New houses are eligible for 10% deposits in cases where older or existing houses aren’t

Summary: Banks are turning away purchasers who have less than a 20% deposit; however, if you buy a property that is brand new, then you can look at using a 10% deposit.

These days, many home owners are being told by their banks that they need to have a 20% deposit in order to buy a house. If you consider a house price of say, $700,000, or $800,000; that means needing as much as $150,000 as a deposit for your home.

Yes, you read right. $150,000!

For most first time homeowners, this amount is completely unachievable.

It could take you as much as 10 years to save up this amount! And by that time, property prices would be increasing more and more and more!

And unfortunately, some people think that they can go out to the market and buy with a 10% deposit on older or existing houses, however this rarely the case. It is very hard to do this because the rules make it much easier to buy a newly constructed home.

These rules are in place as the NZ Reserve Bank is working to reduce and curb the number of low deposit home loans given, so they have reduced the ability for people to buy using a 10% deposit significantly.


So how could someone buy a house with just a 10% deposit, and not 20%?

Banks tend to request you to have a 20% deposit to buy a home. However, there are special cases where 10% deposits can be used. For example; when a property is new, the bank is more easily able to  grant a home loan on a 10% deposit.


How could you buy a home with a 10% deposit?

One of the most common ways to achieve this, is to be buying a new home, e.g. a special type of home that is exempt from the Reserve Bank’s LVR speed limits. These rules restrict the purchase of older existing properties, but are more lenient for brand new properties that are newly constructed. In most cases; this means you need to be buying a home that is new.

Where the home is new, the bank will be more willing to give you a home loan at a 10% deposit. This means that rather than having a home deposit of $150,000 – you can probably make it happen with a much smaller deposit.

Just Mortgages has specialized expertise in helping purchasers with new and newly constructed properties. For more information, contact us today!

Note: Full, further and/or Other criteria applies, criteria may change, and you should also review the official information on this matter on the Reserve Bank’s website and information on what constitutes a new home.

This website is written as a general guide and is not personalised advice. It is not intended as personal financial advice,nor is it specific advice to your situation. The author has written this in good faith and disclaims any liability from any action or inaction from how you may use this website or the results it may or may not achieve. Government, bank, company, insurer and lending policies, as well as other policies, procedures, and information in this website are likely to also change from time to time, and rules and decisions and policies may be applied differently and/or on a case-by-case basis. These rules may also change from the approximate time this was written. You are encouraged to recheck if these matters are accurate and up to date. By reading and using this website, you agree to hold the author, associated entities and/or associates, harmless.