Quick Answer
To get a mortgage in NZ you need at least a 20% deposit as an owner-occupier (or 5% via the First Home Loan), a stable income, and a Debt-to-Income ratio under 6x your gross salary. Most first home buyers choose a 1–2 year fixed rate, get pre-approval before house hunting, and borrow over 25–30 years from a registered NZ bank or non-bank lender.
How a Mortgage Works
A mortgage is a loan secured against real property. The lender advances money to buy the property and registers a mortgage over it as security. If you stop making repayments, the lender has the legal right to sell the property to recover the debt.
NZ mortgages are typically structured as:
- Principal & Interest (P&I) — each repayment covers the interest charge plus a portion of the loan balance. The debt reduces over time and is fully repaid by the end of the term. Most owner-occupiers use P&I.
- Interest-Only — repayments cover only the interest. The loan balance stays the same. Lower monthly payments but no equity build-up. Commonly used by property investors to maximise cash flow.
How Much Can You Borrow?
Two Reserve Bank of New Zealand (RBNZ) rules determine your maximum borrowing — LVR restrictions and Debt-to-Income (DTI) limits. Both apply at the same time.
LVR restrictions set the maximum loan-to-value ratio a bank can lend at. For most buyers, this means a minimum deposit:
DTI limits cap how much you can borrow relative to your income. Introduced by RBNZ in October 2024:
- Owner-occupiers: maximum total debt of 6× gross annual income. On a $100,000 salary, the most you can borrow across all debts is $600,000.
- Investors: maximum total debt of 7× gross annual income across the whole portfolio.
You must satisfy both the LVR limit (enough deposit) and the DTI limit (income large enough relative to total debt). The binding constraint depends on your specific situation.
What Lenders Look At
Before approving a mortgage, lenders carry out a full financial assessment. Every bank has its own internal criteria on top of RBNZ rules, but the core factors are consistent across the market.
- Deposit size and source — lenders verify your deposit is genuine savings, KiwiSaver, a gifted deposit (with restrictions), or equity from another property.
- Income and employment — PAYE employees need 3–6 months of payslips. Self-employed borrowers usually need 2 years of financial statements. Income from overtime and bonuses may be discounted.
- Living expenses — banks benchmark your expenses against the Household Expenditure Model (HEM). If your declared expenses are lower than HEM, the bank will use HEM in their calculations.
- Credit history — lenders run a credit check through Centrix, Equifax, or Illion. Defaults, late payments, or multiple recent credit applications can reduce your borrowing capacity.
- Existing debts — car loans, credit cards, buy-now-pay-later (even if you always pay on time), student loans, and any other mortgages all reduce how much you can borrow.
- Debt-to-Income ratio — total debts (including the new mortgage) must not exceed 6× gross annual income for owner-occupiers under RBNZ DTI rules introduced in October 2024.
Cancel unused credit cards and buy-now-pay-later accounts at least 3 months before applying. Each card limit reduces your borrowing power even if you carry no balance. Pay off or reduce car loans if possible.
Fixed vs Floating Interest Rates
NZ banks offer two main rate structures. Most borrowers use a combination of both — fixing the bulk of the loan for certainty while keeping a portion floating for flexibility.
The most popular approach for NZ first home buyers is to fix 80% of the loan on a 1–2 year term and leave 20% floating. When the fixed term expires, you can re-fix at the prevailing rate — so you are not locked in forever.
Breaking a fixed mortgage early (e.g. to sell or refinance) may incur a break fee calculated by the bank based on wholesale rate movements. Get a break cost estimate from your bank before making any decision that would end a fixed term early.
Getting Mortgage Pre-Approval
Pre-approval (also called conditional approval or pre-qualification) is a written commitment from a lender stating they are willing to lend you up to a specified amount, subject to the property valuation and your circumstances remaining unchanged. It is not a guarantee of final approval.
Getting pre-approval before you start house hunting gives you a realistic price ceiling and signals to vendors and real estate agents that you are a serious buyer.
The First Home Loan (Kainga Ora)
The First Home Loan is a government-backed scheme administered by Kainga Ora. It lets eligible first home buyers purchase with as little as a 5% deposit by having the government underwrite part of the mortgage risk. The loan itself comes from a participating bank — not from the government.
Income: Under $95,000/year before tax for a single buyer; under $150,000/year combined for two or more buyers.
Deposit: Minimum 5% of the purchase price (can include KiwiSaver withdrawal).
Property: Must be a new or existing residential property within regional price caps. Caps vary — check kaingaora.govt.nz for your region.
Lenders: ANZ, ASB, BNZ, Westpac, and Kiwibank all participate. Each bank still applies its own internal criteria.
Even with a First Home Loan you will pay Lenders Mortgage Insurance (LMI) — a one-off premium added to your loan that protects the lender against default. Factor this into your total cost. You can combine a First Home Loan with a KiwiSaver first home withdrawal to maximise your deposit.
KiwiSaver First Home Withdrawal — full guideMortgage Advisers vs Going Direct to a Bank
You can apply for a mortgage directly with any NZ bank, or work with a licensed mortgage adviser (also called a broker). Both routes can reach the same outcome — the right choice depends on your situation.
Mortgage advisers in NZ must be registered with the Financial Markets Authority (FMA) and operate under the Financial Advice Provider (FAP) licensing regime. They are legally required to act in your best interest and disclose any commissions they receive from lenders.
Self-employed borrowers, those with non-standard income, or anyone who has been declined by a bank directly often benefit most from using a mortgage adviser. Advisers know each lender's credit appetite and can match your profile to the right one.
Related tools & guides
Run the numbers on your deposit, repayments, and loan structure before you talk to a lender.