Not enough deposit? Where to turn now?

Published on 24 April 2024 at 07:53

Where to turn when you don’t have enough deposit to buy a home?


So you’ve decided you want to get out of renting, and paying your landlords mortgage, to buy your own home BUT you haven’t saved the required deposit.  Banks are generally looking for 20% skin in the game.  This is set by the Reserve Bank of New Zealand and adopted by banks policies when assessing applications.


There are options to build your deposit – save, save save but this could take a while. Sell your jetski or other asset, ask family for support – they can gift or loan to go towards the deposit or even help by leveraging their property for you (reach out if you want to learn more on this). If after all this, you’re still short of 20% it’s not the end of the world as there are options available.


Kainga Ora’s First Home Loan allows deposits from 5% making homeownership more accessible to wider groups or people.  To qualify, you’d need to meet certain criteria, including a maximum income level (crazy right) and minimum time in your job. You’d also need to intend to live in the property for a certain period.  Only a handful of lenders can offer a KO FHL but you get access to some pretty good interest rates if successful.


If you fall outside KO’s low deposit eligibility all is not lost.  Lenders have been given the green light to offer more of their total lending to less than 20% deposit loan borrowers.  Under this pathway to owning your own home your income needs to be pretty strong as there is a higher requirement on this front form the banks.  You also need to know that low equity margin (higher interest rate) or low equity premium (additional fee) will be charged and the interest rate starting point will be higher than a ‘normal’ loan 20% deposit loan…higher rates are not forever though, only until you have grown equity to 20% of the properties value.


The main thing to remember is that there are options to consider.

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