Buying guide

How to get a 5% deposit home loan in NZ

Only got a little deposit saved? This article's for you.

Last updated: 22 February 2024

At the end of 2023 a 20% deposit on the average home on Trademe Property would set you back over $170,000. 

Luckily, several major lenders offer a Kāinga Ora-backed home loan that requires a much smaller deposit, but only if you’re an eligible first home buyer. Here’s everything you need to know about 5% deposit home loans in NZ. 

5 percent deposit home loans NZ

Lenders generally require a 20% deposit for a home loan, because if you have less they see a higher risk that you won’t be able to repay the loan. They may be especially cautious lending to buyers with less than a 20% deposit if it’s their first home. 

The First Home Loan is a great way to get around these rules. It’s a home loan that only requires a 5% deposit because it’s backed by the government’s housing agency, Kāinga Ora. The catch is, it’s only available to first home buyers who meet eligibility criteria and lenders may charge an up front fee equal to 0.5% of the loan amount, plus a higher interest rate.  

Are you eligible for a home loan with a 5% deposit?

To be eligible for a home loan with a 5% deposit via the First Home Loan scheme you’ll need to tick the following boxes:

  • Be a NZ citizen, permanent resident, or a resident visa holder who’s ordinarily resident in NZ. 

  • Be a first home buyer, or a previous home buyer in a similar financial position to a first home buyer. 

  • Have a minimum deposit of at least 5% of the purchase price.

  • Be purchasing a home for you to live in as your main home, it can’t be an investment property.  

  • Not own any other property or land, except for Māori land. 

  • Be purchasing a property with less than one hectare of land. 

You must also must have a before tax income from the last 12 months of:

  • $95,000 or less for an individual buyer without dependents. 

  • $150,000 or less for an individual buyer with one or more dependants.

  • $150,000 or less (combined) for two or more buyers.

Last of all you must meet the lender’s own lending and serviceability requirements. 

Saving a deposit can be challenging for first home buyers.

How to apply for the 5% deposit First Home Loan

Apply for a first home loan via your chosen lender’s application form or by contacting them directly, not through Kāinga Ora. The lender will walk you through the application process and eligibility criteria, providing advice to help ensure your application is successful. These are the lenders that offer First Home Loans:

  • Westpac

  • Kiwibank 

  • The Cooperative Bank 

  • SBS Bank

  • Unity

  • Nelson Building Society 

  • NZ Home Loans (NZHL) 

Don’t apply to your bank by default - it’s always a good idea to shop around to see who’s offering the most competitive interest rates, lowest fees and best benefits for first home buyers. If you’d rather not do this on your own, a mortgage broker can help you with this. 

The application process

When you apply for your mortgage you can either ask for pre-approval or final approval:

  • Go for pre-approval if you’re ready to buy a home but haven’t found the right one yet. The lender will indicate that they will lend you a certain amount then once you’ve found the right property you’ll return to the lender to gain final approval. 

  • Go for final approval if you’ve found the right property and you’re ready to go. This is a formal offer of lending. 

There are several ways to get a deposit together to buy a home/

Getting a deposit together

The hardest part when buying your first home is almost always getting a deposit together, even if you’re applying for a 5% deposit home loan. Lucky for you there’s help available. Your deposit can be gifted by a relative, and you can also use the first home grant (up to $10,000 per person) and first home withdrawal from your Kiwisaver. 

Check out eligibility criteria for Kiwisaver withdrawals and grants here

Keep in mind that if you can save a little more and get a 10% deposit together you may be able to secure a home loan to buy a new build without higher interest rates and extra upfront fees. 

Getting ready to buy

If you’re not quite ready to apply for a home loan and buy a home it’s important to put a plan in place. For help figuring out what your next steps are, we recommend speaking to an expert - either a financial advisor or a mortgage broker - who can help you set savings goals, create a budget and figure out what type of property is right for you. 

DISCLAIMER: The information contained in this article is general in nature. While facts have been checked, the article does not constitute a financial advice service. The article is only intended to provide education about the New Zealand mortgages and home loans sector. Nothing in this article constitutes a recommendation that any strategy, loan type or mortgage-related service is suitable for any specific person. We cannot assess anything about your personal circumstances, your finances, or your goals and objectives, all of which are unique to you. Before making financial decisions, we highly recommend you seek professional advice.


Ben Tutty
Ben Tutty

Ben Tutty is a regular contributor for Trade Me and he's also contributed to Stuff and the Informed Investor. He's got 10+ years experience as both a journalist and website copywriter, specialising in real estate, finance and tourism. Ben lives in Wānaka with his partner and his best mate (Finnegan the whippet).