What happened to First Home Grants and the First Home Partners scheme?

Both schemes have now been discontinued as of May 2025.So you’ll need to rely on your own deposit, your KiwiSaver, a First Home Loan, or family support.

Mortgages

5 min read11 Nov 2021

How much deposit do I need for my first home?

In this article, we discuss how much deposit you need as a first home buyer, and some suggestions on actions you can take to make your ambition a reality.

Author: Ben King

Ben has 14 years of experience as a mortgage advisor and background as an investment adviser.

Book free session with Ben

Reviewed by: Derry Brown

Financial Adviser in industry since 2007. Investor in Auckland & Christchurch. Previous COO of Global Brand

Copied

Buying your first home isn’t easy, but for many Kiwis the dream of owning a slice of paradise is still alive.

So, how much deposit do you actually need – and what can you do to get that deposit up if you’re still saving hard?

In this article I’ll break down exactly how much deposit first home buyers need.

You’ll also learn how to get a mortgage with less deposit than normal … and you’ll learn strategies to help you climb onto the property ladder sooner.

How much deposit do I need as a first home buyer?

In an ideal world, first home buyers would have a 20% deposit, but this isn’t always possible.

The median house price in Auckland (as of March 2025) is $1,040,000
That means a 20% deposit is $208,000

Even for a lower-priced property – say a $650,000 two-bedroom townhouse – the deposit is still $130,000.

Saving that amount is tough, especially without help, but the good news is: You don’t always need 20%.

Can I get a mortgage with a smaller deposit?

The short answer is often ‘yes’, you can buy a house with a smaller deposit.

Many first-home buyers purchase with a 10% deposit, and some even with as little as 5%.

This is called a low-deposit loan. Here’s how it works:

Banks can only lend a limited portion of their mortgage book to low-deposit borrowers (currently 20%)
They often prioritise first-home buyers for these loans
To qualify, you’ll need a good income, low debt, and solid credit

But there is a catch.

If you borrow with less than 20%, you’ll likely pay a higher interest rate. This is sometimes called a Low Equity Margin. It’s an extra interest charge and ranges from 0.25% to 1.5%.

The smaller your deposit, the higher the margin. More on this below.

So yes, you can get on the ladder sooner. In fact around 40% of first home buyers use a low-deposit loan, but it’s likely to cost a little more.

How Much Can I Borrow? (It’s Not Just About the Deposit)

Debt-to-Income (DTI) restrictions came into play on July 1, 2024. DTIs link your income and how much you can borrow.

This means you might not be able to borrow as much money to buy your first home.

First home buyers can usually only borrow up to 6x their income.

So, if you and your partner earn $100,000 combined:

You can borrow up to $600,000 to live in the home (under these rules)

So if you also had a $60k deposit, perhaps you could buy a house worth $660k.

Remember: all your other debts count too – credit cards, student loans, car loans etc.

So if you have lots of credit cards, that comes off the $600k you could borrow under the DTI rules.

What happens if I use a low-deposit loan?

If you’re a first home buyer with less than a 20% deposit you are a “low equity margin customer”.

This means your home loan is high compared to your home’s value, so the banks are taking on a bit more risk by giving you a loan.

This is why they charge you a higher interest rate, so add a margin to your rate. These margins typically range from 0.25% up to 1.5%, depending on how small your deposit is.

But as a general rule, the lower your deposit, the higher your interest rate will be.

So, while a lower deposit may help you get on the ladder sooner, it does incur some costs.

Help me out ... what are some of the ways I can get on the property ladder?

The biggest hurdle first home buyers face is they just don’t have enough money for the deposit. For even the best of savers, it’s often still not enough.

A couple might struggle. As a single person without family help it’s becoming increasingly hard, but there are ways you can get “creative”.

Strategy #1: Buy a New Build

Buying off-the-plans can be a smart move for first home buyers. Why?

Reason 1: Lower upfront deposit.

