Low Deposit Home Loans in NZ: Buying With 5% or 10%
You don't need 20% to buy a home in New Zealand. You do need to know which of the four low-deposit routes fits you, because each has its own rules and its own price.
Why 20% is the usual line
The Reserve Bank limits how much of each bank's new lending can go to borrowers with less than a 20% deposit. Banks can still do it. They just have a restricted amount to hand out, so they ration it and charge more for it. The technical name for the measure is loan-to-value ratio, and the Reserve Bank publishes the current restrictions.
Four ways to buy with less than 20%
| Route | Typical minimum deposit | Who it suits |
|---|---|---|
| Bank low-deposit allocation | 10%, sometimes 5% | Strong, stable income and a tidy credit record. |
| New build | 10%, depending on the lender | Buyers happy with a new home. New builds are exempt from the Reserve Bank's restrictions. |
| KΔinga Ora First Home Loan | 5% | First home buyers under the scheme's income caps. |
| Family guarantee | Little or none of your own | Buyers whose parents have equity and are willing to back part of the loan. |
Non-bank lenders are a fifth possibility. They aren't bound by the same restrictions and some lend at 85% or 90%, at a higher rate. We treat that as a short-term step.
What banks look for at 10%
With limited low-deposit lending available, banks choose their applicants. In our experience the things that count are a secure job or a solid self-employed record, a deposit you saved yourself or at least partly, no missed payments, and little other debt. Clearing a car loan or cutting a credit card limit before applying can change the answer.
Availability also moves around. A bank can be open to 10% deposits one month and close the tap the next when it nears its limit. That's one of the few areas where having someone check several lenders on the same day makes a real difference.
What it costs
Low-deposit loans are usually priced above standard rates. Lenders add a low equity margin or fee that falls away as your equity grows. You'll also get less of the extras, such as cash contributions.
It's still often worth doing. Waiting three more years to save 20% has a cost too: rent paid, and whatever house prices do in the meantime. Nobody can tell you which way that will go, so we run the numbers both ways and let you decide.
Where the deposit can come from
- Your savings.
- KiwiSaver. After three years you can usually withdraw most of your balance for a first home. See KiwiSaver first-home withdrawal.
- A gift from family, with a signed letter. See gifted deposits.
- Equity in a family member's home, through a guarantee.
This article explains how New Zealand lenders generally assess these situations. It is general information, not personalised financial advice, and lender policy changes often β check your own position with a registered adviser. Official sources: Reserve Bank of New Zealand for lending policy and the OCR, and Sorted.org.nz for independent government-backed money guidance.
Low deposit home loans: common questions
Got less than 20%? Let's see what's possible
Tell us your deposit, income and where you're looking. We'll check which lenders have low-deposit lending available right now and what it would cost.
Call 027 343 3293 now- β We compare 23 NZ banks and non-bank lenders
- β The lender pays us β our advice costs you nothing
- β Registered financial adviser (FSP1011206)
- β Same-day reply on weekdays