Home Loan Deposits in NZ: 5%, 10% and 20% Explained

Ask a room of first home buyers what is stopping them and most will give the same answer: the deposit. The repayments they could manage. It is the years of saving while renting that wear people down. The good news is that 20 percent is not the only door into the market. It is simply the door banks prefer. Depending on your income, your KiwiSaver balance and whether you are buying new or existing, a 10 percent deposit is often realistic, and a 5 percent deposit is possible through a government-backed scheme with strict entry rules.

This guide explains how deposit sizes actually work in New Zealand, why the Reserve Bank’s lending rules shape what banks can offer, and what each path costs you beyond the deposit itself. All prices used in the examples are round, illustrative figures only.

Quick answer

• 20 percent deposit is the standard path. It gives you the widest range of lenders, the sharpest advertised interest rates and no low equity charges.
• 10 percent deposit is available to owner-occupiers in limited numbers. Reserve Bank rules cap how much of a bank’s new lending can go to borrowers with small deposits, so banks ration these loans and often add a low equity margin or fee.
• 5 percent deposit is mainly reached through the Kāinga Ora First Home Loan, underwritten by the government agency and limited to buyers under set income caps. A KiwiSaver first-home withdrawal can supply much or all of that 5 percent.
• Investors generally need a much larger deposit than owner-occupiers. The Reserve Bank threshold for investor lending sits at 70 percent of the property’s value, which points to a 30 percent deposit for most rental purchases.
• New builds are treated more generously. Lending to construct a new home is exempt from the Reserve Bank’s deposit speed limits, so smaller deposits are often possible.

LVR explained: the rule behind the deposit

The deposit debate is really a debate about LVR, short for loan-to-value ratio. The LVR is the size of your loan compared with the value of the property, expressed as a percentage. Buy a home for $700,000 with a $140,000 deposit and you borrow $560,000, an LVR of 80 percent. The same home with a $70,000 deposit means a loan of $630,000 and an LVR of 90 percent.

The Reserve Bank of New Zealand restricts how much high-LVR lending each bank can do. These are often called speed limits, because they do not ban low-deposit loans outright. They limit the share of a bank’s new lending that can be low-deposit lending. From 1 December 2025, the settings eased: up to 25 percent of a bank’s new owner-occupier lending can have an LVR above 80 percent, and up to 10 percent of new investor lending can have an LVR above 70 percent. The Reserve Bank said the easing was possible because separate debt-to-income rules, introduced in 2024, were already restraining risky borrowing.

Two practical consequences follow. A low-deposit approval is partly a question of timing, because a bank that has used up its allowance for the month may decline a strong applicant it would happily have approved weeks earlier. And banks guard their limited slots for their best applicants: existing customers with clean account conduct, stable income and a tidy savings record.

Sitting alongside the LVR rules are the debt-to-income (DTI) restrictions. Banks can make only a limited share of loans to borrowers whose total debt is large relative to their income: up to 20 percent of new owner-occupier lending can exceed a DTI ratio of 6, and up to 20 percent of investor lending can exceed 7. A small deposit makes both tests harder at once, because a bigger loan pushes up your LVR and your DTI together. If you are working out how much you can borrow, treat the deposit and the income test as one problem, not two.

The 20 percent standard path

Twenty percent remains the benchmark deposit for a reason. At an LVR of 80 percent or below, your loan sits outside the Reserve Bank’s restricted category altogether, so the bank does not need to spend one of its rationed low-deposit slots on you. That translates into real advantages:
– Access to the advertised special rates banks reserve for borrowers with at least 20 percent equity.
– No low equity margin, low equity fee or lender’s mortgage insurance.
– A wider choice of lenders competing for straightforward applications.
– A buffer against price falls, so a dip in values is less likely to leave you owing more than the home is worth.

The trade-off is time. On an illustrative $700,000 purchase, 20 percent is $140,000, a long save for most renting households once KiwiSaver is counted. That is precisely why the smaller deposit paths exist.

Buying with 10 percent

A 10 percent deposit puts you at a 90 percent LVR, squarely inside the restricted category for owner-occupiers. Banks can write these loans, but only within that 25 percent share of their new lending, so approval is more competitive and criteria are applied more strictly. Expect the following:

• Sharper scrutiny of your finances. Lenders look closely at income stability, existing debts, credit card limits and everyday spending. Unsecured debts such as car loans and buy-now-pay-later balances weigh heavily against small-deposit applications.
• A valuation at your cost. The bank will usually require a registered valuation, and the LVR is worked out on the lower of the purchase price and the valuation. If the valuation comes in under the price you agreed, your effective deposit shrinks and the deal can stall.
• Extra cost for the risk. Most banks charge low-deposit borrowers more, either through a low equity margin added to the interest rate until your equity builds, a one-off low equity fee, or both. Treat it as a genuine cost of buying sooner, and weigh it against another year of rent.