When you buy off-the-plans you pay a smaller amount upfront (usually 10%). Then you pay the rest once the property is built.

That could be 1–2 years away. This can work well for first home buyers who don’t have all the money just yet.

This way you can put down the 10% deposit, and have 1-2 years to save the other 10% (that the bank needs).

Reason 2: Lock in today’s price.

If prices rise while your property is being built, you benefit from the house going up in value without paying more (of course there is also the risk property prices decline during the build).

Strategy #2: Use Your KiwiSaver

You can withdraw most of your KiwiSaver balance to use as a deposit – as long as:

It’s your first home
You plan to live in it for at least 6 months
You’ve been contributing to KiwiSaver for 3+ years

You must leave $1,000 in your account, so if you have $26k, you can use $25k.

Strategy #3: Apply for a First Home Loan

This government-backed loan scheme lets you buy with just 5% deposit if you meet the criteria:

Income under $95k (single) or $150k (couple)
House price is under the regional cap (check the Kainga Ora website)

The government covers your mortgage insurance, and these loans don’t count under LVR restrictions, so banks are more likely to approve them.

Strategy #4: Bank of Mum and Dad

If your parents can help, they might:

Gift or lend you cash
Use equity in their home as a guarantee

But at least 5% of your deposit must be genuine savings. That means:

Your own savings
KiwiSaver withdrawal
A car (or other asset) you sold

Strategy #5: Save and/or Sell

Sometimes, the old-school tactics are still the best:

Save a set portion of your salary
Sell a second car or unused assets
Consider moving in with family temporarily to reduce costs

Every little bit adds up when you have a clear goal.

What should I do next?

There’s no one-size-fits-all answer to how much deposit you need. It depends on what you buy and which loan options you can access.

Here are your next steps:

Work out your budget under the DTI and deposit rules.
See what your KiwiSaver and savings can contribute.
Book a session with a mortgage adviser to explore your deposit options and eligibility for low-deposit loans.

Home ownership might be hard – but with the right plan, it’s still within reach.

Ben King

Ben has 14 years of experience as a mortgage advisor and background as an investment adviser.

Ben brings a wealth of experience to the table with his 14 years as a mortgage advisor and background as an investment adviser. His dedication to helping clients reach their financial goals is central to his work.

Book free session with Ben View Profile

Mortgages

The fast five - the five ways to build your deposit as a first-home buyer

Discover five quick and effective strategies to build your deposit as a first home buyer, helping you get closer to owning your dream home.

How to build your equity so you can invest

Property Investment

5 Strategies if you don't have the money to invest just yet

Want to invest in property but don't have the money to invest just yet? Use these 5 property investment tactics to increase your equity and invest

Mortgages

How do I get a mortgage and pay it off?

This 9,500-word Epic Guide to Mortgages is the definitive article on how to get a mortgage and pay it off faster, today in 2022. The Ultimate Guide.

Mortgages

How much money do I need to talk to a financial adviser?

Wondering if you're "rich enough" to see a financial adviser? Learn how much money you need, how they get paid, and who they actually help.

Mortgages

Latest interest rate changes in NZ

Explore the latest interest rate changes from NZ's main banks. Our detailed update shows recent shifts, allowing you to compare and understand how these adjustments could affect your finances.

Property Investment

How much does a mortgage broker cost?

Mortgage advice that’s truly free? At Opes Mortgages, we help you find the best home loan without charging you a cent. Learn how mortgage advisers work, why it’s often better than going straight to the bank, and how expert help can save you money.

Law

What's the CCCFA and how do the changes affect you?

Find out how CCCFA rule changes impact your chances of approval—and what it means for your next home loan application.

Property Investment

Leverage: The dark side of having a big mortgage (the one you didn’t think about)

Taking on a large mortgage can help you buy property sooner, but it also comes with risks. Learn how a big mortgage can grow your wealth — or magnify your losses — when investing in property.