How Much Deposit Do You Need to Buy Your First Home in NZ? (You May Not Need 20%)
TL;DR
The 20% deposit is not a legal requirement. It never was. It is the level at which lending gets easiest and cheapest, not the gate you have to clear to get in. Eligible first home buyers can buy with as little as 5% through a Kāinga Ora First Home Loan, and 10% deposits go through regularly with mainstream banks. On a $700,000 home, that is the difference between saving $35,000 and saving $140,000. If you have been waiting to hit 20% before you even look, you may have been queuing for a door that was never locked. Here is what you actually need, and the trade-offs of going in with less.
Almost every first home buyer starts with the same number stuck in their head.
Twenty percent.
It gets repeated so often it feels like law. It isn't. The 20% figure is a lending convention, not a rule you must meet, and treating it as a hard requirement keeps people renting for years longer than they need to.
Let's pull it apart.
Where the 20% Number Actually Comes From
The Reserve Bank sets loan-to-value ratio rules, LVR for short, that shape how much banks can lend against a property. For owner-occupiers buying an existing home, the standard limit is 80% of the property value. That 80% is where the "20% deposit" idea comes from. Borrow 80%, put in 20%, done.
But that is the level banks are free to lend at without restriction. It is not the floor.
The Reserve Bank also lets banks do a set share of their lending above that 80% level, to buyers with smaller deposits. This is the "speed limit." From 1 December 2025, banks can write up to 25% of their new owner-occupier lending to borrowers with less than a 20% deposit, up from 20% previously.
Read that again. A full quarter of new owner-occupier lending can go to people with under 20% down. Low-deposit buyers are not a fringe case the banks tolerate. They are a quarter of the market by design.
What You Can Actually Buy With
Here is the real range of deposits, not the myth.
20% deposit. The easiest path. Access to every lender, the best interest rates, and no low-equity fees. If you can get here comfortably, it is the smoothest option. But it is the ceiling of ease, not the entry requirement.
10% to 19% deposit. Very doable with mainstream banks through low-equity lending. You will usually pay a low-equity premium, an extra margin on your rate, but you are in years earlier. More on that cost below.
5% deposit. Possible for eligible buyers through the Kāinga Ora First Home Loan. The government does not lend you the money. A normal bank does. Kāinga Ora underwrites the loan, meaning it tells the bank it will help cover the risk if things go wrong, so the bank is willing to accept a much smaller deposit.
On a $700,000 home, those tiers translate to roughly $140,000, $70,000, and $35,000. That is not a small difference. That is years of your life.
The First Home Loan: The 5% Path Explained
The Kāinga Ora First Home Loan is the single most useful tool for buyers who are strong on income but short on deposit.
To qualify, you generally need to:
Be a New Zealand citizen, permanent resident, or a resident visa holder who is ordinarily resident here
Be a first home buyer, or in a similar financial position to one
Earn no more than $95,000 in the last 12 months as a single buyer with no dependants, or up to $150,000 as a single buyer with dependants, or up to $150,000 combined for two or more buyers
You also have to intend to live in the home, and you still have to pass the bank's own lending criteria on top of the Kāinga Ora rules. The underwrite gets you past the deposit barrier. It does not override the bank's view on whether you can service the loan.
One Thing That Has Changed: The Grant Is Gone
If your plan involved the First Home Grant, that cash top-up of up to $10,000, you need to update your information.
The First Home Grant was closed to new applications on 22 May 2024 as part of Budget 2024. The money was redirected into social housing. It has not been reinstated and there is no direct replacement.
Any website or adviser still telling you how to apply for it in 2026 is working from outdated information. The First Home Loan and your KiwiSaver first-home withdrawal both remain. The grant does not. Plan around what exists.
Your KiwiSaver Is Probably Part of the Deposit
Most first home buyers can withdraw their KiwiSaver to put toward a first home, provided you have been a member for at least three years. You have to leave a minimum of $1,000 in the account, and the home has to be one you intend to live in, not an investment.
For a lot of buyers, KiwiSaver plus a modest cash saving plus, in some cases, a family gift is what gets the deposit across the line. It rarely comes from one source. A gifted deposit is common and accepted, though the bank will want a signed letter confirming the gift is not a loan in disguise.
The Honest Trade-Off of a Low Deposit
This is where most cheerleading articles go quiet. We won't.
Buying with less than 20% has real costs, and you should go in with your eyes open.
The low-equity premium. Borrow above 80% and banks typically add a margin to your interest rate, often somewhere between 0.25% and 1% depending on how far above 80% you are and the lender. On a large loan, that adds up to thousands a year until you build enough equity to shed it.
Less buffer if prices fall. Put in 10% and if the market drops 10%, your equity is wiped out. That makes refinancing or selling hard. A bigger deposit is a cushion against a falling market, not just a lending tick-box.
The speed limit is real. Banks can only do so much low-deposit lending each month. In busy periods those slots fill, and banks prioritise the strongest applications, good income, clean credit, stable employment, deposits at the higher end of the low range. A 5% deposit does not guarantee a yes even if you meet the Kāinga Ora criteria.
None of this means don't do it. It means know the cost, and weigh it against the cost of waiting.
The Cost of Waiting Is Usually Bigger
Here is the part that gets lost.
Saving from 10% to 20% on an $800,000 home means finding roughly another $80,000. On a normal income, that can take years. During those years you are paying rent, prices may keep moving, and your KiwiSaver contributions are the only part of your saving that is really working hard.
For many buyers, going in at 10% with a low-equity premium, then paying that premium off over a few years as equity builds, costs far less than the rent and lost time of waiting to hit 20%. Not always. But often enough that it should be a genuine calculation, not an automatic "wait until 20%."
The premium is a known, finite cost. Waiting is an open-ended one.
So How Much Do You Actually Need?
The honest answer: it depends on your income, the property, and which path fits you.
Strong income, small deposit, within the caps: the 5% First Home Loan is likely your route.
Decent deposit approaching 10 to 15%, solid income: mainstream low-equity lending, in the market now rather than in three years.
Comfortably at 20%: the easiest path, if you are already there without a long wait.
Buying a new build: different, more favourable LVR treatment applies, which can lower the deposit further. Worth its own conversation.
What you should not do is assume the answer is 20% and stop there. For a large share of first home buyers, it isn't.
Where This Leaves You
The 20% deposit is the comfortable version, not the required version. The rules explicitly make room for buyers with 5%, 10%, and everything up to 20%, and a quarter of new owner-occupier lending is built for exactly those people.
The real question is not "have I saved 20%." It is "which path fits my income and deposit, and does the cost of going in now beat the cost of waiting." That is a numbers question, and it usually has a clearer answer than people expect.
Most first home buyers overestimate what they need and underestimate what they qualify for. That combination costs years.
At Crisp we map your actual position, deposit, income, KiwiSaver, and the First Home Loan criteria, against what the lenders will genuinely do right now. You will get a straight answer on whether you are closer than you think, and the smartest path in.
You might already be ready. Let's find out.
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About the Author:
Joshua Flack is a mortgage and lending adviser and the founder of Crisp Financial. Before finance, he spent two decades running businesses across construction, facilities services, and franchising, which is why his advice starts with how the numbers actually work rather than how the brochure says they should. He works with home buyers, investors, and self-employed borrowers across New Zealand, with particular depth in complex and non-standard lending. Crisp Financial Limited (FSP1012114) operates under the Link Financial Group FAP licence. The information in this article is general in nature and is not regulated financial advice.
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