One category gets an easier ride at this level: new homes, covered in their own section below.

Buying with 5 percent: the First Home Loan

The main route to a 5 percent deposit is the First Home Loan, a scheme administered and underwritten by Kāinga Ora, the government’s housing agency. The loan itself comes from a participating bank or lender, but Kāinga Ora’s underwriting lets that lender approve loans that sit outside its normal lending standards, and in practice outside the banks’ Reserve Bank speed limits as well.

The eligibility rules are firm. According to Kāinga Ora, you must:

• Be over 18 years old.
• Be a New Zealand citizen, a permanent resident, or a resident visa holder.
• Be a first home buyer, or a previous homeowner who is in a similar financial position to a first home buyer.
• Have earned, before tax, less than $95,000 in the last 12 months if you are an individual buyer, less than $150,000 if you are an individual buyer with dependants, or less than $150,000 combined if there are two or more buyers.
• Have a minimum deposit of 5 percent of the purchase price.
• Be buying the home to live in as your primary place of residence.
• Meet the lending criteria of a participating lender, which assesses the application and makes the final decision.
• Pay a Lender’s Mortgage Insurance premium of 1.2 percent of the loan amount, plus a loan application fee if the lender charges one. The premium is charged to insure each loan and can typically be added to the loan rather than paid upfront.

Participating lenders listed by Kāinga Ora include ASB, Westpac, Kiwibank, The Co-operative Bank, SBS Bank, Unity, Nelson Building Society and NZHL. Each applies its own additional lending criteria on top of Kāinga Ora’s minimums, so being declined by one does not automatically mean being declined by another.

The process runs in two stages. You can apply for pre-approval while house hunting, which confirms your eligibility and gives you a price range to shop within, then full approval once you have found a specific home. Pre-approvals expire after a set period, so keep your documents current.

You may also have seen references to the First Home Grant, which once topped up deposits with a cash grant. Kāinga Ora stopped accepting new applications for the grant on 22 May 2024, so it is no longer part of the deposit picture. The First Home Loan and the KiwiSaver withdrawal below are the two supports that remain.

KiwiSaver first-home withdrawal: the other half of the 5 percent path

For many buyers, the 5 or 10 percent deposit is not saved in cash at all. It comes substantially from KiwiSaver. Under the first-home withdrawal rules, confirmed by Inland Revenue, you can withdraw your KiwiSaver savings towards buying your first home if you have been a member for at least three years. You can take out your own contributions, your employer’s contributions, the government contribution, interest earned and any fee subsidies. Two limits apply: you must leave at least $1,000 in your account, and money transferred in from an Australian complying superannuation scheme cannot be withdrawn.

The withdrawal is arranged through your KiwiSaver provider, and the money is paid to your lawyer to apply to the purchase, rather than landing in your everyday account. If you have owned a home before, you are not automatically excluded, but Kāinga Ora must first assess whether you are in a similar financial position to a first home buyer. In practice, most low deposits are a blend: ordinary savings, one or two KiwiSaver withdrawals and sometimes a family gift.

Note the timing trap. KiwiSaver funds are generally released at settlement, not when you sign. The cash deposit payable when your offer goes unconditional may need to come from ordinary savings, with the KiwiSaver money completing the deposit at settlement. Talk to your lawyer and lender about how the agreement is worded before you sign.

New builds and the LVR exemption

New housing gets deliberate encouragement in the Reserve Bank framework. Loans for the construction of new dwellings, and loans to remediate properties, are exempt from the LVR speed limits. Because an exempt loan does not consume any of the bank’s rationed low-deposit allowance, banks are often willing to lend a higher proportion of the price or value on a new build than on an existing home, and deposits of 10 percent or less are commonly workable for owner-occupiers who meet the income tests.

The same logic supports many turnkey and off-the-plans purchases, though how a particular purchase is classified is the bank’s call. Construction loans release money in stages as the build advances, with interest usually charged only on what has been drawn. Some participating lenders will also allow a First Home Loan to be used to buy land and build, subject to their own criteria.

