If you've got less than 20% saved, you're not alone and you're not out of options. Here's the real picture: what the rules actually say, what a low-equity margin costs in real dollars, and a myth worth clearing up before it costs you money.
Two separate rules work in your favour here, and most explainers only mention one of them.
Banks are allowed to put up to 25% of their new owner-occupier lending above 80% LVR (meaning a deposit under 20%). This was eased in late 2025 specifically to help lower-deposit buyers. You are not asking your bank to break a rule by applying under 20% down — you're applying into a quota that exists for exactly this.
The Kāinga Ora First Home Loan lets an eligible buyer in with just 5% deposit. Income caps apply ($95,000 for a sole borrower, $150,000 for two or more — higher with dependants) and there's no house-price cap. Critically, a First Home Loan doesn't carry a low-equity margin at all — check your own numbers with the First Home Loan calculator.
If you don't use a First Home Loan and borrow above 80% LVR through a standard mortgage, most banks price the extra risk into your rate. That's the real cost of going in low-deposit — and it's a calculable dollar figure, not a vague penalty. That's what the rest of this page breaks down.
Buy with less than 20% deposit on a standard mortgage, and most NZ banks charge more for it — but how they charge more is different bank to bank, and the difference is big enough to matter.
ASB, BNZ, Westpac and The Co-operative Bank add a separate low-equity margin on top of their standard rate, banded by how far under 20% you are — the lower your deposit, the higher the margin. It usually steps down and falls away once your equity crosses the 20% mark.
ANZ, Kiwibank, TSB and SBS Bank take a different approach — no separate margin line, just a higher standard interest rate for low-equity lending. The end effect on your repayment is similar; it just shows up differently on paper.
Because the mechanism differs, two banks quoting what looks like "the same deal" can cost noticeably different amounts per year at the same LVR. This is exactly the kind of thing a mortgage adviser compares across lenders for you — see our adviser guidance below.
This is a genuinely common misconception, and believing it can mean you walk into a bank expecting a number you won't actually be offered.
Where the confusion comes from: DTI and LVR are different rules doing different jobs. The LVR speed limit (above) genuinely does carve out room for low-deposit buyers. DTI doesn't carve out the same room — it caps how big your loan can be relative to your income, independent of your deposit. Having 5% down doesn't raise your DTI ceiling.
Run your own numbers through the borrowing power calculator — it flags you if your result is near or over the DTI line, so you know before you're disappointed by a bank's answer.
Everything above is the general picture — your actual figures depend on your bank, your deposit, and your income. Three calculators get you a real answer:
What a sub-20% deposit actually costs per month and per year at your bank.
SchemeCheck whether you'd meet the Kāinga Ora rules — no margin, no price cap.
BorrowingSee where your DTI sits before you talk to a bank.
Not financial advice. General information only. LVR speed limits, DTI limits, and First Home Loan income caps are set by the Reserve Bank and Kāinga Ora and are reviewed periodically — the figures on this page are current as of October 2026. Low-equity margins and rates are set by each bank individually and change over time; always confirm current figures with a lender or licensed mortgage adviser before relying on them.