Deposit

The deposit is the portion of the purchase price you pay upfront from your own funds. The rest is borrowed from the bank as a mortgage. In New Zealand, most mainstream lenders generally look for a deposit of around 20% of the purchase price as a starting point, though there are pathways available for buyers with less saved, including the First Home Loan scheme backed by Kainga Ora.

Your deposit can come from a range of sources: regular savings, a KiwiSaver withdrawal, a gift from family (sometimes called the 'Bank of Mum and Dad'), or proceeds from the sale of another asset. Lenders will typically ask for evidence of how your deposit was accumulated, this is called genuine savings verification, and some lenders are more flexible than others about what qualifies.

The size of your deposit directly affects your LVR, which in turn affects your interest rate, your borrowing capacity, and whether mainstream banks will lend to you at all. A larger deposit is almost always beneficial, it reduces the amount you borrow, lowers your monthly repayments, and means you pay less interest over the life of the loan.

Every additional dollar in your deposit reduces your loan by the same amount, meaning less interest paid over time and lower monthly repayments. It also reduces your LVR, which can unlock better interest rates and widen the pool of lenders willing to work with you. Even a modest increase in your deposit, if it pushes you across a key LVR threshold, can meaningfully improve your overall borrowing position.

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