All you need to know about Low Deposit Loans

As you may or may not know, getting a low-deposit loan with less than a 20% deposit is a lot more difficult and more expensive!

However, all is not lost – loans with a minimum 10% deposit are still available, although these will cost you more in fees than pre-LVR restrictions.  New builds are allowed to be at 10% as they are exempt from the Lending regulations, but you will still pay more for having the privilege of borrowing over 80%.

Don’t forget, you may be eligible for a First Home Loan or First Home Partner which only requires a 5% deposit.

Why would I go for a low-deposit loan?

You have saved $x which equals 10% of something.  You can get on the property ladder.  Yes, the loan repayments will be higher, but no lender will give you a loan if you can't service that loan.  Service means you pay out of your income and declared expenses.  At the beginning of a conversation with a Mortgage Adviser, that person will assess what you can service. That assessment is calculated at a higher rate because of the Responsible Lending Code here in NZ.  We need to ensure that you can pay in the future when the rates do go up, so you are assessed now at that higher rate.

Fees for Low Deposit Loans

Since the tightening up of low deposit loans, Banks and Lenders have not only increased fees and interest rates, but now also apply application fees and no longer offer contributions for legal fees.

So what fees are you up for?

  • Low Equity Fees
    Lenders generally add a margin (LEM) to your interest rate if you are over 80% lending.  This can range from .25% to 1.5% depending on the bank.  Some banks also charge a low equity premium (LEP) which comes in the form of an upfront fee based on the size of your loan.

  • Legal Fees for any Purchase
    These can vary from solicitor to solicitor – so it pays to shop around. It’s always good to be referred to a solicitor as well.

  • Registered Valuation
    It is normal for banks to request a valuation for properties being purchased with less than 20% deposit. Also for private sales. Valuations can range from $850 upwards depending on the valuer, as well as the value, size, and location of the property. This is ordered by the Mortgage Adviser once they know the lender that you are using.  You the client then pays for the valuation and the valuer goes and does the valuation.  The Mortgage Adviser, you the client, and the lender all get a copy of the valuation. If the property is a new build, then a valuation called a Certificate of Completion is needed at the end of the build to show it's 100% complete.  This is cheaper and is a requirement from the lender to complete the loan.

Achieving 80% lending

It’s all about how you structure the loan when you get your home. Start off by working it down to 85% borrowing, then the added interest rate reduces.  Then get it down to 80% and then you are where you and the lender want to be – at 80% lending.

So, when it comes to getting a loan with a low deposit – it does pay to shop around, not only to find a lender who offers low deposit loans, but also to find the best deal.

So what are Low Equity Fees and Margins all about?

Due to the high risk for banks of low deposit loans, they are required to take out a lenders mortgage insurance to minimise their risk. The low equity fee covers the cost of this insurance.

Tips for ‘Getting to Yes’ with the bank for loans with less than 20% deposit

While it’s fair to say that it is difficult in the current climate to obtain a loan with less than 20% deposit via a bank, you may still be able to obtain one if you have a very strong application. To have a fighting chance, applicants will likely need to match the following criteria;

  • Have excellent credit history
  • Preferably a saved deposit 
  • Demonstrate good financial management and have excellent account conduct (no unauthorised overdrafts, dishonours)
  • A very good surplus of funds once all expenses deducted
  • Hardly any debt 
  • Steady long-term employment/income

TIP iconTry and pay off your loan as fast as you can so that you can achieve 20% equity as soon as possible. That way you will not only save yourself money on interest, but will also enable you to qualify for cheaper interest rates! Any capital gains will also help you build your equity too!


Low Deposit Options

First Home Loan


First Home Partner

Update 29 September 2023 from Kainga Ora about First Home Partner

First Home Partner is a shared ownership scheme that has helped hundreds of aspiring first-home buyers purchase a home since October 2021.

Due to recent unprecedented demand, this scheme is now fully subscribed and therefore we will not be accepting any new applications while we work through our commitments to those already in the scheme. We will shortly be contacting current applicants to confirm the status of their application.

Please refer to our other home ownership products to help you on your home ownership journey.


First Home Partner is a government run shared ownership scheme for First Home Buyers and is managed by Kāinga Ora. The following is a broad summary of the scheme. For full details go to the First Home Partner scheme at the Kāinga Ora website.

What is Shared Ownership?
Shared ownership means that a third party also owns a share of your property by contributing equity to the purchase of the property (in this case Kāinga Ora) which you repay under an agreed arrangement.

Who is Eligible?

  • NZ citizen, permanent resident, or resident visa holder
  • Over 18 years of age
  • Total household income of no more than $130,000 before tax
  • Have a good credit rating
  • First Home Buyer
  • Not previously received shared ownership assistance from Kainga Ora 

Other Criteria

  • Must be for purchase of a property that you will reside in for at least 3 years.
  • Have a minimum 5% deposit (this can be savings, KiwiSaver, First Home Grant or money gifted).
  • Meet lending criteria for the relevant participating bank (Westpac, BNZ, or SBS)
  • Must be a brand-new home ‘newbuild’ or an ‘off the plan’ purchase.

How Much Equity will the First Home Partner scheme contribute?

  • Applicants are assessed on a case-by-case basis with a maximum contribution of up to 25% or $200,000 whichever is lower.

How do I apply?

Need Assistance Applying for a First Home Partner Loan?

  • Our First Home Buyer Club Advisor, Dustin, can assist with a First Home Partner Home home loan. Contact Dustin for a no obligation chat below.

Book a Chat


YouOwn is a shared ownership home loan product that helps to lower your deposit to 5%.  It does this with the help of an investment by YouOwn to top up your deposit to the ideal 20%.

How Does it Work?
You buy a portion of the property you can afford now, and YouOwn helps with the rest. You pay an equity charge of 4.95% on their portion and after five years, you can buy their share when you are able to.

With YouOwn’s help it really is possible to step into your own home today and create the future of your dreams.

Learn More about YouOwn here:

Get started with a plan for homeownership…

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