Information about securing finance without a 20% deposit

Homes for Living Houses

90% lending for Owner Occupiers & Investors

Recent exemptions from RBNZ mean that most banks will offer financing on new builds from 10% deposit if they meet one of the following criteria:

  • They are bought off the plans from a developer (including via their agent).
  • They are built (and sold) directly by the developer (including via their agent) and the Code of Compliance (CCC) was issued within 6 months.
  • Or if you purchase a section and engage a builder to build the house for you.

Often the servicing criteria are more favourable than if you are purchasing an existing property, which means you may be able to borrow slightly more.

95% lending for Owner Occupiers

If finding a 10% deposit seems out of reach, you may be in luck. The Government (under Kainga Ora) offers a scheme called the First Home Loan, which only requires a 5% deposit.

Selected banks and other lenders issue these loans. They are underwritten by Kainga-Ora and have specific criteria.

There is an income cap on the scheme, which gets calculated on your previous 12 months’ earnings, not your current

The income caps are as follows:

  • $95,000 or less before tax for an individual buyer
  • $150,000 or less before tax for an individual buyer with one or more dependents
  • $150,000 or less before tax for two or more buyers, regardless of the number of dependents.

The regional house price caps were scrapped on the 1st June 2022 for the First Home Loan scheme and no longer apply, which means there is no official cap on how much you can spend on a property.

However, there is still a cap on your debt serviceability and income, but it now provides you with a greater choice of properties. Like the First Home Grant (which we outline below), you must intend to live in the home you purchase for a minimum of 6 months and be an NZ Citizen or Resident.

Generally, to be eligible for the scheme, Kainga Ora wants you to be with your employer for at least 12 months. Alternatively, Kainga Ora will see if you have been in the same occupation/industry for 24 months. There is a little bit of leeway to this. For example, a solicitor who had been studying for four years and was only eight months into her employment qualified because she had a direct career path. We recommend chatting to your adviser if your situation is not straightforward.

In addition, even if you have purchased a property in the past, you may still be eligible as a Second Chance Home Buyer. Kainga Ora will initially need to determine whether you are a qualifying person. If you are deemed to be in the same financial position as a first home buyer, you will be provided with an eligibility letter which you can then include in your application.