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Can I have less than 20% deposit for my build?

With house prices rising above what they were a few years ago, and construction costs impacted by a shortage of materials and labour, more and more clients are asking us whether they can have less than a 20% deposit for their new build property.

The answer is - yes, it's easier to get a build loan approved with less than 20% deposit, but there are a couple of things to bear in mind... let's work through these.

Reserve Bank Guidelines:

In 2020 and 2021, the Reserve Bank of New Zealand (RBNZ) reinstated some of the requirements for banks to have less than 10% of their overall lending amount to people with less than 20% deposit. However, to encourage more construction and therefore more housing stock, they exempted new build properties from these restrictions.

That means that there are essentially no limitations coming from the RBNZ onto banks to lend at higher levels for new construction properties. Great news for borrowers, right?

From a bank perspective, there is always a slightly higher risk to them in lending beyond 80% LVR and that is simply down to having a bit less "skin in the game" in terms of equity. The ways they alleviate this risk is as follows;


To borrow money at a higher level, the bank will always want to see higher income than if you had a more deposit. 

This can vary a lot depending on your situation, expenses, and the bank we approach, but generally up to 20% more income is needed to borrow money with a 10% deposit or less. Banks also tend to take a less risky approach to relying on bonus income similar, and may look to scale that type of income and reduce the amount they can use for serviceability. 

You can talk to us about how this might look for you and your situation.


Banks talk about "character" often, and this refers to your money personality, management and habits over time. 

Generally what they're looking for here is lower short term debt (i.e. personal or car loans, credit cards, and overdrafts) and managing money and accounts well, paying current bills on time and ensuring there's always enough money in the pot to meet existing commitments.

They also like to see a clean credit history, and great record of repaying smaller past debts and ideally we'll be able to demonstrate this when we look at your loan application.

How can we make this work for you?

Meeting bank requirements with lending over 80% can be a wee bit tricky, but that's why we're here, with a bunch of options for you and the expertise and advice so you can get into the best position possible.

Get in touch with Greg, Claire or one of the Team to discuss your plans, and we'll have you building a home in no time!


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