The deposit can feel like the one number standing between you and your first set of house keys. The good news is that home loan deposit options are broader than simply saving every dollar in a bank account. In New Zealand, many buyers use a mix of savings, KiwiSaver, family help or equity to get there. What matters is understanding how each source works, what a lender will accept and whether the repayments still fit comfortably into your life.
How much deposit do you need for a home loan?
A 20% deposit is often treated as the benchmark, but it is not the only path to buying a home. Depending on the lender, your financial position and the property, it may be possible to buy with a smaller deposit. Loans above 80% of a property’s value are generally considered higher risk, so the lender may apply tighter affordability checks, charge a higher interest rate or ask for extra supporting information.
For a $700,000 home, a 20% deposit is $140,000. A 10% deposit is $70,000. That difference is significant, but so is the difference in the amount you need to borrow. A smaller deposit can get you into the market sooner, while a larger one may give you more lender choices and lower long-term borrowing costs.
There is no universally right answer. The strongest approach is usually one that lets you buy a suitable home without leaving your household budget stretched to its limit.
Home loan deposit options to consider
Personal savings and term deposits
Regular savings remain the clearest form of deposit in a lender’s eyes. Money built up through your income shows that you can budget, plan ahead and manage your cash flow. Savings held in a transaction account, savings account or term deposit can all contribute, provided the funds are available when you need them.
Keep records as you save. Bank statements help show where the money came from, particularly if you have made large transfers between accounts or received a one-off payment. If some of your deposit comes from a bonus, commission, sale of an asset or overseas funds, your adviser or lender may ask for evidence of the source.
KiwiSaver first-home withdrawal
For many first-home buyers, KiwiSaver is a major part of the deposit. If you meet the eligibility rules, you may be able to withdraw most of your KiwiSaver balance after being a member for at least three years. You generally need to leave $1,000 in your account, and the property must usually be intended as your main home.
The withdrawal process takes time. Your solicitor will need to be involved, and the funds are normally paid through the settlement process rather than into your everyday bank account. Do not assume the balance shown in your KiwiSaver app is immediately available as deposit money. Start the paperwork early so it does not hold up your offer or settlement date.
KiwiSaver can make a substantial difference, but it is worth remembering that you are using retirement savings to buy a home. For many people that is a sensible trade-off, especially when it reduces the size of the mortgage. The right choice depends on your wider retirement plans and how much cash you will retain after purchase.
A gift from family
Family support is common, particularly where house prices have risen faster than incomes. A parent or relative may contribute some or all of the deposit as a genuine gift. Lenders will usually want this recorded in a signed gift letter confirming that the money does not need to be repaid and that the giver will not have a claim over the property.
This distinction matters. If the money is actually a loan, it may affect your affordability because it creates another financial commitment. Be open about the arrangement from the beginning. A straightforward gift, properly documented, is far easier to present to a lender than an informal agreement that emerges late in the application.
Family money can also carry personal expectations. Have the conversation early about whether there are any conditions, whether siblings will be treated equally and what happens if you sell the home. Clear communication protects relationships as well as the purchase.
Equity from another property
If you already own a home, an investment property or have a family member willing to help, usable equity may form part of the deposit. Equity is the difference between a property’s value and the debt secured against it. For example, a home worth $900,000 with a $500,000 mortgage has $400,000 in total equity, although not all of it will necessarily be available to borrow against.
Some buyers use equity in an existing property to buy their next home or an investment property. In other cases, parents may offer a limited guarantee or allow equity in their home to support a child’s purchase. These arrangements can be useful, but they need careful thought. The supporting property is exposed if the borrower cannot meet their repayments, and everyone involved should understand exactly what they are committing to.
Selling assets or using a lump sum
Proceeds from selling a vehicle, investments, a business interest or another asset may also be used as deposit funds. A redundancy payment, inheritance or settlement payment can be considered too. The key is being able to verify the funds and show that they are genuinely available.
This option can help you move faster, but avoid using every available dollar. Selling an investment may create tax implications, and using all your cash can leave nothing for moving costs, repairs or an unexpected rate rise. A home purchase is more manageable when there is still a modest buffer after settlement.
What lenders look for beyond the deposit
A deposit gets attention because it is easy to measure, but it is only one part of a home loan decision. Lenders will also assess your income, existing debts, regular spending, credit history and the property itself. They want confidence that you can continue making repayments if rates rise or household costs increase.
This is why a buyer with a 10% deposit and stable income, low debt and sensible spending may be in a stronger position than someone with a 20% deposit but large credit card limits and car finance commitments. Before applying, it can help to reduce high-interest debt, avoid taking on new finance and keep your accounts well managed.
The deposit source can influence the assessment too. Genuine savings may be viewed differently from a gift, while equity-based arrangements may require valuations and extra documents. Lender policies vary, so a declined application with one lender does not automatically mean every lender will say no.
Do not forget purchase costs
Your deposit is not the full amount needed to buy a home. You will also need to allow for legal fees, a building inspection, valuation costs where required, moving expenses and insurance. Depending on the property and the agreement, there may be other costs before settlement as well.
It is tempting to put every cent into the deposit to reach a better loan-to-value position. Sometimes that makes sense. Other times, keeping a few thousand dollars aside provides far more peace of mind in the first months of ownership. A leaking hot-water cylinder or urgent appliance replacement is stressful enough without having no cash available.
Choosing the right path for your deposit
Start by working out a realistic purchase price and the repayments that feel sustainable, not just the maximum amount you might be approved to borrow. Then map your available funds: personal savings, KiwiSaver, confirmed family gifts and any equity. Separate money that is certain from money that is only possible.
If you are buying with a partner, discuss how much each of you is contributing and get legal advice about ownership before signing an agreement. If family is involved, put the arrangement in writing. These are practical conversations, not pessimistic ones, and they can prevent difficult misunderstandings later.
A mortgage adviser can compare how different lenders may treat your deposit mix and help you prepare the information they need. For Wellington and Kapiti buyers, Lee Mason can help make sense of the numbers, lender policies and next steps before you make an offer. A clear plan for your deposit gives you more confidence to act when the right home comes along.
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