The honest answer is: it depends which door you want to walk through. There are three practical deposit levels in New Zealand, and each corresponds to a different lending pathway.
20% — the standard door
At 20% you are inside the Reserve Bank's standard loan-to-value threshold for owner-occupiers. Banks compete for you, you avoid low-equity premiums and margins, and approval is more straightforward. On a $700,000 home that is a $140,000 deposit.
10% — possible, rationed, and priced
Banks are allowed to write only 25% of their new owner-occupier lending above 80% LVR, so low-deposit loans are rationed. Expect a low-equity premium or margin (often roughly 0.25–0.75% extra on the rate, or a one-off fee), more conditions, and slower processing. On the same $700,000 home a 10% deposit is $70,000 — but the loan is $630,000, and at a higher effective rate.
5% — the First Home Loan route
The Kāinga Ora First Home Loan lets eligible buyers purchase with a 5% deposit. It is exempt from the LVR restrictions and the DTI cap, but has income caps — $95,000 for a single buyer with no dependants, $150,000 otherwise — and a Lender’s Mortgage Insurance premium on top of the loan (see Kāinga Ora for the current rate). A 5% deposit on $700,000 is $35,000.
Don't forget the costs beside the deposit
- Legal and conveyancing: typically $1,500–$3,000
- Builder's report and LIM: several hundred dollars each, sometimes on more than one property
- Moving costs, insurance from settlement day, and a buffer for the first months
A deposit that empties every account to the last dollar is not really a deposit at that level — lenders also look for evidence you can hold savings after settlement.
A worked example
Suppose you and a partner target a $650,000 first home. 20% is $130,000, 10% is $65,000, 5% is $32,500. With $45,000 of withdrawable KiwiSaver between you and $20,000 of cash, you have $65,000 — exactly 10%. The planner shows the gap to each threshold and how long your current saving rate takes to close it, which turns “how much do I need?” into “when will I be ready?”.
The deposit is measured against price, not your offer
A detail that catches buyers late in the process: the lender calculates LVR against the lower of the purchase price and the bank's own valuation. Usually these match. When they do not — you have won a competitive auction, or the registered valuation comes back under — the deposit you carefully assembled to hit a threshold may no longer reach it, and the shortfall has to be found in cash. This is one of the strongest arguments for aiming slightly above a threshold rather than landing exactly on it.
Waiting is sometimes cheaper than qualifying
Buyers understandably treat the lowest accessible deposit as the goal, but a smaller deposit means a larger loan, a higher rate or premium, and more interest over decades. Before committing to a low-deposit pathway, model the same property at your current deposit and at the next threshold up, including the low-equity cost. If six more months of saving moves you across a threshold, the comparison is often startling — and it is a genuine choice, not simply a delay. Sometimes the market moves against you and buying sooner wins. The point is to make that call with both numbers visible rather than assuming the earliest door is the best one.