Low-Deposit Home Loans: Can You Still Buy with 10% deposit in NZ?
Saving a 20% deposit can feel like an impossible task for many first-home buyers in New Zealand — especially while paying rent and rising living costs. The good news? Yes, it is still possible to buy a home with as little as a 10% deposit in NZ, and in some cases even less.
However, low-deposit lending comes with specific rules, criteria, and trade-offs. Here’s what you need to know in 2025 and beyond.
What Is a Low-Deposit Home Loan?
A low-deposit home loan is any mortgage where the buyer has less than a 20% deposit. In most cases, this means:
10% deposit (90% loan-to-value ratio), or
5% deposit through specific government-supported schemes
Banks consider these loans higher risk, so approval criteria are stricter — but they are still available.
Buying with a 10% Deposit: Is It Possible?
Yes — many mainstream NZ banks still offer 10% deposit home loans, particularly for first-home buyers with:
Stable income
Strong employment history
Good spending habits
Clean or improving credit history
However, there are a few things to be aware of:
Low-Equity Margins (LEM)
With less than 20% deposit, banks often charge a low-equity margin, which is a slightly higher interest rate (usually 0.25%–1.20% above standard rates). This margin can often be removed entirely once your equity reaches 20%.
Stricter Affordability Tests
Banks may apply tighter affordability calculations to ensure you can handle repayments — especially if interest rates rise.
The First Home Loan (5% Deposit Option)
If you have only a 5–10% deposit, you may qualify for the First Home Loan, supported by Kāinga Ora and offered through selected lenders.
To be eligible, you generally need to:
Be a first-home buyer (or “second-chance” buyer)
Meet income caps
Buy within regional house price caps
Live in the property yourself
This scheme has helped thousands of Kiwis buy sooner — but availability is limited and criteria are strict, so early planning is essential.
Using KiwiSaver and Family Support
Many low-deposit buyers boost their position by combining:
KiwiSaver first-home withdrawals
Gifts from parents or family
Family guarantees or equity support
Banks are usually comfortable with gifted deposits, provided the funds are documented correctly and don’t need to be repaid.
Is Buying with 10% Deposit a Good Idea?
Buying with a low deposit can make sense if:
You’re paying high rent and want stability
You plan to stay in the home long-term
You can comfortably manage repayments
You understand and accept the short-term higher costs
However, it’s important to go in with your eyes open. A higher interest rate and smaller equity buffer mean cash flow discipline matters more in the early years.
Final Thoughts
Low-deposit home loans are still very much part of the NZ market — and for many first-home buyers, a 10% deposit is enough to get started.
The key is preparation. A mortgage adviser can assess your situation, identify which lenders are most flexible, and help structure your loan to minimise costs and risk — both now and in the future.
Because sometimes, buying sooner with the right strategy beats waiting years for a perfect deposit.