A 20% deposit is the number everyone quotes, but it is not the only way into a home in New Zealand. Banks lend above 80% of a property value every day, and in December 2025 the Reserve Bank gave them more room to do it. Here is how low deposit lending actually works, what it costs, and which route is likely to fit you.
Most people assume a small deposit means the answer is no. In practice it usually means fewer lenders rather than none, and which lenders depends on details that are quick to check:
Low deposit does not mean one product. These are the three routes, and the right one usually comes down to your income and whether you qualify for the government scheme.
Once you are near 10%, most main banks will consider you on their own terms, with no government scheme involved and no limit on what you earn. You pay a low equity margin on top of your interest rate until you reach 20% equity. This is the route for people who earn too much for Kāinga Ora.
The First Home Loan is underwritten by Kāinga Ora and allows a deposit as small as 5%. You need to have earned $95,000 or less in the last 12 months as a single buyer, or $150,000 or less buying with someone else or with dependants. It has its own page with the full criteria.
A shared ownership provider buys a share of the home alongside you, which means around 5% is often enough to get started. You are the majority owner from day one and you live in it as your own. You pay a charge on the provider’s share while they hold it, and you buy that share back over time as you pay down your loan. It is worth knowing that this is not a loan and not a second mortgage, so it works differently from every other option on this page.
Borrowing above 80% costs more than borrowing below it. Not dramatically, and not forever, but it is worth knowing the two ways it shows up before you start looking.
Lenders add an extra amount to your interest rate when you borrow more than 80% of a property value, because a smaller deposit carries more risk for them. How much depends on the lender and on how far above 80% you are. It normally comes off once you reach 20% equity, either by paying the loan down or through the property rising in value.
The Reserve Bank limits how much high deposit lending each bank can do. That is why approval can depend on timing: a bank close to its limit may decline an application it would have taken a month earlier. Knowing who currently has room is a large part of the job.
On 1 December 2025 the Reserve Bank eased the limit for owner occupiers, lifting the share of new lending allowed above 80% from 20% to 25%. In plain terms, banks have more room for low deposit borrowers than they did, which is genuinely good news if you have been told no before.
A Kāinga Ora First Home Loan does not carry a low equity margin at all, which is one reason it is worth checking whether you qualify before going down the standard route.
Low deposit applications get declined for avoidable reasons more often than for real ones. Most of the work happens before anything is submitted.
Savings, KiwiSaver, anything family are offering, and what is realistically coming in before you buy. People often have more to work with than they think.
If you qualify for a First Home Loan at 5%, that is usually the cheaper path, so it is worth ruling in or out before anything else.
Unused credit card limits, small hire purchases, an overdraft you forgot about. These matter far more on a low deposit application than on a standard one.
Lenders are limited in how much high deposit lending they can write, and they are not all in the same position at the same time. This is where using an adviser earns its keep.
You get a conditional approval and a price range you can trust before you start making offers.
I stay with the application through the conditions, approval and settlement.
If a bank has already declined you on deposit, that is worth a second look rather than a full stop. Lenders read the same application differently.
Every lender treats low deposits differently, and those rules change. I put your application where it has the best chance rather than wherever is quickest.
Paperwork, lender questions, conditions coming back. I handle the back and forth so you can get on with your life.
The lender pays me once your loan settles. That is the same whether you are buying with 5% or with 20%.
I work with first home buyers in Tauranga, Mount Maunganui, Pāpāmoa and across the Bay of Plenty, and with plenty of people who live nowhere near me. Most of this happens by phone, email and video call, so where you are does not change the advice or how easy it is to reach me. If you are local and would rather sit down together, that is easy to arrange.
The things people ask me most about buying with a small deposit.
It is a home loan where you borrow more than 80% of the property value, so your deposit is less than 20%. Most main banks will consider around 10%, and the Kāinga Ora First Home Loan allows as little as 5% for buyers who meet its income criteria.
Realistically, no. New Zealand lenders do not offer 100% home loans for owner occupiers. What does exist is close to it: a family member securing part of the loan against their own property, a gifted deposit, or a KiwiSaver balance you did not realise you could use. Those routes can get some people in without savings of their own, but there is still a deposit, it just comes from somewhere else.
It is an extra amount added to your interest rate when you borrow more than 80% of a property value, because a smaller deposit carries more risk for the lender. How much depends on the lender and how far above 80% you are borrowing. It usually comes off once you reach 20% equity.
Loan to value ratio restrictions limit how much high deposit lending each bank can write. For owner occupiers, a loan above 80% of the property value counts as high LVR. On 1 December 2025 the Reserve Bank raised the share of new lending banks may write above that threshold from 20% to 25%, which means more room for low deposit borrowers than there was.
It is an arrangement where a provider buys a share of the home alongside you instead of lending you money. Your deposit plus their share makes up the full deposit, you own the larger share and live in the home as your own, and you buy their share back over time as you pay down your loan. You pay a charge on the portion they hold while they hold it. It is not a loan and it is not a second mortgage.
Often, yes. New builds are exempt from the loan to value restrictions, so banks can lend on them with a smaller deposit than an existing home would need. Construction lending has its own complications though, so it is not automatically the easier path.
Yes. A family member can guarantee part of your loan by offering security over their own property or a term deposit, rather than handing over cash. You still have to show you can afford the whole loan yourself, and anyone acting as guarantor should get independent legal advice before signing, because it is a real commitment.
Not necessarily, and a decline from one lender does not mean the same answer everywhere. Banks sit in different positions on their high LVR lending at different times, and they weigh income and credit history differently. It is worth a second opinion before you assume the answer is no.
Sometimes, sometimes not. Waiting costs you rent and exposes you to prices moving, while buying earlier costs you a low equity margin for a few years. Which is better depends on your numbers rather than on a rule, and it is a fair question to bring to a conversation.
Nothing. My service is free to you, because the lender pays me once your loan settles. If that ever would not be the case, I would tell you before we started.
