What Can You Use as a Deposit for a House?
Buying your first home is an exciting goal but for many people the biggest challenge isn’t meeting monthly repayments, it’s pulling together the deposit. Understanding what can count as a deposit, how much you need and the different sources you can use is crucial to making your home ownership dream a reality.
What Is the Minimum Deposit Needed?
The minimum deposit required to buy a home in New Zealand can vary depending on the lender, the type of property and your circumstances. Typically, a 20% deposit is considered ideal especially if you want access to more lenders, lower interest rates and fewer restrictions or extra fees. For a $700,000 house that equates to $140,000. However, it’s more common for first-home buyers to have a 10% deposit (and yes, in some cases, as little as 5% is possible) especially with schemes like Kāinga Ora’s First Home Loan.
If you’re aiming for a deposit smaller than 20% it is important to know that banks may have stricter criteria to approve your loan. They generally offer a limited number of low-deposit loans and may look more closely at your income, debts and overall financial management.
Can You Really Buy with 5% or 10%?
Yes, buying with a 10% deposit is possible and quite common for many first-home buyers. For a 5% deposit it’s usually through specific schemes such as Kāinga Ora’s First Home Loan which allows participating banks to lend to buyers with smaller deposits if they meet income and house price caps. If you’re looking at new builds some of the Reserve Bank restrictions don’t apply. This sometimes makes it easier to buy with a lower deposit. However, lenders will still check for solid savings behaviour and responsible spending.
Using KiwiSaver for Your Deposit
For many New Zealanders KiwiSaver is the main source of their house deposit. If you’ve been a member for at least three years you may be eligible to withdraw almost all of your KiwiSaver funds (apart from the $1,000 minimum that must remain in the account) to put towards your first home. Banks usually require that you’ve been making regular contributions and will consider your KiwiSaver as “genuine savings” when processing your application.
There is no set amount of KiwiSaver you need but let’s say you want to buy a $600,000 home with a 10% deposit ($60,000): at least half of this should ideally come from your KiwiSaver or another form of genuine savings. The remainder can be made up from other sources.
What Qualifies as Genuine Savings?
Banks are interested in your financial discipline and ability to save over time. Genuine savings might include:
Regular KiwiSaver contributions
Ongoing deposits into a savings account
Funds held in a term deposit or shares for over three months
Savings built up from bonuses or commissions rather than spent straight away
Banks generally want at least 5% of the purchase price (for example, $30,000 on a $600,000 home) to come from such sources, especially for applicants with lower deposits. This shows you can manage money well and are likely to handle mortgage repayments in the future.
Can You Use Gifts from Family for a Deposit?
Family help is another common way Kiwis top up their deposit. A family member can gift you funds, or in some cases offer a loan. However, the bank will typically want to see that the gift is unconditional (meaning you’re not expected to pay it back) and the person gifting may have to sign a declaration. If it’s a loan banks will factor repayments into your ability to afford the mortgage.
It’s important to note that you can’t use KiwiSaver funds belonging to someone else as a gift for your deposit. Each person can only withdraw from their own KiwiSaver to buy their first home, but if you’re buying a house with a partner, sibling or friend then each person can use their own KiwiSaver funds towards the same purchase.
How Big Should Your Deposit Be?
A deposit of 20% remains the benchmark because it opens up more options — more banks, better rates, fewer paperwork hurdles and no low-equity fees or higher-interest “lender’s risk” margins. However, many New Zealanders buy with 10%, and some manage with 5% (using specific assistance schemes). The right deposit size for you depends on your income, debts, spending habits and eligibility for special schemes or family support. Consulting a mortgage adviser is a good step to clarify your position and maximise your chances of getting approved.
Making a Start
If home ownership feels out of reach it’s worth remembering that banks consider your entire financial picture, not just the deposit amount. Responsible spending, a solid savings record and steady income all count in your favour. Sometimes they count even more than a big deposit. Begin by building regular savings habits, contribute steadily to KiwiSaver and don’t be afraid to talk to family about support or seek professional advice. Step by step, each action brings you closer to that first set of keys.
The journey may feel long, but with knowledge and a plan, saving a deposit and buying your own home is an achievable goal for many Kiwis.