Disclaimer:
The information on this website is for general guidance only and does not constitute financial or investment advice. Always do your own research and seek personalised advice from a qualified financial adviser or mortgage adviser before making financial decisions. All investments carry risk and past performance is not indicative of future results.
Key Takeaways
- Some eligible buyers may have 5% deposit pathways, subject to scheme and lender criteria.
- First Home Loan and shared-ownership pathways may help eligible buyers.
- Some new-build pathways may allow lower deposits, but approval is not automatic.
- Lower deposits can mean higher interest and insurance costs.
- KiwiSaver withdrawals can boost your deposit if eligible.
There is a misconception that a 20% deposit is the only option for a first-home buyer. Some eligible buyers may be able to buy with a 5% deposit through specific pathways such as the Kāinga Ora First Home Loan or some shared-ownership arrangements, subject to eligibility, lender approval, and property criteria.
TIP: Boost Your Deposit
To help you achieve a home deposit, check out the KiwiSaver First-Home Withdrawal. If you have been a member of KiwiSaver for at least 3 years, you may be able to make a withdrawal from your savings to put towards a deposit for buying your first home. Read our KiwiSaver guide to understand contribution, fund-choice, and withdrawal considerations before relying on KiwiSaver for your deposit.
What Are the Deposit Options for a First Home Buyer?
5% Deposit
Having saved a 5% deposit, you may be eligible for the following financial support products available to First Home Buyers:
First Home Loan
- Allows for 5% deposit
- Income criteria - Have a before tax income from the last 12 months of: $95,000 or less for an individual buyer without dependents; or $150,000 or less for an individual buyer with one or more dependents; or $150,000 or less (combined) for two or more buyers, regardless of dependents
- $95,000 or less for an individual buyer without dependents; or
- $150,000 or less for an individual buyer with one or more dependents; or
- $150,000 or less (combined) for two or more buyers, regardless of dependents
YouOwn
- NZ Citizen / Permanent Resident
- Current household-income criteria set by the provider
- Debt and affordability criteria set by the provider and lender
- KiwiSaver and deposit requirements set by the provider and lender
- Deposit requirements set by the provider and lender
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10% Deposit
Achieving a 10% home deposit may open up some new-build pathways. RBNZ exempts some construction loans and newly built homes purchased from the developer within 6 months of completion from LVR restrictions. That can give lenders more room, but 10% approval is not automatic and still depends on lender, property, contract, deposit, and servicing criteria.
Advantages of 10% Deposit (New Build):
- Lower upfront costs: You may need less cash upfront, which may help some buyers purchase earlier if they meet lender and property criteria.
- More flexibility: You may be able to buy a property sooner than if you were saving up for a 20% deposit.
- Lower maintenance: Because your new home is a New Build, there will be less initial maintenance.
- More time to save: Depending on when the finishing date for the development is, you may have more time to save.
Disadvantages of 10% Deposit:
- Higher costs in the long term: Your monthly mortgage repayments will be higher, and you may also be required to pay lenders mortgage insurance (LMI).
- Higher interest rates: Lenders may charge higher interest rates on low deposit loans.
- Less equity in the property: You'll have less negotiating power if you need to sell the property in the future.
Overall, a 10% deposit for a new build can be one pathway to compare, but weigh costs, approval criteria, property risks, and advice before deciding.
20% Plus Deposit
A 20% deposit is a common benchmark because it usually keeps an owner-occupier loan outside RBNZ's high-LVR category and may reduce low-equity costs. In reality, this can be a big ask for first-home buyers in today's market.
Advantages of 20% Deposit:
- Lower monthly repayments: When you put down a 20% deposit, you are borrowing less money, which means your monthly mortgage repayments will be lower.
- No low deposit costs: For some banks this is an upfront fee based on the size of the loan. For others, it is a margin added on top of the interest rate offered. Generally, this can range from 0.25% to 1.5%.
- Lower interest rates: Many lenders offer lower interest rates to borrowers who have a larger deposit.
- Finance-condition timing: Discuss timing with your lawyer, lender, or adviser before signing, especially if you do not already have pre-approval.
- Greater equity in the property: You will own a larger portion of the property and will be in a stronger financial position if the property increases in value over time.
Overall, a 20% deposit may reduce ongoing low-equity costs and increase your equity position, but the tradeoff is that saving longer can affect timing and available options.
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Frequently Asked Questions
Need personalised guidance?
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Have a question about this?
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