5%, 10% or 20%? Understand what your deposit means, how KiwiSaver can help, what other costs to plan for, and how to work out a realistic path to home ownership.
Buying your first home in New Zealand can make the deposit feel like the biggest hurdle. You may have heard that you need a 20% deposit, while someone else may have told you that a first-home buyer can get into the market with 5%.
Both figures can be relevant — but neither tells the whole story.
The deposit you need depends on your circumstances, the property, the lender, the type of lending you qualify for and whether you are buying a home to live in or an investment property. A smaller deposit can make buying possible sooner, but it also generally means borrowing more.
The key question is not simply: “How little deposit do I need?”
It is: “What deposit can I use while still keeping the mortgage affordable and my finances resilient?”
Your deposit is the portion of the property\'s purchase price that you contribute rather than borrow through your mortgage.
For a $700,000 property, the numbers look like this:
LVR means loan-to-value ratio. It describes how much you are borrowing compared with the property\'s value. A higher LVR generally means you are borrowing a larger proportion of the property\'s value.
Do You Really Need a 20% Deposit?
Not necessarily. A 20% deposit is a common benchmark because it leaves the borrower with an 80% LVR, but it is not an absolute requirement for every buyer.
Current Reserve Bank settings allow banks to make a proportion of new owner-occupier lending above 80% LVR and a proportion of investor lending above 70% LVR. These are limits on banks\' lending portfolios, not a guarantee that an individual borrower will be approved for a low-deposit loan. Lenders still apply their own criteria.
Important: Having a 10% deposit does not mean a lender must lend you the other 90%. Your income, expenses, existing debts, credit history, employment, affordability and the property itself can all affect the outcome.
What Can You Buy With a 5% Deposit?
For eligible first-home buyers, a Kāinga Ora First Home Loan can lower the required deposit to 5%. The loan is issued by participating lenders and underwritten by Kāinga Ora, and eligibility criteria apply.
That means a 5% deposit could look like:
A 5% deposit can reduce the time needed to save for a purchase, but it also leaves you with a larger mortgage. That can affect repayments, interest costs and how comfortably you can handle changes in your circumstances.
What About a 10% Deposit?
A 10% deposit can be a useful middle ground. On a $700,000 property, that is $70,000, leaving approximately $630,000 to finance.
For some buyers, moving from 5% to 10% can materially strengthen the application while still being achievable sooner than saving a full 20%. Whether it makes sense to wait for the larger deposit depends on your income, savings, debts, property price and overall financial position.
Why Is a 20% Deposit Still Important?
A 20% deposit means you are borrowing less and starting with more equity. That can provide several advantages.
Lower borrowing
On a $700,000 home, a 20% deposit means a mortgage of about $560,000 instead of $665,000 with a 5% deposit.
Potentially lower interest costs
All else being equal, borrowing less means paying interest on a smaller loan balance.
More equity from day one
A larger deposit gives you a larger ownership stake in the property at settlement.
A larger buffer
More equity can provide additional protection if property values fall, although property prices can move in either direction and no deposit removes market risk.
What Counts Towards Your Deposit?
Your deposit does not always have to come entirely from money sitting in your everyday savings account. Depending on your circumstances and eligibility, your funds may include savings, KiwiSaver first-home withdrawal, eligible family gifts or other acceptable sources.
KiwiSaver
If you have been a KiwiSaver member for at least three years, you may be able to withdraw eligible savings towards buying your first home. Current Kāinga Ora guidance states that at least $1,000 must remain in the account, and the property must be intended as your home rather than an investment property.
There are also additional rules for people who have previously owned a home, and eligibility can depend on the circumstances. KiwiSaver first-home withdrawals are subject to the applicable terms and conditions.
Family gifts
Some buyers receive financial help from parents or other family members. A family gift may be acceptable to a lender, but the lender may require evidence about the source and nature of the funds. The important thing is to discuss it with your broker and lender early rather than assuming the funds will automatically be accepted.
Don\'t Use Every Dollar You Have for the Deposit
One of the most common mistakes is to focus so heavily on reaching a deposit percentage that there is nothing left after settlement.
Buying a home can involve legal and conveyancing costs, inspections, valuation or lending-related costs, insurance, moving expenses, rates adjustments and immediate maintenance or repairs, depending on the property and transaction.
You should therefore think about your total cash position, not just the headline deposit.
Good planning means asking:
“How much can I put towards the purchase while still keeping an emergency buffer after settlement?”
