The Reserve Bank of New Zealand (RBNZ) is changing the rules around how much deposit you need to buy a house. Effective December 1, 2025, the RBNZ is easing its Loan-to-Value Ratio (LVR) restrictions.
For new buyers, particularly first-home buyers (FHBs), this policy shift is a big deal. It makes getting a mortgage easier, but it also creates more competition for the homes you want to buy.
What is Changing? (The “Deposit Rule”)
The LVR is essentially the deposit rule. It limits the total amount of money banks can lend to people who have only a small deposit. By relaxing these limits, the RBNZ gives banks more freedom to approve mortgages for buyers who can service the debt but haven’t saved a large down payment.
The new bank lending limits are:
| Who is Buying? | What is a “Low Deposit”? | Current Limit | New Limit (from Dec 1, 2025) |
| New Buyers/Homeowners | Less than a 20% deposit | 20% of the bank’s new lending | 25% of the bank’s new lending |
| Property Investors | Less than a 30% deposit | 5% of the bank’s new lending | 10% of the bank’s new lending |
In simple terms: Banks now have a bigger pool of money they can lend out to buyers with deposits below the traditional 20% threshold.
The Good News: Access to Credit
The biggest benefit for new buyers is the dramatic improvement in access to credit.
For years, the 20% deposit has been the single greatest hurdle for many young Kiwis. By allowing banks to lend more to this low-deposit group (25% up from 20%), the RBNZ is directly targeting this pain point.
As RBNZ Acting Assistant Governor Angus McGregor noted, these easier settings will “improve market efficiency and access to credit, particularly for first home buyers.” If you have a solid income but have only managed to save a 10% or 15% deposit, your chances of getting a mortgage approval are now significantly higher.
The Catch: Increased Competition
While it’s easier to get a loan, it might become harder to buy the house, thanks to changes for property investors.
The allowance for investors to secure low-deposit loans (less than 30%) has doubled from 5% to 10%. This signals an easier path for investors to re-enter the market.
The Competition Factor: Investors often target the same entry-level, more affordable homes that FHBs are pursuing. With easier access to credit, investors may become more active, increasing competition for a limited supply of homes. For the new buyer, this means:
- A Bigger Fight: More bidders for the properties you are targeting.
- Potential Price Rise: Increased demand from both groups could put upward pressure on house prices, potentially eroding the benefit of easier credit.
The Safety Net: Debt-to-Income Rules
The RBNZ is confident in easing LVRs because it introduced a different safety measure last year: Debt-to-Income (DTI) restrictions.
The DTI rule prevents a borrower from taking on too much debt relative to their income. The RBNZ confirms that DTI restrictions will remain unchanged, acting as a crucial “guardrail” to limit high-risk lending.
What This Means: Even with a low deposit, the bank must ensure you can comfortably afford the loan based on your income. This protects new buyers from being over-leveraged and helps contain the severity of any future housing market corrections.
The Bottom Line:
The policy change is a net positive for your ability to get a loan, validating the financial resilience of many New Zealanders who struggle with the deposit barrier. However, new buyers must remain ready for a more competitive property market as investors are simultaneously given an easier path back in.
Take Advantage of the New Rules!
The rules are changing, and now is the time to find out exactly what this means for your buying power. Banks have more money to lend to low-deposit buyers, make sure you’re first in line!
Don’t wait and wonder. Stop guessing and start planning.
Find Out How Much You Can Borrow Today!
It takes less than 2 minutes to complete our simple, quick assessment form below. We’ll give you a clear, obligation-free estimate of your maximum borrowing capacity under these new, relaxed LVR rules.
