5% Deposit Mortgage NZ — Can You Buy a House With 5% Down?

A 5% deposit mortgage is possible in New Zealand — but only through the Kāinga Ora First Home Loan scheme, which has income and property price caps. If you qualify, it’s one of the most valuable first home buyer tools available.

The Kāinga Ora First Home Loan

The First Home Loan is a government-backed guarantee scheme allowing eligible first home buyers to purchase with just 5% deposit. Key features:

Minimum deposit: 5%
Lender guarantee: Kāinga Ora guarantees the lender against loss between 80% and 95% LVR — this is why banks offer it without the standard high-LVR rate premium
No rate loading: You pay the same standard fixed rate as a 20% deposit buyer
Available through: ANZ, ASB, BNZ, Westpac, Kiwibank, and some non-bank lenders

Eligibility Criteria

To qualify for the First Home Loan:

1. First home buyer: You must not have previously held a freehold or leasehold interest in residential property (with some exceptions for previous hardship situations).

2. Income caps:

Single: $95,000 gross annual income
Combined (couple or multiple buyers): $150,000 gross annual income

3. Property price caps: The property price must be within Kāinga Ora’s regional caps — which differ for new builds and existing properties. Price caps vary by region and are updated periodically. Check kaingaora.govt.nz for current caps.

As at 2026, indicative caps for existing homes:

Auckland: ~$700,000–$750,000
Wellington: ~$650,000–$700,000
Christchurch: ~$550,000–$600,000
Rest of NZ: lower caps by region

New build caps are typically higher.

4. Minimum deposit: 5% of the purchase price, from genuine savings or KiwiSaver (plus buying costs).

5. Owner-occupier intent: Must be purchased to live in, not as a rental.

Where Does the 5% Come From?

The 5% deposit can be sourced from:

KiwiSaver withdrawal — after 3 years membership, your balance (minus $1,000) is withdrawable for a first home purchase
Personal savings
Gifted deposit — from parents, subject to lender requirements (deed of gift, no repayment obligation)
A combination of the above

Most first home buyers use KiwiSaver as the primary or partial deposit source. See KiwiSaver First Home Withdrawal.

5% Deposit Examples

Property price	5% deposit	Mortgage (95%)	Monthly repayment at 5.45% (30 years)
$500,000	$25,000	$475,000	$2,679
$600,000	$30,000	$570,000	$3,215
$700,000	$35,000	$665,000	$3,750

Plus buying costs ($8,000–$15,000 above deposit).

5% Deposit vs 20% Deposit: The Real Cost

A 5% deposit means a larger mortgage and more interest paid over the life of the loan:

Scenario	Deposit	Mortgage	Total interest (30 years at 5.55%)
5% deposit	$30,000	$570,000	~$608,000
20% deposit	$120,000	$480,000	~$512,000

Difference in total interest: ~$96,000

However, buying now with 5% vs waiting to save 20% also has a cost — property price appreciation in the time it takes to save the additional 15%. In markets that appreciate significantly, early entry with 5% can outperform waiting.

Is 5% Deposit Enough?

Pros of buying with 5% deposit:

Enter the market sooner (stop renting, start building equity)
Avoid the “deposit savings treadmill” (saving while house prices rise)
No rate premium under the First Home Loan

Cons of buying with 5% deposit:

Larger mortgage = more interest over the life of the loan
Higher monthly repayments at the same property price
If property values fall, you’re in negative equity faster
Less financial buffer — no equity to draw on for early years

Practical check: Can you comfortably afford the repayments on a 95% LVR mortgage at 7.5% (stress test scenario)? If not, a larger deposit or lower-priced property may be more appropriate.

Saving 5% + Costs

The minimum cash required with the First Home Loan:

5% deposit + ~$8,000–$12,000 in buying costs

Example: Targeting $600,000 property

5% deposit: $30,000
Buying costs: $10,000
Total minimum: $40,000

Monthly savings	Time to save $40,000
$1,500	27 months
$2,000	20 months
$3,000	13 months