Deposit Options
Give your savings efforts a boost with these tips, and find out how KiwiSaver withdrawal, gifting, and family support can get you closer to owning your home.
Building your first home deposit doesn't have to rely solely on traditional savings. There are several options available to help you reach your deposit goal faster. Understanding these different deposit sources can significantly accelerate your path to homeownership.
Key Points About First Home Deposits
- Most banks require 20% deposit, but 10% or even 5% is possible for first home buyers
- KiwiSaver can be withdrawn after 3 years of membership (minus $1,000 minimum balance)
- Family gifts are accepted but require a signed gift letter
- Banks prefer to see at least 5% as genuine savings to demonstrate financial discipline
- Family equity loans allow parents to use their home equity to help secure your deposit
Myth Buster: Do You Really Need a 20% Deposit?
The short answer is no! While a 20% deposit was traditionally required and does give you more options, first home buyers in New Zealand have several pathways to homeownership with smaller deposits.
Low Deposit Options Available:
- ✓First Home Loan: Buy with as little as 5% deposit through participating banks
- ✓New Builds: Many banks offer 10% deposit loans for new build properties
- ✓10% Deposit: Some banks have limited allocation for existing homes at 10% LVR
Yes, a lower deposit means you'll borrow more and may pay a slightly higher interest rate or low equity premium. But for many first home buyers, getting on the property ladder sooner outweighs waiting years to save 20%.
Good Old Fashioned Savings
Preferred by Banks
Traditional savings remain the most preferred option by banks and demonstrate your financial discipline. Lenders want to see that you can manage money responsibly before lending you hundreds of thousands of dollars.
Key Requirements:
- •Must demonstrate saving capacity and discipline
- •Proof required through savings account history
- •Minimum 5% of purchase price recommended
- •Shows lenders you can manage money responsibly
KiwiSaver Withdrawal
Most Popular Option for First Home Buyers
KiwiSaver is likely your biggest contribution to your first home deposit. If used effectively, it can be incredibly powerful. After 3 years of membership, you can withdraw almost your entire balance for a first home purchase.
What You Can Withdraw:
- •Your contributions (minus $1,000 minimum balance)
- •Employer contributions
- •Returns on your investments
- •Government contributions (if eligible)
Pro Tip: Consider switching to a conservative fund 1-2 years before buying to protect your balance from market volatility. Learn more about fund timing →
Gifting & Family Support
Bank of Mum and Dad Options
Family support is a common way for parents to help children onto the property ladder. There are three main ways family can assist with your deposit:
1. Gift – No Repayment Required
Most CommonFamily members gift you money towards your deposit with no expectation of repayment.
- •Letter or statutory declaration required confirming it's a gift
- •Must state no repayment is expected or required
- •Banks prefer 5% personal contribution plus gifted amount
2. Gifted Loan – Repayable Later
FlexibleFamily provides funds with the understanding it will be repaid upon sale of the property or refinance.
- •Repayment triggered by property sale or refinancing
- •No regular repayments required during ownership
- •Should be documented in a formal loan agreement
3. Family Loan with Interest
FormalA formal loan arrangement with regular interest payments to family.
- •Interest payments need to be factored into loan servicing calculations
- •Bank will assess your ability to service both loans
- •Formal loan agreement and repayment schedule recommended
Important: Whichever option you choose, banks prefer you have at least 5% from your own savings to show you have "skin in the game" and can manage money responsibly.
Family Equity Loans
Leverage Family Property
If you don't have enough deposit but your family members have equity in their property, a family equity loan can help you get started.
How It Works:
Two Separate Loans:
- 1.Loan 1 (20% deposit): In your name AND family member's name (shorter term)
- 2.Loan 2 (80% main loan): In your name only (typically 30 years)
Security:
Mortgage registered over family member's property for the 20% loan
Release:
Once you build up 20% equity in your home, the family member can be released
Can Combine With:
KiwiSaver withdrawal to reduce the amount needed from family
Using KiwiSaver for Your First Home
KiwiSaver is one of the most powerful tools available to first home buyers in New Zealand. Understanding how to maximise your KiwiSaver can significantly boost your deposit.
Key Things to Know:
- •You can withdraw your contributions, employer contributions, and investment returns
- •Must have been a KiwiSaver member for at least 3 years
- •$1,000 minimum must remain in your account
- •Consider switching to a conservative fund 1-2 years before buying
Budgeting & Savings Tips
Building a deposit requires discipline and smart money management. Learn practical strategies to save faster and reach your homeownership goals sooner.
Quick Savings Tips:
- •Set up automatic transfers to a dedicated savings account
- •Track your spending to identify areas to cut back
- •Review subscriptions and recurring expenses
- •Consider a no-spend challenge for non-essentials
Take Control of Your Money
Financial literacy is the foundation of successful homeownership. Understanding how to manage your money effectively will not only help you save for a deposit but also prepare you for the responsibilities of owning a home.
Making Homeownership Your Reality:
- •Understand your current financial position
- •Set clear, achievable savings goals
- •Build good financial habits that will serve you as a homeowner
- •Learn to prioritise spending and avoid lifestyle creep
Budgeting & Saving Tips
Learn how to maximize your savings potential and build your deposit faster.
View Savings Tools →Low Deposit Loans
Find out about low deposit options like the First Home Loan scheme.
Related Articles
Frequently Asked Questions About First Home Deposits
Frequently Asked Questions
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