How much deposit do I need to buy my first home in New Zealand?
Disclaimer: The below guide is general in nature and do seek individual financial advice to see how this applies to your situation. Our experienced advisers are on hand to help at no cost to you (T’s and C’s apply)
Deposit is a big factor in determining our options. But that doesn’t mean that we necessarily need a big deposit in order to buy.
Sometimes it can be worth waiting and saving more, but I often speak to clients that already have enough deposit without realising.
A couple I worked with recently had $25,000 between them in their Kiwisavers.
Deposit is only one of a number of factors, but based on deposit alone, we we able to purchase a property of up to $500,000 with a 5% deposit of $25,000. And this was without having any cash savings in their bank account or help from family. This was through the Kainga Ora First Home Loan Scheme.
Prior to our discussion, this couple felt like they were years away from buying a home. 2 months after our discussion, they had settled on their first house.
What counts as deposit?
Kiwisaver First Home Withdrawal - this is open to anyone who has had their Kiwisaver for more than 3 years and not used this scheme before.
Savings in any form - term deposits, money in a bank account, your own money from overseas
Shares & Investments that can be liquidated
Gifting from family members - this cannot be a loan and must be a gift that is not to be repaid.
Equity in other properties that you already own (this usually doesn’t apply to first home buyers though)
What % of deposit do I need?
20% Deposit Options
The gold standard of mortgages is to have a 20% deposit. This will mean that more banks will be open to lending to us, and the best rates on the market will be available to us. If you have this much, congratulations - let’s start that convesation.
However, with the average house price in NZ sitting at $907,000 at the time of writing, not everyone has the resources to come up with over $180,000 in deposit!
We know this very well and luckily, there are a number of ways that we can get a good loan without too many extra costs.
5%+ Deposit Options
Via the Kainga Ora First Home Loan Scheme, we can access home loans with as little as 5% deposit. You might already have this saved up in your Kiwisaver, do check!
Before coming across this scheme, clients often believe that a scheme like this must have a lot of extra costs and extra strings. There are some considerations with this scheme and there are some costs involved, but in general, the costs involved can be similar to having a 20% deposit.
Standard Less Than 20% Deposit Loans
Not everyone will qualify for the Kainga Ora First Home Loan Scheme. A standard low deposit can still be a good option for some clients. It is usually a bit more expensive that having a 20% deposit, but that’s not always the only consideration.
Working with your adviser, this can be a temporary option to get on the housing ladder. Over time, we would hope to see property values increasing and loan balances dropping, which then gives us 20% equity (deposit in a property we already own), and we can then access the banks best rates.
