Can you buy a home in NZ with less than a 20% deposit?

Often yes. But not because the Reserve Bank lowered anyone’s deposit requirement — it never set one in the first place.

Rules and figures below are current as at August 2026.

A 20% deposit is the benchmark most banks use for someone buying a home to live in. It’s a bank standard, not a law. What the Reserve Bank of New Zealand (RBNZ) actually controls is something different: how much low-deposit lending each bank can do in total.

That distinction matters, and a lot of the coverage of the December 2025 changes blurred it.

First, one bit of jargon

You’ll see LVR everywhere. It stands for loan-to-value ratio, and it just means how much you’re borrowing compared to what the property is worth.

Buy an $800,000 home with a $160,000 deposit, and you’re borrowing the other $640,000. That’s 80% of the value. So your LVR is 80%.

Bigger deposit, lower LVR. Smaller deposit, higher LVR. That’s the whole idea.

What changed on 1 December 2025

Picture all the new home loans a bank writes in a year as one big pot of money.

The Reserve Bank doesn’t look at your loan and approve or decline it. Instead it tells each bank: only this much of your pot can go to people with small deposits.

In December 2025 it made that allowance bigger.

Of every $100 of new lending, how much can be high-LVR?	Before	From 1 Dec 2025
Buying a home to live in — LVR above 80% (deposit under 20%)	$20	$25
Buying an investment property — LVR above 70% (deposit under 30%)	$5	$10

Think of these as limits measured across a bank’s total new lending, not quotas for individual borrowers. A bank doesn’t have to lend $25 in every $100 to low-deposit buyers — it chooses which borrowers receive its high-LVR lending.

Two things that did not change:

• Your own deposit requirement. That’s set by your bank, and this rule doesn’t force any bank to change it.
• Who gets approved. The bank still chooses who fills that space, using its own criteria.

If it helps: the bank has a limited bucket for high-LVR lending. The bucket got bigger on 1 December 2025, but the bank still decides who gets some of what’s in it.

How much deposit do you actually need?

Three buyers, same $800,000 property.

Buyer A — $40,000 deposit (5%) That’s a 95% LVR. Well above the 80% LVR threshold used for standard lending. Some banks may offer lending at this level, but it will depend heavily on their own criteria. The Kāinga Ora First Home Loan may be relevant if you’re eligible. Qualifying new-build lending may also be treated differently under the LVR and DTI rules.

Buyer B — $100,000 deposit (12.5%) An 87.5% LVR. This is the band the December 2025 change genuinely helps. Your application competes for the bank’s high-LVR allocation, which is now bigger than it was. Approval depends on the bank’s criteria and your wider financial picture. You may face a low-equity margin, fee or other pricing adjustment.

Buyer C — $160,000 deposit (20%) An 80% LVR. This is no longer high-LVR lending, so the Reserve Bank’s high-LVR restriction isn’t the issue. Your income, existing debt and the bank’s serviceability assessment may now matter more.

Notice the pattern. Below 20%, LVR becomes an additional hurdle, because you’re relying on the bank’s high-LVR lending capacity. At 20% and above that hurdle largely disappears, so your income, existing debt and serviceability matter more.

The 5% deposit route

For eligible buyers, the Kāinga Ora First Home Loan is one of the clearest ways to buy with 5%. It is backed by Kāinga Ora, allowing participating lenders to offer a 5% deposit option subject to the scheme’s eligibility rules — rather than it eating into their high-LVR allocation.

Income caps, based on your gross income over the last 12 months:

• $95,000 — a single buyer without dependants
• $150,000 — a single buyer with one or more dependants
• $150,000 combined — two or more buyers

Income is only the start. You also need to be a New Zealand citizen, permanent resident, or resident visa holder ordinarily resident here; be a first-home buyer or a previous owner in a similar financial position; live in the home as your main residence; not own other property or land; and buy a property under one hectare. There’s a 1.2% lender’s mortgage insurance premium, which can usually be added to the loan. You still have to satisfy your chosen lender’s own criteria.

So 5% is real, but it isn’t broadly available. If you’ve read that “banks can now lend a quarter of their loans at 5% deposit,” that’s a misreading — the 25% figure covers everything above 80% LVR, and 95% LVR sits at the far end of that.

The constraint people forget: debt-to-income

Your deposit is only part of the picture. Since July 2024 there’s been a second set of rules, based on your income.

If you’re buying a home to live in, borrowing more than six times your before-tax income counts as high-DTI lending. That’s not a hard ceiling. Banks can still do some of it — currently up to 20% of their new lending to owner-occupiers.

It’s similar to the LVR rule above: a limit on the bank’s lending, not a rule that automatically caps you personally.

The part that catches people: DTI counts your existing debts too. Car finance, personal loans, student loan balances, and your full credit card limits — whether or not you’ve spent them. So “income × 6” is a rough illustration, not a number to budget against.

If you’re near the threshold, paying down consumer debt or reducing a credit card limit can move your borrowing capacity more than you’d expect.

New builds are treated differently

Qualifying new-build purchases and construction lending are generally excluded from both LVR and DTI restrictions. That’s deliberate policy, aimed at supporting housing supply.

It can be a genuine advantage. But the exemption depends on the property meeting the rules for a qualifying new build — not everything marketed as “new” will qualify. Ask your lender directly before you assume it.

What actually decides your number

Three things matter at once, and whichever is most restrictive for your situation can determine how much you can borrow:

1. Deposit and LVR — is the bank able and willing to lend at your deposit level?
2. Debt-to-income — your total debt relative to your gross income, including the new mortgage and relevant existing debt
3. Serviceability — can you afford repayments at the bank’s stress-tested rate, after living costs?

Passing one doesn’t mean passing the others. And banks apply their own criteria on top of the Reserve Bank’s, so meeting the regulatory settings makes you eligible to be considered, not approved.

What to do next

Work out your LVR before anything else. Deposit divided by price. That single number tells you which of the three scenarios above you’re in.

If you’re under 20%, talk to a broker rather than one bank. Different banks have different amounts of high-LVR allocation left at any given time. One bank declining you doesn’t necessarily mean another lender will.

Check First Home Loan eligibility properly if you’re near 5% — the income caps are only the first filter.

Reduce consumer debt before applying, especially unused credit card limits.

Remember the deposit isn’t the whole cost. Legal fees, a builder’s report, a LIM, a valuation and moving costs all come out of the same savings. Budget for them separately.

See the full list of costs when buying a house in NZ for exactly what that adds up to, beyond the deposit itself.

This article is general information only, not financial or lending advice. Reserve Bank settings, Kāinga Ora criteria and bank policies change — confirm current details with a mortgage adviser or your bank.

Official sources

• Reserve Bank of New Zealand — LVR restrictions eased from 1 December 2025
• Reserve Bank of New Zealand — debt-to-income restrictions explained
• Kāinga Ora — First Home Loan eligibility
• Your bank or mortgage adviser — for how these settings apply to your application