Your deposit sets your LVR
The loan-to-value ratio, or LVR, is simply how much a bank lends against a property compared with the property's value. A 20% deposit means borrowing the other 80%, which is an 80% LVR.
The size of your deposit therefore determines your LVR, and your LVR shapes which lenders and products will consider your application, what conditions may attach to it, and sometimes the rate you are offered.
Source: Reserve Bank of New Zealand: loan-to-value restrictions explained
Why banks have 'speed limits' on low-deposit lending
The Reserve Bank places limits on how much high-LVR (low-deposit) lending banks can do. These limits only apply to a bank's new lending — they do not force a particular borrower to have a particular deposit — but they mean banks have a finite amount of room each year for loans above the high-LVR thresholds.
For owner-occupied homes, the current policy treats lending above 80% LVR as high-LVR and restricts it to a capped share of a bank's new owner-occupier lending. These settings are reviewed and can change over time, so it is worth checking where they stand now rather than relying on older figures.
Source: Reserve Bank of New Zealand: loan-to-value ratio restrictions
Buying with a smaller deposit
If your deposit is below the level a bank would normally want, there are still pathways. The Kāinga Ora First Home Loan, offered through participating lenders, lets eligible buyers purchase with a smaller deposit than standard lending would require. Eligibility criteria apply, and they can change, so check the current rules directly with Kāinga Ora or a participating lender.
Low-deposit lending is common for first-home buyers, but it usually comes with extra conditions and sometimes a different rate or an added fee. It is worth understanding those trade-offs before committing to a purchase price.
Source: Kāinga Ora: First Home Loan
What a deposit looks like at today's prices
The Cotality–Westpac First Home Buyer Report puts the median price paid by first-home buyers at about $700,000, a level it has held for the past couple of years.
At that price, a 20% deposit is around $140,000. That is a meaningful sum, which is why many buyers combine sources: personal savings, a KiwiSaver first-home withdrawal, and sometimes gifted funds from family.
Source: Cotality–Westpac NZ First Home Buyer Report (May 2025)
Where the deposit can come from
A KiwiSaver first-home withdrawal is a common source. If you meet the scheme's criteria — which include how long you have been a member and that the home will be one you live in — you may be able to withdraw most of your KiwiSaver savings towards a first home.
Lenders also want to see where deposit funds came from. Genuine savings built over time are straightforward; a gift from family usually needs to be documented as a gift rather than a loan. Building a savings history early makes the application smoother, even if the final deposit is topped up later.
Common questions
Can I use KiwiSaver for my deposit?
Yes, in many cases. The KiwiSaver first-home withdrawal lets eligible members put most of their savings towards their first home, provided they meet the scheme's criteria, including membership duration and that the property will be one they live in. Check the current rules on the Kāinga Ora website or with a lender before you count on the full balance.
Is a 5% deposit enough to buy a first home?
It can be, but it is not guaranteed. Buying with a small deposit sits in high-LVR lending, which banks can only do within Reserve Bank limits, and it may involve extra conditions, fewer lender options or a different rate. Programmes like the Kāinga Ora First Home Loan can help eligible buyers purchase with a smaller deposit through participating lenders. The borrowing check on this site (Start the borrowing check, above) shows your indicative borrowing power with the deposit you have today.
Do I need exactly 20%?
No — 20% is not a rule, it is the level at which lending generally sits outside the high-LVR categories, which usually means more lender options and fewer conditions. Many first-home buyers buy with less. What matters for your estimate is the deposit you can actually pull together from savings, KiwiSaver and any family help.