How to buy a $1.2 million house in Sydney?

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How to purchase a 1.2 million house in Sydney

My clients approached me last year about buying their first home. They’re a couple with two kids aged 8 and 10. The husband and wife are both working and earn around $100,000 each. They’re also both Australian citizens.

Because both are first home buyers, Australian citizens and earning $200,000 combined, they qualify for the First Home Loan Deposit Scheme. 

What is the First Home Loan Deposit Scheme?

The First Home Loan Deposit Scheme (FHLDS) is an Australian Government initiative to support eligible first home buyers purchase their first home sooner. It allows first home buyers to purchase a property with as little as a five per cent deposit and without the need to take out lenders mortgage insurance (LMI).

But the scheme has a property price cap. For the suburb where they’re looking at buying and building home, the price cap for the New Home Guarantee is $950,000. 

How did I find out that buying a house now cost $1.2 million?

A week later, my clients came back to me saying they couldn’t find anything within the $950,000 price range. Most of the properties are more than $1 million.

I did visit a display home in Box Hill and much to my surprise found out that a 300 square meter block of land is around $800,000 minimum. To build a house would cost around $400,000.  

What is LVR?

Loan to value ratio is the loan amount divided by the purchase price or the valuation of the property.

Let’s say a house has a market value of $1,000,000 and the loan amount is $900,000. The loan to value ratio is $900,000 divided by $1,000,000, which is 90%.

What is LMI?

Lenders Mortgage Insurance protects the bank if the borrowers are unable to pay the loan. LMI is usually a one-off cost payable to a home loan borrower, payable when the amount borrowed is greater than 80% of the value of the property. If you have a 20% deposit, then you don’t pay LMI.

How does my clients’ funds position look like?

Land price $800,000

Construction cost $400,000

With construction loans, most lenders will only go up to 90% of the value of the property inclusive of loan mortgage insurance. In this scenario, our clients can only go up to a loan of $1,080,000. The borrowers must pay the stamp duty and all the other fees related to the purchase a property.  Thankfully, the clients have enough savings to make the $1.2 million purchase. In this case, they had $180,000 which they’ve saved the last 3 years.

Cost to purchase?

Land $800,000

Construction $400,000

Stamp duty $31,305

Registration fee $147.70

Transfer fee $147.70

Total $1,231,600.40

Where funds are coming from?

Loan $1,056,000

Customer’s contribution $175,600

We have other first home buyers who were able to purchase within the $950,000 price. They had to look elsewhere and went as far as the Central Coast to purchase their first home. Their ability to work from home has allowed them to buy outside of metro Sydney at less than $950,000 and at the same time qualify for the New Home Guarantee.

We’ve created a video on how you can purchase a $1.2 million property in Sydney. You can watch the video here.

You can find out more about the First Home Buyer Incentives here.

How about attending our webinar to learn the process of Buying your First Home? We regularly conduct webinars for first home buyers every quarter. If you can’t wait for our next webinar, you can simply send us an email at and we will send you a recording.

To find out if you’re ready to buy your first home, speak to a Maverick Finance Broker who’ll be able to walk you through the process. As always, all of us at Maverick Finance are here to support you on your property journey. You can get in touch with us by calling 0430 144 008 or send us an email to, or simply leave your contact details and we’ll call you back. You can also book a complimentary meeting with us at

This article is for general information only and should not be considered personal financial advice.   Before making a financial decision, you should seek independent advice from a mortgage broker, financial planner or an accountant.

Maria Papa is a senior property and finance expert specialising in home loans, investment loans, self-employed loans, alt doc loans, car loans, personal loans and loan protection.  She has offices in Sydney, Melbourne and Manila.  If you have questions, you can call Maria at 0430 144 008 or email her at

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