The 20% rule is a starting point, not a wall
Most first home buyers hear the same number: you need a 20% deposit. It's the figure banks like because it clears their standard servicing rules with the least fuss. But it isn't the only door open to you.
Banks are allowed to lend outside that threshold under limits set by the Reserve Bank. There's always some capacity for low-deposit lending on the books, and first home buyers are usually the group best placed to use it. The catch is that low-deposit approvals move around depending on what's available at each lender that week, so the answer today isn't necessarily the answer next month.
Low-deposit lending is a real option
Buyers with less than a 20% deposit can still get finance, either through a bank's low-deposit allocation or through Kāinga Ora's First Home Loan scheme, which lets eligible buyers purchase with a lower deposit (income and price caps apply — check the current thresholds on the Kāinga Ora website).
There are trade-offs. Low equity margins or premiums often apply, servicing tests are stricter, and not every property type qualifies. But the difference between waiting three more years and buying now is often big enough to make the maths worth doing properly.
KiwiSaver counts as deposit, with rules
KiwiSaver is the deposit for most first home buyers. If you've been a member for at least three years, you can withdraw most of your balance to put towards a first home. You have to leave $1,000 in the account, and the money has to be paid to your solicitor at settlement rather than into your own account.
Both partners can each withdraw from their own KiwiSaver, which often doubles the impact. The First Home Grant closed in 2024, so KiwiSaver withdrawal is now the main first-home boost from the government side.
Deposit is only half the picture
The other half is how much the bank thinks you can afford to repay. They test your income against a stressed interest rate (higher than the actual rate), subtract your living costs and other debts, and see what's left. A big deposit with tight servicing can fail. A smaller deposit with clean servicing often gets through.
That's why the useful first step isn't crunching a deposit percentage — it's a proper look at both sides together. Sometimes the fix isn't more savings, it's cleaning up a car loan or restructuring a credit card.
What to do next
Before you start looking at houses, get a real read on where you stand: what you can borrow, what deposit you actually need for the type of property you want, and what's fixable in the next few months versus what needs a longer runway.
This is general information, not personalised advice. Your situation is its own thing — the right answer for you depends on the details. Have a chat with one of our advisers and we'll walk you through it.