Deposits for investors

Investor lending sits under a stricter threshold. The Reserve Bank speed limit applies above a 70 percent LVR for investors, and only 10 percent of a bank’s new investor lending can exceed it. In deposit terms, that means a 30 percent deposit is the normal expectation for a rental purchase, and loans above that line are the exception rather than the rule.

Existing equity changes the maths for established landlords, because a bank can sometimes structure lending across a portfolio so the overall LVR stays within limits even if one purchase is highly geared. That is a conversation about total security, not a loophole, and the investor DTI restriction of 7 still applies across the portfolio. First-time investors without other property should simply plan on 30 percent.

Where the deposit money can come from

Banks care about the source of your deposit almost as much as its size. The main sources, and what lenders expect to see for each, are:

• Your own savings. Lenders generally want to see a genuine savings pattern: money built up over time in your accounts, supported by bank statements. A balance that appeared last week invites questions. There is no Reserve Bank rule setting a minimum savings period, but a visible track record of regular saving, alongside rent payments, is the strongest evidence that you can handle repayments.
• KiwiSaver withdrawal. Covered above. The provider’s paperwork and the $1,000 minimum balance are the key facts to plan around.
• A gift from family. Gifted deposits are common and acceptable to most lenders, but expect formality. The giver will usually be asked to sign a gift declaration confirming the money is a genuine gift, does not need to be repaid, and that they claim no interest in the property. Kāinga Ora’s application material counts gifts as part of the deposit evidence, alongside savings and first-home withdrawals.
• A guarantee. Some families help through a guarantee instead of cash, where a parent offers equity in their own home as additional security for part of the loan. This puts the guarantor’s property at real risk if repayments fail, and banks will insist everyone takes independent legal advice. Treat it as a serious legal commitment, not a signature of encouragement.

Whatever the mix, assemble the evidence before you apply: identification, proof of address, several months of bank statements, income and expense details, and statements for any debts. Kāinga Ora’s list for First Home Loan applicants is a good template for any low-deposit application.

A word on the contract deposit, because buyers confuse the two. The deposit named in your sale and purchase agreement, commonly around 5 to 10 percent of the price and payable when the agreement goes unconditional, is part of your overall home loan deposit, not an extra amount on top. It is usually paid into a trust account and held there before being released.

Worked examples: what 5, 10 and 20 percent look like

The table uses round, illustrative purchase prices only. They are not market prices for any particular place.

Illustrative purchase price	5% deposit	Loan at 95% LVR	10% deposit	Loan at 90% LVR	20% deposit	Loan at 80% LVR
$500,000	$25,000	$475,000	$50,000	$450,000	$100,000	$400,000
$700,000	$35,000	$665,000	$70,000	$630,000	$140,000	$560,000
$900,000	$45,000	$855,000	$90,000	$810,000	$180,000	$720,000

Read the loan column as carefully as the deposit column. On the $700,000 example, buying at 5 percent instead of 20 percent means borrowing an extra $105,000, serviced every fortnight and repaid with interest over the life of the loan. The smaller deposit gets you in sooner; it does not make the house cheaper.

The extra costs of a small deposit

The deposit is the headline number, but low-deposit borrowing carries additional costs that should sit in your budget:

• Low equity margin. Many banks add a margin to the interest rate on loans above 80 percent LVR. The margin typically steps down or disappears as your equity grows through repayments or value increases. On a large loan, even a small margin adds up to hundreds of dollars a year, which is why checking current home loan rates and the margin that applies at your LVR matters before you commit.
• Low equity fee or mortgage insurance. Some lenders charge a one-off fee instead of, or as well as, a margin. Under the First Home Loan, the equivalent cost is the 1.2 percent Lender’s Mortgage Insurance premium set by Kāinga Ora. On a $600,000 loan, that premium alone is $7,200, usually added to the loan and repaid with interest.
• Valuation and application costs. Registered valuations, loan application fees and legal costs apply to most purchases and bite harder when cash is tight.
• Cashback offers. Banks compete for first home buyers with cash contributions towards legal and moving costs, and a mortgage cash back offer can soften the upfront costs, though it does not reduce the deposit you need and conditions about staying with the lender apply.

Against those costs, weigh the price of waiting: rent paid in the meantime, and the risk that prices or interest rates move against you while you save. There is no universally right answer, only an honest comparison.