Family Savings and the Real Goal
Saving for a deposit is not just about reaching a number. It is about building a financial position that can support home ownership over the long term.
For a family with children, that may mean balancing deposit savings with everyday expenses, childcare, existing debt and other financial goals. The strongest deposit strategy is one that helps you buy without putting unnecessary pressure on the household budget.
What About Property Investors?
If you are buying an investment property rather than a home to live in, the lending picture can be different.
Current Reserve Bank LVR settings allow banks to have a limited share of new investor lending above 70% LVR. That does not mean every investor can buy with a 10% or 20% deposit. Banks can apply stricter criteria based on their own policies and the borrower\'s overall position.
Investors may also need to consider existing property equity, rental income, personal income, existing mortgages, other debts, the property itself and serviceability.
Can You Use Equity Instead of Cash?
Existing homeowners may sometimes be able to use available equity in an existing property towards another purchase. However, equity is not the same as cash in the bank. Using equity generally means taking on additional debt, so the lender will still assess whether the resulting lending is affordable.
Should You Aim for 5%, 10% or 20%?
A 5% deposit may make sense when:
- You meet the requirements for an appropriate low-deposit option.
- Your income is stable and your mortgage would be affordable.
- You have a manageable level of other debt.
- Waiting several more years to reach 20% would materially delay your plans.
A 10% deposit may make sense when:
- You can reach 10% without exhausting your savings.
- A larger deposit improves your overall lending position.
- You want to reduce the amount you need to borrow compared with a 5% deposit.
A 20% deposit may make sense when:
- You can reach it while retaining a sensible emergency buffer.
- You want to borrow less.
- You want more equity from the start.
- You want to broaden your potential lending options, subject to lender policy.
What If You Have the Deposit but Can\'t Get the Mortgage?
This is an important distinction. Having enough money for the deposit does not automatically mean you can borrow the amount you need.
For example, you might have $70,000 saved for a $700,000 property. But if a lender determines that a $630,000 mortgage is not affordable based on your income, expenses and existing commitments, the purchase may not work.
This is why it can be useful to understand your borrowing position before you start seriously shopping for a property.
How Much Deposit Should You Aim For?
Instead of starting with “I need 20%”, work backwards from what you can realistically afford.
Step 1: What property price fits your plans?
Step 2: What mortgage could you comfortably service?
Step 3: What deposit do you have available?
Step 4: What cash will remain after settlement?
For example, on a $600,000 property:
That makes it much easier to see how the deposit changes the amount you need to borrow.
Frequently Asked Questions
Can I buy a house with a 5% deposit in New Zealand?
Potentially. Eligible first-home buyers may be able to use a Kāinga Ora First Home Loan with a 5% deposit. Eligibility requirements apply and you must still meet the participating lender\'s lending criteria.
Is a 10% deposit enough to buy a house?
It can be, depending on the lender, borrower and property. A 10% deposit represents a 90% LVR, but individual approval remains subject to lender criteria.
Is 20% still the best deposit?
A 20% deposit can create a stronger starting position because you borrow less and begin with more equity. However, waiting for 20% is not necessarily the right choice for every buyer.
Can I use KiwiSaver for my first-home deposit?
Yes. KiwiSaver savings may be used towards the deposit for a first home, subject to the applicable terms and conditions and eligibility requirements. Current Kāinga Ora guidance states that eligible members who have been in KiwiSaver for at least three years may be able to withdraw savings for a first home, with at least $1,000 remaining in the account. The property must be intended as the member’s home rather than an investment property.
Can investors buy with a smaller deposit?
Investor lending is subject to different LVR settings and lender policies. Current Reserve Bank settings allow a limited share of new investor lending above 70% LVR, but this is not a guarantee of approval for any individual investor.
Should I wait until I have a 20% deposit?
Not necessarily. The right decision depends on your borrowing capacity, mortgage affordability, savings buffer, property goals and the lending options available to you.
Explore Our Mortgage Services
If you are working towards your first home, our mortgage services can help you understand your mortgage options and the next steps in the lending process. Our role is mortgage advice; KiwiSaver withdrawal eligibility and administration are handled by the relevant KiwiSaver provider and, where applicable, Kāinga Ora.
Information sources: Kāinga Ora – Homes and Communities and Inland Revenue guidance on First Home Loans and KiwiSaver first-home withdrawals; Reserve Bank of New Zealand guidance on LVR restrictions. Information is general in nature and should not be treated as personalised financial advice. Rules and lender policies can change, so confirm current eligibility and lending requirements before making a purchase decision.
