Want to purchase an investment property in New Zealand with just a 10% or 20% deposit? Understanding the minimum deposit required for an investment property in New Zealand is one of the first steps for property investors.
Investment properties are a favourite way for Kiwis to grow wealth and save for retirement. Banks often require around 30-35% deposit for existing investment properties in New Zealand. However, there are situations where investors may still be able to purchase with 10% or 20% deposit, depending on property type, their financial position, and the lender’s criteria. There are many reasons why a rental property can be a great investment. To learn more about why rental properties are a popular investment choice for building long-term wealth, refer to the in-depth guide.
Banks generally require larger deposits when lending to property investors because the risk profile is different from owner-occupied homes. Rental properties can be affected by market cycles, tenant vacancies or changes in interest rates, which means lenders apply stricter criteria.
As a result, banks usually require larger deposits for rental properties, although the exact requirement can vary depending on the lender and the borrower’s financial position.
Lenders will also assess debt-to-income (DTI) ratios when considering investment property loan applications, which can affect how much you are able to borrow, even if you meet the deposit requirements. You can learn more about how these lending limits work in our guide to Debt-to-Income Ratios in New Zealand.
If you are unfamiliar with how this lending metric works, you can also read our article explaining what debt-to-income ratios mean for borrowers, which provides a simple overview.
Deposit requirements are also influenced by the Loan-to-Value Ratio (LVR) rules, set by the Reserve Bank of New Zealand. LVR limits how much banks can lend compared to the value of the property.
For property investors, these rules generally mean a larger deposit is required than for owner-occupied homes. However, there can be exceptions, particularly for new builds or when using specialist lenders. Understanding LVR rules helps explain why lower deposit options may still be possible in certain situations.
In some situations, it is possible to buy a new build investment property in New Zealand with as little as 10% deposit. Some banks are willing to lend at lower deposits for new builds because these properties are treated differently under the Reserve Bank’s loan-to-value ratio (LVR) restrictions, which are designed to support the construction of new housing. For many investors, buying a new build is one of the few situations where a 10% deposit may still be possible for an investment property.
As a result, lenders may consider deposits of around 10-20% for new build investment properties, although the exact requirements vary between banks and depend on the borrower’s financial position and lending criteria.
In addition to lending flexibility, new builds may also offer tax advantages compared with existing rental properties, which is another reason they remain popular with property investors.
At the time of writing, a property is considered a new build, if it is in the process of being built, or has recently been completed and issued with a Code of Compliance Certificate (been built within the last 6 months). New builds can be bought either directly from the developer, or via real estate agents.
There are other benefits to buying a new build. Combined with the lending and tax incentives, these factors can make it a good choice for many investors. New builds mean little to no maintenance costs. Another upside, is that most builds come with a 10 year guarantee (which should always be confirmed for the individual property). New developments are also often located in areas with modern infrastructure and urban planning, which can make them attractive to tenants and help reduce vacancy risk.
Second tier lenders often lend on mortgages with just 20% deposit. They charge higher interest rates than the banks, this enables them to take more risks with who they lend to. For this reason, they can be a great option in certain circumstances for the right opportunity. Talk to us to fully understand the lending criteria, risks, and long-term considerations before making this decision. You may also want to explore different investment mortgage options and loan structuring tips to make the most of your deposit and servicing potential.
A 20% deposit does not always need to come from cash savings. If you already own a home, it may be possible to use the equity in your existing property as a deposit for an investment property. Many homeowners who have been in the market for 5 or more years may have seen the value of their property increase. This equity can sometimes be used to help fund the deposit for another property purchase. For a more detailed explanation of how this works in practise, see our article on using equity to buy and investment property in New Zealand.
If you’re thinking about investing in property, or want to grow your portfolio, get in touch with us and we can let you know what’s possible. When you’re ready to look for a property, our award-winning Mortgage Brokers will find your lending options to buy your home in NZ and then manage the application process for you.
Angela is an accredited Financial Adviser, licensed under FSP742251 and has been in the Financial Industry since 2006. Our 5-star Google reviews reflect the excellent customer experience we promise — making your home loan journey positive, stress-free, and rewarding. At Platinum Mortgages, our clients are the reason we exist — so you can be confident every step is guided by genuine care and expertise.