Building a deposit faster

None of the following is magic, but together they shorten the timeline materially:

• Set the target in LVR terms, not round dollars. Knowing you need 10 percent of a realistic price range, rather than an abstract savings goal, focuses every decision.
• Automate the saving. A separate account, paid on payday before spending starts, builds the pattern lenders want to see as well as the balance.
• Review your KiwiSaver settings. Your contribution rate and fund choice drive the balance you can later withdraw. Higher contributions now are, in effect, deposit savings with employer and government contributions attached.
• Clear small debts first. Car finance, personal loans and card balances reduce what you can save and count against you twice at application time: once in the deposit, once in the servicing test.
• Bank the windfalls. Tax refunds, bonuses and the proceeds of selling a car go straight to the deposit account before they dissolve into general spending.
• Consider the property, not just the deposit. A cheaper first home, a new build with exempt lending, or buying with a partner all change the deposit required far more than any savings trick.

FAQs

Can I buy a house in NZ with a 5 percent deposit?

Yes, mainly through the Kāinga Ora First Home Loan, provided you meet its income caps and other criteria and a participating lender approves you. Outside that scheme, 5 percent approvals for existing homes are rare, though new builds are treated more flexibly because construction lending is exempt from the LVR speed limits.

What income do I need for a First Home Loan?

Your before-tax income over the last 12 months must be less than $95,000 as an individual buyer, less than $150,000 as an individual buyer with dependants, or less than $150,000 combined for two or more buyers. There is no minimum income, but you still need to satisfy the lender that you can service the loan.

How much of my KiwiSaver can I withdraw for a first home?

After at least three years of membership, you can withdraw your contributions, your employer’s contributions, the government contribution and earnings, as long as at least $1,000 stays in your account. Money transferred from an Australian superannuation scheme cannot be withdrawn.

Do I still need a deposit if my parents guarantee my loan?

Usually some deposit is still expected, and the structure varies by lender. A guarantee uses your parents’ property as security and exposes it if you default, so it reduces the lender’s risk rather than removing the need to show savings discipline. Independent legal advice is essential for everyone involved.

Is a 10 percent deposit enough for an investment property?

Generally no. Investor lending is restricted above a 70 percent LVR, so a 30 percent deposit is the normal starting point unless you have substantial equity in other property for the bank to structure against.

Does the First Home Grant still exist?

No. Kāinga Ora stopped taking new First Home Grant applications on 22 May 2024. The First Home Loan and the KiwiSaver withdrawal are the remaining forms of government help with a deposit.

Why did one bank decline me when another approved a similar loan?

Because the speed limits apply to each bank’s own lending mix. A bank close to its low-deposit allowance will ration approvals, while another with room to spare can say yes. Lenders also layer their own criteria over the Reserve Bank rules, so outcomes genuinely differ.

For more guides on buying, selling and owning property in New Zealand, browse the Real Estate hub.

Sources

• Reserve Bank of New Zealand, “Confirmation of changes to loan-to-value restrictions”, briefing to the Minister of Finance, 6 November 2025: LVR speed limits from 1 December 2025, rbnz.govt.nz
• Reserve Bank of New Zealand, media release on activating debt-to-income restrictions and easing LVR settings, May 2024: DTI limits of 6 for owner-occupiers and 7 for investors with 20 percent speed limits, rbnz.govt.nz
• Reserve Bank of New Zealand, LVR restrictions factsheet for borrowers: exemptions for construction and remediation lending, rbnz.govt.nz
• Kāinga Ora, First Home Loan page and First Home Loan brochure: eligibility criteria, income caps, 5 percent minimum deposit, 1.2 percent Lender’s Mortgage Insurance premium, participating lenders, kaingaora.govt.nz
• Kāinga Ora, Home Ownership Products Quarterly Report: First Home Grant applications ceased 22 May 2024, kaingaora.govt.nz
• Inland Revenue, “Getting my KiwiSaver savings for my first home”: three-year membership rule, withdrawable components, $1,000 minimum balance, ird.govt.nz
• Consumer Protection (MBIE) and Real Estate Authority guidance on buying a house: sale and purchase agreement stages, contract deposits and trust accounts, consumerprotection.govt.nz and rea.govt.nz

Disclaimer

This article is general information about home loan deposits in New Zealand, based on official sources at the time of writing. It is not financial advice and does not take your personal circumstances into account. Lending criteria, scheme settings and interest rates change, and approval always depends on the lender’s assessment of your application. Talk to your bank or lender, a mortgage adviser and your lawyer before committing to a purchase.