The deposit is often the part of buying a home that feels hardest to pin down. You may have savings, KiwiSaver, help from family or equity in another property, but still be unsure what a lender will accept. Understanding the available deposit options for home buyers can turn a vague goal into a practical plan – and help you approach pre-approval with more confidence.
In New Zealand, there is no single ‘right’ deposit. The best path depends on where your funds come from, the property you want to buy, your income, and how comfortable you are with the repayments that come with a larger loan.
How much deposit do you actually need?
A 20% deposit remains the benchmark for many home loans. It can give you access to a wider range of lenders and may reduce the interest margin or low-equity costs attached to your loan. On a $800,000 home, that means a $160,000 deposit.
But 20% is not the only route into home ownership. Some lenders will consider applications with a 10% deposit, and in certain circumstances a 5% deposit may be possible through eligible low-deposit lending options. These loans are assessed more carefully because the lender is taking on more risk. Your income, spending, employment stability, credit history and the type of property all matter.
A smaller deposit gets you into the market sooner, but it also means borrowing more. That can increase your repayments and may limit the interest rates or loan structures available to you. A larger deposit gives you more breathing room, but waiting too long to save it can have its own cost if property prices rise faster than your savings. The sensible choice is the one that works for your finances now and still leaves room for real life after settlement.
Deposit options for home buyers
Savings and term deposits
Personal savings are the most straightforward deposit source. Lenders will generally want to see where the funds have come from, so keep clear records of regular savings, term deposits, bonuses and investment withdrawals. If a large amount has recently appeared in your account, expect questions about its source.
A consistent savings pattern can also strengthen an application. It shows that you have been managing your money and can build a buffer, which is reassuring when a lender is assessing whether you can handle home loan repayments.
KiwiSaver withdrawal
For many first-home buyers, KiwiSaver is a major part of the deposit. If you have been a KiwiSaver member for at least three years, you may be able to withdraw most of your balance to buy your first home or land to build on. You must leave at least $1,000 in your account.
There are eligibility requirements, and the property generally needs to be your main home rather than an investment property. The withdrawal process can take time, so it needs to be allowed for in your offer conditions and settlement planning. Do not assume your available balance is automatically ready to use on auction day or within a short unconditional period.
KiwiSaver can also be relevant if you have owned property before but are now in a similar financial position to a first-home buyer. This is assessed under specific criteria, so it is worth getting advice before ruling yourself out.
A gift from family
A family gift can bridge the gap between your current savings and the deposit you need. This is common, but it must be documented properly. Lenders usually need a signed gift letter confirming the money is genuinely a gift, whether it needs to be repaid, and whether the person giving it will have any interest in the property.
If family support is actually a loan, tell your adviser and lender from the outset. Repayments on that loan can affect your affordability assessment. Trying to present a loan as a gift can create problems later, especially when bank statements or repayment arrangements tell a different story.
Some families choose to contribute in return for an ownership share in the home. That can work well, but it changes the legal and financial structure. Independent legal advice is essential so everyone understands ownership, contributions, future sale decisions and what happens if circumstances change.
Equity in an existing property
Existing homeowners may use equity to fund the deposit on their next home or an investment property. Equity is the difference between a property’s current value and the debt secured against it. For example, if your home is worth $1 million and you owe $500,000, you have $500,000 in equity – although not all of it may be available to use.
Using equity can be useful when you have built value in a property but do not have cash sitting in the bank. However, it often means securing more debt against your current home. That increases the stakes, so the structure needs to be carefully considered alongside your cash flow, future plans and risk tolerance.
Sale proceeds and other assets
If you are selling a current property, the net proceeds after repaying the existing mortgage, agent fees and legal costs can form your deposit. Timing is critical here. A lender may need to see a signed sale and purchase agreement before relying on those funds.
Funds from shares, managed funds, an inheritance or overseas accounts may also be acceptable. You will usually need a clear paper trail. For overseas money, lenders may ask for additional evidence about the source of funds and how the money has moved into New Zealand. Starting this process early avoids last-minute delays.
Low-deposit loans: possible, but plan for the trade-offs
Low-deposit lending is designed to help buyers who have the income to service a mortgage but have not yet saved a full 20% deposit. Depending on your circumstances, this may include standard bank low-equity lending or a First Home Loan through participating lenders, subject to current eligibility rules and lending criteria.
These options can be valuable, particularly for buyers whose rent is already close to what a mortgage repayment would be. Yet a 5% or 10% deposit is not a shortcut around affordability. Lenders still assess your income, outgoings and ability to cope if interest rates or household costs change.
You may also pay a low-equity margin, have fewer lender choices, or need to meet tighter property requirements. Some lenders are more cautious with apartments, small units, leasehold properties, properties requiring major work, or homes in locations with a limited resale market. A pre-approval helps you understand both your borrowing limit and the kind of property that fits the lender’s policy.
Do not confuse the contract deposit with your home loan deposit
When you sign a sale and purchase agreement, the contract may require an upfront deposit – often 5% or 10% of the purchase price – paid to the vendor’s solicitor or agent once the agreement goes unconditional. This is not always the same as your total home loan deposit.
For example, you may buy a $700,000 home with a 10% overall deposit of $70,000. The agreement could require a 5% contract deposit of $35,000 upfront, with the remaining $35,000 contributed at settlement. Your KiwiSaver withdrawal, savings and loan funds must all be timed correctly to meet those dates.
This is one reason buyers should seek advice before making an offer. A well-written finance condition and realistic settlement date can protect you from committing before your funds and lending are ready.
A practical way to prepare your deposit
Start by calculating the full amount you need, not just the percentage. Your deposit sits alongside legal fees, building reports, valuations where required, moving costs, insurance and any immediate work the property needs. Keeping a small cash buffer after settlement is usually wiser than putting every last dollar into the deposit.
Next, separate your deposit into clear sources: savings, KiwiSaver, gift, sale proceeds or equity. Gather statements and supporting documents early. If you are self-employed, contracting or have variable income, clean records matter even more because the lender will be looking at both your deposit position and the reliability of your income.
Then test the repayments at more than one interest rate. The maximum amount a lender may approve is not always the amount you should borrow. Think about childcare, rates, insurance, maintenance, future plans and whether one income might need to carry the household for a period.
A mortgage adviser can compare lender policies and help structure the application around your real position, rather than forcing you into one bank’s checklist. Mortgage Time works for you, helping make sure your deposit story is clear and your finance plan matches the home you are aiming for.
The right deposit is not simply the biggest one you can assemble. It is the one that lets you buy with confidence, meet your repayments comfortably and keep moving towards the life you want in your new home.
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