 1 October 2025 the scheme has had unlimited places, no income caps and higher price caps — in NSW, $1,500,000 in Sydney and the major regional centres (Central Coast, Newcastle, Lake Macquarie, Illawarra, Mid North Coast, Coffs Harbour–Grafton and Richmond–Tweed), and $800,000 everywhere else.

The direct saving is the LMI premium you don’t pay. On a 5% deposit, that’s serious money. Money.com.au’s LMI guide (updated 24 September 2026, using Westpac’s calculator for a NSW property) puts indicative premiums at 95% LVR at:

Every lender prices LMI differently, so treat these as indicative — but the shape is clear: the LMI avoided grows with the price, all the way to the cap.

The indirect saving is time. Waiting to save a 20% deposit on a $900,000 home means finding $180,000 plus costs; the scheme cuts the deposit hurdle to $45,000. For many buyers the years not spent saving — in a market that may keep moving — are worth more than the premium itself.

The stamp duty exemption: it saves you transfer duty, but only under $1m

The First Home Buyers Assistance Scheme (FHBAS) is the NSW side of the ledger. For contracts from 1 July 2023: full transfer duty exemption on new or existing homes at $800,000 or less, a concessional rate above $800,000 and under $1,000,000, and nothing from $1,000,000 up. Vacant land gets a full exemption to $350,000 and a concession to $450,000.

What’s that worth? Under the 2026–27 NSW duty schedule (rates from 1 July 2026, per Hunter Galloway’s 12 September 2026 update), standard duty is $11,602 plus $4.50 per $100 above $387,000 for most of the first home buyer range. In dollars, for an eligible first home buyer:

Notice how fast the concession decays: the saving drops roughly $7,500 for every $50,000 of price above $800,000, hitting zero at $1 million. The thresholds are hard lines — a home at $800,000 pays nothing, a home at $805,000 pays duty.

Head to head: what each scheme is worth at your price

Putting both tables together — duty saved via FHBAS versus indicative LMI avoided via the 5% Deposit Scheme:

Three takeaways:

1. Under $800,000, don’t choose — stack. Both schemes at full strength are worth a combined ~$54,000–$63,000, and you can add the $10,000 First Home Owner Grant on top if the home is new and under that grant’s caps.
2. From $800,000 to $1 million, the 5% scheme becomes the main event. By $900,000 it’s worth more than double the shrinking duty concession.
3. Above $1 million, there is no comparison to make. The duty concession is gone; the 5% Deposit Scheme (to $1.5m in Sydney and major centres) is the only support left — and you should budget for full standard duty of $39,187 at $1m, rising to $52,237 at $1.29m (2026–27 schedule).

Worked example: an $850,000 Sydney apartment

Say you’re buying an established two-bedroom unit for $850,000 with a 5% deposit, eligible for both schemes.

Without either scheme (5% deposit, no guarantee):

• Deposit: $42,500
• Transfer duty: $32,437
• Indicative LMI at 95% LVR: mid-$30,000s — between the published $32,677 ($800,000) and $36,787 ($900,000) estimates (Money.com.au, 24 Sep 2026)
• Approximate cash and premium burden beyond the deposit: ~$67,000

With both schemes:

• Deposit: $42,500 (unchanged)
• Transfer duty under FHBAS: $9,797 — a saving of $22,640 (Hunter Galloway, 2026–27 schedule)
• LMI: $0 under the 5% Deposit Scheme
• Approximate cash and premium burden beyond the deposit: ~$9,800

That’s a difference in the region of $57,000 on the same property — most of it from the federal scheme at this price point, but with a five-figure contribution from the NSW concession that many buyers in the $800k–$1m band forget to claim.

One planning note that falls straight out of the duty table: at $850,000 you pay $9,797 in duty; at $800,000 you’d pay nothing. If your search spans that band, the effective cost of the extra $50,000 of house is closer to $60,000. That’s worth knowing before you set an auction limit.

