FIRST HOME BUYERS · RBNZ LENDING UPDATE
Can You Buy a NZ Home With Less Than 20% Deposit?
RBNZ data shows 55% of first-home buyer lending in August was above 80% LVR. See what this means if your NZ home deposit is under 20%.
One of the most persistent misconceptions among New Zealand first-home buyers is that you need a 20% deposit before a bank will consider giving you a mortgage.
The Reserve Bank’s latest lending figures show a different picture.
In August 2026, New Zealand first-home buyers received $1.475 billion in new mortgage lending. Of that, $815 million was lending above 80% loan-to-value ratio (LVR).
That means approximately 55% of the dollar value of first-home buyer lending during August involved borrowers with less than 20% equity.
For people saving towards their first home, that’s an important number — but it needs to be understood correctly.
What the August lending figures show
The Reserve Bank’s latest figures, released on 24 September, show overall new mortgage activity weakened compared with a year earlier.
Total new residential mortgage commitments were $7.188 billion, down from $7.557 billion in August 2025 — a decline of approximately 4.9%.
First-home buyer lending was much more resilient.
FHBs borrowed $1.475 billion, compared with $1.470 billion a year earlier.
More importantly for low-deposit buyers, lending to FHBs above 80% LVR increased from $735 million to $815 million, an increase of about 10.9%. Reserve Bank of New Zealand
What does above 80% LVR mean?
LVR compares the mortgage with the value of the property.
For example, if someone purchases a $700,000 home with a $70,000 deposit and borrows $630,000, their starting LVR is 90%.
They have a 10% deposit and 10% equity.
A mortgage above 80% LVR therefore generally means the borrower has less than 20% equity.
It doesn’t tell us that every borrower had a 10% deposit. Some could be close to 20%, while others may have considerably less.
But the data clearly shows that low-deposit first-home lending is a meaningful part of the current market.
Can you buy with less than 20%?
There isn’t a blanket rule saying every owner-occupier must provide 20%.
The RBNZ’s current macroprudential settings allow banks to have up to 25% of new owner-occupier lending above 80% LVR. Reserve Bank of New Zealand
This is important: the 25% allowance applies to a bank’s portfolio.
It does not mean a borrower has a right to receive a mortgage with a 10% or 15% deposit.
Banks still decide which low-equity applications they are prepared to approve.
What else do lenders assess?
The latest data provides clear evidence that banks are writing substantial amounts of first-home buyer lending above 80% LVR. But deposit size is only one component of a mortgage application.
A lender may assess your income, employment, regular household expenditure, credit cards, personal loans, student loans, credit history and other financial commitments.
Banks also apply servicing calculations designed to test whether repayments remain affordable under more difficult conditions.
Debt-to-income restrictions remain in place alongside LVR restrictions. Reserve Bank of New Zealand
So two couples with identical incomes and identical 10% deposits can still have different borrowing outcomes.
What about a 5% deposit?
Some eligible first-home buyers may be able to use a Kāinga Ora-supported First Home Loan through a participating lender with a deposit starting from 5%.
That is different from standard low-deposit lending.
Scheme eligibility and lender approval both matter, and meeting the minimum deposit requirement does not guarantee the mortgage will be approved.
This is why comparing the available lending routes can be valuable.
Someone with a 10% deposit, for example, might potentially have both standard bank and First Home Loan options depending on their circumstances.
Why a larger deposit can still help
The fact that low-deposit lending exists doesn’t mean buyers should stop saving as soon as they reach a minimum threshold.
More equity can provide several advantages.
It may increase the range of lenders available, reduce low-equity costs or margins, strengthen the application and create a financial buffer after settlement.
Using every available dollar for the deposit can leave a new homeowner with very little cash for legal costs, moving expenses, repairs, insurance excesses or unexpected bills.
The objective shouldn’t necessarily be to buy with the smallest possible deposit. It should be to understand when your overall financial position is strong enough to buy responsibly.
The practical takeaway
Don’t reject your own mortgage application before a lender has even assessed it.
Someone with $60,000 saved towards a $600,000 property might assume they’re still years away because they haven’t reached $120,000.
Depending on their income, expenses, debts, KiwiSaver balance, property choice and lender eligibility, that assumption may be wrong.
Equally, someone with a 20% deposit may discover that income or servicing — rather than deposit — is actually limiting their borrowing capacity.
That’s why the deposit percentage should be considered alongside the entire application.
At EasyMortgage, Ravinder Chahal can assess the broader position and compare relevant lender pathways before a buyer becomes committed to a property.
- Establish how much usable deposit you actually have, including eligible KiwiSaver funds.
- Calculate a realistic borrowing range based on income, expenses and debts.
- If your deposit is below 20%, identify which lenders and lending pathways may be available rather than assuming every bank will assess the application identically.
- Keep some consideration for costs outside the purchase price.
A pre-approval can then give you a much clearer framework for property searching.
Frequently asked questions
Do I need a 20% deposit to buy my first home in NZ?
Not necessarily. RBNZ data shows approximately 55% of the dollar value of FHB lending in August 2026 was above 80% LVR. Individual lender criteria still apply.
Can I buy with a 10% deposit?
Potentially. Standard low-deposit bank lending is available in some circumstances, subject to lender criteria, RBNZ restrictions and the strength of the application.
Can I buy with 5%?
Eligible buyers may potentially access a First Home Loan through a participating lender with a deposit starting from 5%, subject to scheme and lender requirements.
Does having 20% guarantee mortgage approval?
No. Income, expenses, debts, credit conduct, servicing and DTI requirements can still affect approval.
Is it better to keep saving until I have 20%?
Sometimes. A larger deposit can improve your lending options and financial buffer. But it is worth understanding your current position before assuming you must wait.
What to watch next
The Reserve Bank releases these mortgage-lending statistics monthly. The next scheduled release is 27 October 2026, which will show whether the recent strength in low-deposit FHB lending continues. Reserve Bank of New Zealand
This article is general information only and isn’t personalised financial advice. Lending criteria, LVR/DTI requirements, interest rates, fees and eligibility vary by lender and borrower circumstances.