Ask a Mortgage Broker: Do I Really Need a 20% Down Payment?

Glen McLeod is director of Edge Mortgages. It answers readers’ questions about home loans, whether you’re a newbie just entering the market or someone who already has a loan and wonders how best to handle it. If you have a question, email [email protected]

Do I really need to save a 20% deposit? What are my options if I have less than that?

To access reduced interest rates, a 20% deposit is required with traditional banks. The 20% deposit can take different forms. For example, it can be KiwiSaver, First Home Grant, a donation or an IOU.

Glen McLeod is director of Edge Mortgages.


Glen McLeod is director of Edge Mortgages.

You might be able to get a loan with a 10% down payment, but they may require you to be an existing customer and have your salary or income credited to an account with them for at least three months. Also, you generally won’t be able to access the best rates until you’ve built up 20% equity.

* Preparing for a Home Loan: Insider Scoop from a Mortgage Broker
* Mortgage broker Squirrel offers home loans to buyers with a 5% down payment
* Do you want to register a mortgage deposit? Here’s how

It is also now possible for first-time home buyers to have as little as 5% down payment, if they meet certain criteria.

Ninety-five percent of the loans are available under the Kainga Ora First Home Loan program. This comes with a 1% Kainga Ora fee which can be added to your loan.


Independent economist Tony Alexander says mortgage lenders’ willingness to lend has declined.

The great thing is that there are now options for first-time home buyers.

How much spending is too “fun” for a bank to see in my account history?

The reality is that the CCCFA rules have not yet changed. Meanwhile, the requirements for verifying bank statements are still high. How much money you spent on food, fares, utilities, Afterpay credit cards… are all reviewed.

Indeed, if you can minimize your leisure expenses for a period of three months, you will be in a good position to apply for a home loan. That being said, it all depends on your current income levels and liabilities. Seeking to see if current debts can be consolidated to make your loans more profitable is also a good idea. It’s about understanding your overall situation to ensure that your situation is presented in the best possible way.

At the same time, you also need to take care of your mental health by still living life. So maybe instead of going to a restaurant and buying both food and alcohol, it might be a good idea to go to a BYO and get your own bottle. It will surprise you how much cheaper your evening could be.

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