Deposits, explained
Let's talk about your deposit
If you’re planning to buy soon and your deposit is lower than you’d like, you’re not alone — and you’re not necessarily stuck. Here’s what “deposit” actually means, why banks talk about 20%, and what your real options are at 5% and 10%.
There are actually two different "deposits"
A lot of confusion starts here — the deposit a real estate agent asks for isn’t the same thing as the deposit your bank needs.
The agent's deposit
Your commitment to the purchase
Usually set at 10% (sometimes 5% on new builds), this is what secures the property — not what the bank requires for your loan. It’s paid to confirm you’re committed to buying.
The bank's deposit
What lenders want to see
This is the equity you bring to the purchase — made up of savings, KiwiSaver, and grants. It’s what determines your loan-to-value ratio, and it’s the number that actually shapes your options.
Why do banks keep saying "20%"?
Walk into a bank and you’ll usually be told 20% is what’s needed. That’s not the full picture — it’s the number banks default to promoting, because lending below it is restricted and unpredictable for them.
Reserve Bank rules limit banks to lending only 15% of their total book to buyers with less than a 20% deposit. When that portion is full, low-deposit lending simply isn’t available — until it opens up again. It’s genuinely inconsistent, which is exactly why it pays to have an adviser checking in on it for you.
15%
of a bank’s total lending can go to buyers with under 20% deposit
- Kāinga Ora First Home Loans are exempt from this limit
- New build lending is exempt too
- That's why low-deposit ads usually point to one of these two
What 20% actually looks like in dollars
It’s easy to say “20%” — much harder to save it, especially while paying rent and tax on the way there.
$400,000 home
$80,000
20% deposit needed
$700,000 home
$140,000
20% deposit needed
So what are your real options?
The good news: you don’t need 20% to get started. Here’s what tends to be available at each level.
5% deposit
Limited, but real options
- Kāinga Ora First Home Loan (subject to income and employment criteria)
- Shared ownership schemes (e.g. YouOwn, Ōhu)
- Occasionally, banks — availability comes and goes
10% deposit
More doors open up
- Kāinga Ora First Home Loan still available (not limited to under 5%)
- Specialist non-bank lenders, including credit unions with rates often better than the main banks for first home buyers
- Second mortgage options to fund the shortfall
- Better odds with the main banks generally
Any deposit
Shared ownership
- Available from as little as 5% deposit
- The more deposit you bring, the less the shared ownership provider needs to contribute — which works out better for you financially over time
What about help from family?
The Bank of Mum and Dad can genuinely change your timeline — helping you buy sooner and lock in the better rates that come with a bigger effective deposit, even if your own savings are only 5–10%.
Get it documented properly
We generally steer away from parents acting as loan guarantors. A gifted deposit — properly documented — is almost always the better route, and it avoids potential family complications down the track.
"Just save more and pay off your debts" isn't always the answer
It’s common advice, and it sounds sensible — but watching prices rise faster than you can save is genuinely demoralising. If you want to get in now rather than wait, there are real paths to explore before you write off buying altogether.
Let's talk about your deposit
Every situation is different — the fastest way to know your real options is to talk it through with an adviser, at no cost to you.