One market reality to price in

Both schemes are demand-side help, and in 2026 they’re popular demand-side help. After the federal expansion, the ABC reported a surge of first home buyers entering through the 5% scheme by February, and The Guardian reported in July 2026 that most first home buyers nationally now use it, with commentators linking the demand to price pressure below the caps.

Two practical consequences for NSW buyers:

• Just-under-threshold properties attract crowds. Homes listed around $780,000–$800,000 sit under the FHBAS exemption line and comfortably under the 5% scheme cap, so several bidders at that price are often enjoying the same $60,000-odd of combined support — and can be tempted to spend part of it on a higher bid. Set your limit on your numbers, not on the size of the subsidy.
• The schemes don’t move with the market mid-purchase. Duty is assessed on the dutiable value at exchange, and the 5% scheme cap tests both price and the lender’s valuation. If competition pushes a nominally-$790,000 property to $815,000, you’ve crossed from zero duty into $2,900-odd of duty — and the property still has to appraise within the scheme’s rules.

None of this makes the schemes a bad deal — a saving is a saving. It just means the brackets in this article should inform your search range, not stretch it.

The fine print that catches buyers

Qualifying for one scheme doesn’t qualify you for the other. The 5% Deposit Scheme is assessed by your participating lender against Housing Australia’s rules; the duty exemption is assessed by Revenue NSW under its own criteria — and the lender you choose doesn’t change Revenue NSW’s rules. Check both separately.

The FHBAS residence rules are strict. At least one eligible buyer must move in within 12 months of settlement and live there for 12 continuous months, buyers (and spouses) must never have owned residential property in Australia, and the benefit is once-only (Revenue NSW).

The 5% scheme cap includes the lender’s valuation. Both the purchase price and the lender-assessed value must sit at or below the cap — and outside Sydney and the major regional centres the NSW cap drops from $1.5m to $800,000, so a postcode check matters (firsthomebuyers.gov.au).

A 95% loan is still a 95% loan. No income caps doesn’t mean no assessment — you must service the debt under normal credit rules, and borrowing more means higher repayments and more interest over the life of the loan. The scheme removes LMI, not risk.

Frequently asked questions

Can I use the First Home Guarantee and the NSW stamp duty exemption together?

Yes. They’re separate schemes from separate governments — one guarantees your low-deposit loan, the other reduces or removes NSW transfer duty. An eligible buyer under $800,000 can use both in full, plus the First Home Owner Grant if the home is new.

Which saves more money in 2026?

Under about $800,000 they’re roughly even (each worth $25,000–$33,000). From $800,000 to $1 million the 5% Deposit Scheme pulls ahead as the duty concession tapers. Above $1 million only the 5% scheme applies.

How much stamp duty does a first home buyer pay on a $900,000 home in NSW?

Under the 2026–27 schedule an eligible first home buyer pays about $19,594 (versus $34,687 standard) — a saving of roughly $15,093. Get an exact figure from Revenue NSW’s calculator before exchange, especially near the thresholds.

What is the First Home Guarantee price cap in Sydney?

$1,500,000 — a cap that also covers the Central Coast, Newcastle, Lake Macquarie, Illawarra, Mid North Coast, Coffs Harbour–Grafton and Richmond–Tweed. Elsewhere in NSW the cap is $800,000.

Do I pay LMI if I buy above the NSW duty thresholds?

The two things are unrelated. LMI depends on your deposit size and lender, not on stamp duty. If you buy at $1.2 million with a 5% deposit under the federal scheme, you pay no LMI but full standard duty (about $48,187 under the 2026–27 schedule).

Where OLEND fits

OLEND is a Sydney broking practice with access to 40+ lenders and 300+ products. For purchases like these, the work is sequencing: confirming your eligibility for each scheme separately, matching you with a participating lender whose credit policy fits, and pressure-testing your budget against the duty and cap thresholds before you bid — because a $20,000 difference in purchase price can swing your costs by far more than $20,000. Start with our First Home Buyers service page, read the companion First Home Buyer Guide for NSW, or get in touch for a free assessment.