# First home buyer grants and low deposit home loans > Many first home buyers think they need a 20% deposit. You can often buy with 10%, or 5% through the First Home Loan, but a smaller deposit costs more. By Jason Dark, last checked 2026-11-05. Part of [Buying](https://buyingahouse.co.nz/buying) on Nester. ## The short version - The First Home Grant stopped taking new applications on 22 May 2024. - You don't always need a 20% deposit. Banks can make up to 25% of their new owner-occupier loans to buyers with less than 20%. - If you qualify, the First Home Loan, backed by Kāinga Ora, lets you buy with a 5% deposit. - If you have a smaller deposit, your loan and repayments will be larger. Most banks also charge extra, either with a higher interest rate or a one-off fee. - If you have a small deposit and house prices fall, you can quickly end up with negative equity. ## The grant has closed The First Home Grant gave eligible KiwiSaver members a lump sum towards their deposit. The government stopped taking new applications on 22 May 2024. Other help is still available, and many buyers need a smaller deposit than they expect. ## You don't always need a 20% deposit Many people think you need a 20% deposit to get a mortgage. That's true for a lot of buyers, but it isn't a rule. The Reserve Bank limits how much banks can lend to people with less than 20%, using the [loan-to-value ratio](https://buyingahouse.co.nz/glossary/lvr) (LVR). A 20% deposit is an 80% LVR. Most bank lending must stay at or below 80% LVR, but from 1 December 2025, banks can make up to 25% of new owner-occupier loans above that level. That leaves room for buyers with a 10% deposit, and sometimes less, especially first home buyers. Whether a bank will lend to you depends on your income, expenses, debts, number of dependants and how much room the bank has left within its limit. A mortgage adviser can tell you which banks are lending at low deposits right now. ## The First Home Loan The First Home Loan lets eligible buyers purchase a home with a 5% deposit. Kāinga Ora backs the loan, so participating banks and lenders can accept the smaller deposit. Your savings, KiwiSaver and gifts from family can all count towards it. To qualify, your household income before tax over the past 12 months must be $95,000 or less for a single buyer without dependants, or $150,000 or less for a single buyer with dependants or for two or more buyers together. You'll also need to meet the lender's own rules. Kāinga Ora charges a mortgage insurance premium of 1.2% of the loan, which you can pay upfront or add to the loan. Check the Kāinga Ora website for the latest rules before you start. ## What a smaller deposit costs A smaller deposit gets your foot in the door sooner, which can be better than spending years saving 20%. The downside is a bigger loan and higher repayments. Banks also charge extra if your deposit is less than 20%. Most add a low equity margin to your interest rate, but ANZ charges a one-off fee instead. Here's what the main banks charge, depending on your LVR: - ASB: a margin of 0.30% from 80% to 85%, 0.75% from 85% to 90%, 1.30% from 90% to 95% and 1.50% above 95% - Westpac: a margin of 0.25% from 80% to 85%, 0.75% from 85% to 90%, 1.50% from 90% to 95% and 1.75% above 95% - ANZ: a one-off low equity premium of 0.25%, 0.75% or 2.00% of the loan across the same three bands, which you pay when the loan starts or add to the loan BNZ includes the margin in the interest rate it offers. A margin applies to the whole loan, so 0.75% on a $600,000 loan costs about $4,500 more each year. At ANZ, the same 0.75% is charged as a one-off fee of $4,500. The margin doesn't automatically come off once you reach 20% equity. ASB lets you request its removal after 6 months, but may require a registered valuation, which you pay for. Westpac removes it after you arrange a review. ASB doesn't charge a low equity margin on First Home Loans. ## The risk of negative equity The bigger risk is negative equity, which is when you owe more than the house is worth. Say you buy a $700,000 house with a 10% deposit, so you borrow $630,000. If prices around you fall 10%, the house is worth $630,000, the same as your loan, and you have no equity left. With a 5% deposit, the same fall leaves you owing $35,000 more than the house is worth. With a 20% deposit, you'd still have $70,000 of equity. Negative equity is never a good position to be in. But if you're an owner-occupier and can keep up your repayments until the market recovers, there's a good chance you'll be fine. When times are tough, banks tend to put pressure on property investors first. They might refuse to roll over an interest-only term or push an investor to sell. Banks usually avoid forcing owner-occupiers out of their homes, because it brings bad headlines and hurts their reputation. That's one of the reasons why investors with several properties often split their lending across different banks, so no single bank can see everything or hold too much power over them. The real problem comes if you need to sell while you're in negative equity, because you'd have to cover the shortfall. ## How it worked for me I bought my first house with a 10% deposit, and ASB charged us a low equity margin of 0.75%. We paid the loan down as fast as we could, and after a couple of years we had more than 20% equity, so the margin went away. The smaller deposit got us into the market sooner, and the extra interest was worth it. ## KiwiSaver first home withdrawal If you've been in KiwiSaver for at least three years, you can take out everything except $1,000 to buy a home you'll live in. That covers your own contributions, your employer's, the government's and any investment returns. The [first home withdrawal guide](https://buyingahouse.co.nz/buying/kiwisaver-first-home-withdrawal) explains the rules and the timing. ## Using both Many first home buyers use KiwiSaver for the deposit and a First Home Loan for the rest. Use the [mortgage repayment calculator](https://buyingahouse.co.nz/tools/mortgage-repayments) to see the repayments on the loan you'd need. A mortgage adviser can tell you which lenders offer the First Home Loan and whether you're likely to qualify. ## Sources - [Reserve Bank of New Zealand: Timeline for loan-to-value ratio restrictions](https://www.rbnz.govt.nz/Regulation%20and%20supervision/Oversight%20of%20banks/Standards%20and%20requirements%20for%20banks/Macroprudential%20policy/Timeline%20for%20loan-to-value%20ratio%20restrictions) - [Kāinga Ora: First Home Loan](https://www.kaingaora.govt.nz/en_NZ/home-ownership/first-home-loan/) - [Ministry of Housing and Urban Development: First Home Loan](https://www.hud.govt.nz/funding-and-support/first-home-loan) - [ASB: Home loan interest rates and fees](https://www.asb.co.nz/home-loans-mortgages/interest-rates-fees.html) - [Westpac: Low equity margin home loans explained](https://www.westpac.co.nz/home-loans-mortgages/first-home/low-equity-margin-home-loans-explained/) - [ANZ: Sample home loan summary](https://www.anz.co.nz/content/dam/anzconz/documents/rates-fees-agreements/home-loans/ANZ-home-loan-summary-sample.pdf) - [BNZ: BNZ simplifies its home loan offering](https://www.bnz.co.nz/about-us/news/bnz-simplifies-home-loan-offering-delivering-savings-for-first-home-buyers-and-low-equity-borrowers)