Low Deposit Home Loans in New Zealand
Buy your home with as little as 5% deposit. Explore low deposit options, low equity premiums, and government assistance schemes.
Check Low Deposit EligibilityYour Low Deposit Options
While the standard deposit requirement is 20%, several options exist for borrowers who can't save that much. Here's what's available in 2026.
5% Deposit: Kainga Ora First Home Loan
Government-backed scheme allowing eligible first home buyers → to purchase with just 5% deposit. Strict eligibility criteria apply.
10% Deposit: Bank Low Deposit Loans
Available from most major banks → for borrowers with strong income and credit. Low equity premium of 0.50-1.00% applies.
5-10% Deposit: Family Guarantor Loan
Family member guarantees part of your loan using their property as security, allowing you to borrow with minimal deposit.
15% Deposit: Standard Low Deposit
More readily available than 10% deposit loans with lower low equity premium (typically 0.25-0.50%).
Understanding Low Equity Premiums
When you borrow with less than 20% deposit, most banks charge a Low Equity Premium (also called Low Equity Margin or LEP). This is an additional interest rate charge to compensate for higher risk.
Typical Low Equity Premium Rates
15-20% Deposit (LVR 80-85%)
Minimal additional risk
10-15% Deposit (LVR 85-90%)
Moderate additional risk
5-10% Deposit (LVR 90-95%)
Higher risk lending
What This Costs You
Example: $500,000 loan with 10% deposit (LVR 90%)
Good News: Low Equity Premiums Are Temporary
Once you've paid down your mortgage or your property increases in value enough to reach 20% equity, you can ask your bank to remove the low equity premium. This typically happens within 2-5 years for most borrowers.
Kainga Ora Welcome Home Loan (5% Deposit)
The Welcome Home Loan (formerly First Home Loan) is a government-backed scheme allowing eligible buyers to purchase with just 5% deposit. No low equity premium applies.
Key Benefits
- ✓Just 5% deposit required - lowest deposit option in NZ
- ✓No low equity premium - save thousands compared to standard 5% deposit loans
- ✓Competitive interest rates - similar to standard bank rates
- ✓Can be combined with First Home Grant - get up to $10,000-$20,000 extra
Eligibility Requirements
Income Caps (2026)
Based on gross household income before tax
Price Caps (Examples)
Price caps vary by region
Additional Eligibility Criteria:
- Be 18 years or older
- Be a New Zealand citizen or permanent resident
- Be buying your first home (or haven't owned in the last 3 years)
- Intend to live in the property as your main home
- Have sufficient income to service the mortgage
- Have a clean credit history
Family Guarantor Loans
A guarantor loan allows you to borrow with a small deposit (or sometimes no deposit) by having a family member guarantee part of your loan using their property or savings as security.
How Guarantor Loans Work
You provide a small deposit (5-10%)
Example: $50,000 on a $700,000 home
Your guarantor guarantees the shortfall
Example: Parent guarantees $90,000 using their property equity
You borrow the remaining amount
Example: $650,000 mortgage at standard rates (no low equity premium)
You make all repayments as normal
Guarantor has no payment obligations unless you default
Guarantee is removed once you reach 20% equity
Usually within 2-5 years through payments and property value growth
Benefits of Guarantor Loans
- ✓Borrow with minimal deposit
- ✓Avoid or reduce low equity premiums
- ✓Get into market sooner
- ✓Build equity while renting costs stay high
- ✓Guarantee removed once equity increases
Risks for Guarantors
- ✗Liable if borrower defaults
- ✗Reduces guarantor's own borrowing capacity
- ✗Could affect guarantor's credit if things go wrong
- ✗May need independent legal advice (costs $300-$800)
- ✗Potential family relationship strain
Important: Guarantor loans require careful consideration by all parties. The guarantor should understand they're potentially liable for the guaranteed amount if the borrower defaults. Independent legal and financial advice is strongly recommended.
10% Deposit Bank Loans
Most major banks offer low deposit loans to qualified borrowers who have at least 10% deposit. These loans are more accessible than 5% deposit options but come with low equity premiums.
Who Can Get a 10% Deposit Loan?
Strong Income
Stable employment with income sufficient to service the mortgage comfortably. Banks typically want mortgage payments under 30% of gross income.
Clean Credit History
No defaults, bankruptcies, or adverse credit events. Missed payments in the last 6-12 months will likely disqualify you.
Genuine Savings
Banks prefer to see at least half your deposit from genuine savings (not gifts), demonstrating saving discipline.
Low Debt Levels
Minimal other debts. High credit card limits or personal loans can reduce your borrowing capacity.
10% Deposit Loan Costs
Example: $630,000 loan on $700,000 home (10% deposit)
When can you remove the LEP? Once your LVR drops to 80% (through payments and/or property value increase). If your home increases in value by 5% per year, this could happen in just 2-3 years.
Tips for Saving Your Deposit Faster
1. Maximize KiwiSaver
Increase contributions to at least 4% to maximize employer matching. KiwiSaver funds can be withdrawn for your first home deposit.
2. Automate Your Savings
Set up automatic transfers to a savings account on payday. Treating savings like a bill ensures consistency.
3. Cut Unnecessary Expenses
Review subscriptions, dining out, and entertainment costs. Redirect this money to your deposit savings.
4. Increase Your Income
Consider a side hustle, overtime, or asking for a raise. Extra income accelerates deposit savings significantly.
5. Bank All Windfalls
Tax refunds, bonuses, birthday money - put it all toward your deposit instead of spending it.
6. Consider a Flatmate
Living with roommates while saving can cut rent costs in half, dramatically speeding up your savings timeline.
Low Deposit Loan FAQs
Can I buy a house with no deposit?
It's extremely rare in NZ. The only realistic no-deposit option is a family guarantor loan where parents guarantee 100% of the shortfall. Even then, you'll need to prove you can service the mortgage and cover purchase costs (legal fees, etc.).
Is it worth buying with a low deposit or should I wait?
It depends on your circumstances. Benefits of buying now: start building equity, benefit from potential property growth, stop paying rent. Downsides: higher interest costs from low equity premium, less financial buffer. If you can service the mortgage comfortably and property prices are rising faster than you can save, buying now often makes sense.
Can I use gifted money as my deposit?
Yes, but banks typically want to see at least 50% of your deposit from genuine savings. Gifted money can make up the remainder. The gift must be non-repayable, and the donor usually needs to sign a statutory declaration confirming this.
How long does low equity premium last?
Until your LVR drops to 80% (20% equity). This can happen through: 1) Paying down your mortgage, 2) Property value increases, or 3) A combination of both. Typically takes 2-5 years depending on market conditions and how much extra you pay off.
What if I don't qualify for a low deposit loan?
Options include: working with a mortgage broker who knows which lenders have the most flexible policies, improving your credit score over 6-12 months, reducing other debts, increasing your income, or finding a family guarantor.
Can I get a low deposit loan if I'm self-employed?
Yes, but it's more challenging. You'll need at least 2 years of tax returns showing strong, consistent income, and ideally have an accountant prepare your financial statements. Some specialist lenders are more accommodating to self-employed borrowers.
Ready to Explore Low Deposit Options?
Find out which low deposit loan option fits your situation and get matched with a licensed adviser
Check Your Options NowLast updated: May 21, 2026 | Rates verified against lender carded-rate pages, Kāinga Ora + RBNZ