Deposits: How much do you need to buy your first home?
One of the most common questions first-home buyers ask is how much deposit they need to buy a property in New Zealand. It’s easy to feel overwhelmed by changing bank rules and government schemes, but the good news is that with the right preparation—and sometimes as little as 5%—home ownership is still possible.
Ideally, banks prefer a 20% deposit. This gives you access to the widest range of lenders, better interest rates, and an overall easier approval process. But in reality, many first-home buyers purchase with less. A 10% deposit is often enough for existing homes, and in some situations—such as with Kainga Ora’s First Home Loan or certain new builds—a 5% deposit may be accepted.
Some banks also offer low-deposit lending to their existing customers. These offers come and go quickly, depending on each bank’s internal limits, which is why working with a mortgage adviser is key. They’ll know which banks have low-deposit lending available at any given time.
What Is a Low-Deposit or Low-Equity Borrower?
If you’re buying with less than 20% deposit, you’re classified as a low-deposit or low-equity borrower. This means the bank is taking on slightly more risk, and your application will be assessed more thoroughly. You’ll need to show that you can comfortably afford repayments—even if interest rates rise—and that you have your finances in order.
Banks are allowed to allocate a limited portion of their lending to borrowers with low deposits. As of 2024, that allocation is around 15% of their total residential lending. This means competition for low-deposit lending can be tight, and approvals are often prioritised for those with good income, low debts, and responsible spending.
It’s also important to note that most banks won’t give pre-approvals for low-deposit borrowers. You’ll typically need to have a conditional offer on a property before the bank will consider your application. Because of this, it’s best to focus on homes being sold by negotiation or with a price listed, rather than auctions where you can’t include finance conditions.
Can I Use Gifted Money for My Deposit?
Yes, you can—but not always for the entire deposit. Banks want to see that you’re able to manage your money and save consistently. That’s why most require at least 5% of the deposit to be made up of what’s known as “genuine savings.” This could be money you’ve put aside regularly, or your KiwiSaver balance—especially if you’ve been contributing consistently over time.
For example, if you're buying a $600,000 home, you'll usually need to show that $30,000 of your deposit has come from your own savings or KiwiSaver. The remainder of the deposit can often be gifted by a parent or family member, provided there’s documentation confirming it’s a gift and not a loan.
There are some exceptions. One or two banks may accept a fully gifted deposit, but they’ll look more closely at your income and spending habits to ensure you're financially ready for a mortgage.
What Counts as Genuine Savings?
The most common forms of genuine savings include a regular savings account with a visible track record of contributions, your KiwiSaver (including your contributions, employer contributions, and government contributions), and any annual bonuses that have been saved rather than spent.
On the other hand, money drawn from a credit card limit or short-term loans doesn’t count. Even if you repay a loan and try to use that as savings, the bank may require documentation showing where the original loan came from and how it was repaid.
What If My Deposit Is a Loan From Family?
It’s absolutely fine to receive a loan from your parents to help with your deposit, but it must be properly documented. If there’s an expectation of repayments—whether interest-free or otherwise—the bank will factor this into your overall financial position. Any repayments will be treated as an outgoing expense and reduce how much you can borrow for your home loan.
To avoid surprises, it’s best to agree upfront on the terms of the loan, including whether repayments are required and over what period. Your mortgage adviser can help ensure the loan documentation meets the bank’s requirements.
Tips for Buying With a Small Deposit
When applying with less than 20%, it helps to keep your finances as tidy as possible. That means avoiding unnecessary spending in the months leading up to your application, staying well within your budget, and making a habit of saving. It also helps to minimise your exposure to other debts—so try not to apply for new loans or increase your credit card limit during this time.
If you're buying as a couple, consider keeping your banking separate. This might seem counterintuitive, but it can be a strategic move. Banks tend to favour existing customers when offering limited lending. If you and your partner both bank with the same institution, you only have one relationship to leverage. But if you each bank with different institutions, your adviser has more flexibility to find a lender with an active low-deposit policy.
What About Kainga Ora’s First Home Loan?
The First Home Loan, supported by Kainga Ora and offered by selected banks, is designed to help buyers who don’t have a full 20% deposit. With this scheme, you may be eligible to buy a home with just 5% deposit, provided you meet the income limits and regional house price caps.
This can be a great option for first-home buyers, particularly those using their KiwiSaver to boost their deposit. Keep in mind that lenders still carry out their own affordability checks, so your income, debts, and spending will all be assessed before approval.
Final Thoughts
So how much deposit do you need? In general, a 5% deposit is the minimum—either through the First Home Loan scheme or via a select few banks for certain customers. A 10% deposit is more widely accepted and typically gives you a broader choice of lenders, while a 20% deposit remains the easiest path to mortgage approval, lower interest rates, and fewer hoops to jump through.
Even if you’re not quite ready to buy, understanding how deposit rules work now can help you make smarter saving decisions. With the right planning—and the right advice—you can make your first step onto the property ladder with confidence.