What are the deposit requirements for a mortgage?

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Gather up your acorns

Basically, banks won't lend the full amount for a house - you need to be able to put down a deposit, and the more the better. You may be familiar with 20% as the magic number, but the reality is if you're in a strong financial position we can work with as little as 5% deposit. Most people will need around 10% deposit, and if you can fork out a whopping 20%, you'll access the banks' most competitive rates and avoid low equity fees

The banks' appetite for lending more than 80% has been increasing recently which is excellent for first home buyers. In January 2018 the RBNZ (Reserve Bank of New Zealand) loosened their rules, and then again in January 2019 to allow 20% of total lending for owner-occupied houses with less than a 20% deposit.

More recently in response to Coronavirus, the RBNZ decided to scrap LVR restrictions. As tempting as it is to think this would mean being able to buy with little (or no) deposit, the changes were made to accommodate mortgage deferrals if house prices fall and their clients end up with less than 20% equity. We talk more about that in this article.


If you're a first home buyer you can withdraw KiwiSaver contributions made by you and your employer to use as a deposit towards your new home if you meet these conditions:

  • have been a KiwiSaver scheme member for at least three years;
  • be planning to live in the house for at least six months, and
  • be buying your first home.

First Home Grant

In addition to KiwiSaver, if your household income is less than $150,000 and you are buying for less than $625,000 (or building new for less than $700,000) in Auckland, you may be eligible for a First Home Grant of up to $5,000 per borrower.

You can find out more about these options in our First Home Buyers Guide  (aka your new bible).

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The Bank of mum and dad

The easiest and cheapest way to buy is using your parents to guarantee that part of your 20% deposit you don’t have.

Their guaranteed portion will be secured over their property or it can be secured over a term deposit, so you're not asking them to fork out cash, it's more like putting a 'hold' on their existing equity until you've paid that portion back.

In the event they use a term deposit as security, the term deposit stays in your parent’s name and they continue to earn interest on it. Guaranteed home loans are treated the same as loans under 80% so you get great interest rates, there are no fees, and you’ll even get a cash contribution from the bank. On an average loan size of $400,000 you will save around $10,000 using this option. Using a guarantor makes strong financial sense, even if you can go it alone.

Homeowner's Loan

Ask a Squirrel mortgage adviser about using our Homeowner's Loan as part of your house deposit.

Contact Squirrel

Eligibility for acting as a guarantor

Your parents need to be in a stable financial situation and still working (so ideally not retired on a sailboat, spending your inheritance). 

If they want to know more about what they're signing up to and any potential risks, we're happy to chat! Just call us on 0800 21 22 30.

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