Officers from the NSW Joint Counter Terrorism Team began searching the home at Heckenberg in southwest Sydney.
The AFP said the raid related to an ongoing investigation and there was no danger to the community.
"It's not a threat to the public, it relates to terrorism financing," AFP Commissioner Andrew Colvin said today while speaking at federal police headquarters.
"Like all of our counter terrorism investigations they tend to roll on. This is another one of those.
"It's not a threat to the public, it relates to terrorism financing and while it's ongoing I'll confine my comments to that."
Officers were seen removing a number of items from the Tantangara Street property, and digital forensic experts who specialise in computer and phone analysis were at the site.
A neighbour told ABC News the house was rented by a young family of five, but the husband had not been seen in months.
AAP understands police do not expect to make any arrests today.
