Buying guide

Low deposit home loans: how to buy your first home sooner

Got less than 20%? No worries.

Last updated: 8 March 2025 | 5 min read

If you don’t have a 20% deposit buying your first home can be difficult – some banks may say no, others might charge you a bit more.

That said, if you know your way around a mortgage application and get a little help you may still be able to buy. To get you started we’ve put together a first home buyer’s guide to low deposit loans.

Get advice right away

If you’re buying your first home with a small deposit you’ll benefit from getting impartial advice from a mortgage broker. Step one should be finding a good broker to walk you through what’s possible, help you submit a good application and work with lenders on your behalf.

If you’re not able to buy right now they’ll be able to save you time by letting you know and providing a plan to get ready. It might be that you need to save a bit more, increase your income or compromise on the home you’re planning to buy.

Buying with a small deposit is possible – but there are drawbacks

Banks don’t always require a 20% deposit to buy your first home.

You may be able to buy with as little as a 10% deposit.

If you qualify for the first home scheme you could even buy with 5%.

Buying with a small deposit is possible for some, but it’s not all roses. A loan with a small deposit will be more expensive over the long term, possibly with a higher interest rate and extra fees. Your repayments may also be higher.

On the other hand, if you buy with a smaller deposit you might be able to purchase property sooner, and if house prices are increasing this could save you money.

There's help available if you're sturggling to save a deposit.

Getting a little help from the government

If you’ve only got a small deposit you could still get a home loan with a little help. Here are your best options:

First home loan scheme - 5% deposit loans

The first home loan scheme is designed to help young Kiwi get into homes sooner. It’s a regular loan that’s backed by Kāinga Ora, so that the lender can offer loans that don’t meet its usual deposit criteria.

To be eligible you’ll need to:

Have a 5% deposit at least.
Be purchasing a home to live in as your main residence.
Be an NZ citizen.
Be a first home buyer or previous home owner in a similar financial situation.
Have a before tax income from the last year of less than $95,000 for an individual, $150,000 for an individual with dependents or a couple.
Meet the lender’s existing lending criteria around income and serviceability.

This loan is offered through Westpac, Kiwibank, Cooperative Bank, SBS, Unity, NBS and NZHL. You’ll need to apply directly through a mortgage broker or one of these lenders and you’ll be required to pay an extra fee equal to 0.5% of the home loan amount.

Read more about buying with a 5% deposit.

Kiwisaver withdrawal

If you’re eligible you should be able to withdraw all of your Kiwisaver balance except for $1,000 to use as a deposit.

Find out more about withdrawing your Kiwisaver to buy your first home.

Rent to own schemes

There are several rent to own schemes available for first home buyers that give you secure access to rental housing, while allowing you to save a deposit and eventually buy the rental. Some charge slightly higher rent, part of which goes into deposit savings.

State house purchasing

If you’re living outside of Auckland, Wellington, Christchurch, Hamilton and Tauranga you may be able to purchase the state house you’re currently renting. You could even be eligible for a grant up to $20,000 to help you buy. To get started, fill out the form at the bottom of the page linked here.

Saving for a house in NZ isn't easy/.

Getting help from family and friends

If you’ve got family or friends who are in a position to help you purchase a home – that’s great!

If your parents or grandparents have cash to contribute you could receive a gift to pump up your deposit. You’ll just need to sign a gifting declaration and possibly get legal advice if the money is meant to be paid back in future.

If your parents don’t have the cash but they do own a home they may be able to act as guarantors. This means their house is used as security for the loan and they’re on the hook for repayments if you can’t make them – but may enable you to buy with a smaller deposit and lower income.

If family or friends also want to buy a home you could pool resources and buy together to make getting a deposit and a loan easier.

If you’ve got a small deposit it helps to get creative. Before you give up on your dream of home ownership, think of unique ways you could get on the ladder, and if you know anyone who could help.

DISCLAIMER: The information contained in this article is general in nature. While facts have been checked, the article does not constitute an advice service. The article is only intended to provide general information about government assistance for first home buyers in NZ. Nothing in this article constitutes a recommendation that any type of property 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 decisions about property, we highly recommend you seek professional advice.

Author

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).