Quick Answer
LVR (loan-to-value ratio) rules are Reserve Bank of NZ restrictions on how much banks can lend relative to a property's value. NZ investors must have a minimum 35% deposit (LVR ≤ 65%), while owner-occupiers need at least 20% (LVR ≤ 80%). Up to 20% of new investor lending can go above the 65% LVR limit. New builds purchased directly from developers are exempt from investor LVR restrictions. A lower LVR generally means lower interest rates and less risk at refix.
What Is LVR?
LVR stands for Loan-to-Value Ratio. It measures how much you are borrowing relative to the value of the property. A higher LVR means a smaller deposit and more borrowing; a lower LVR means a larger deposit and less risk for the lender.
The Reserve Bank of New Zealand (RBNZ) sets restrictions on how much banks can lend at high LVRs. These rules don’t apply to individual borrowers directly — they apply to banks, which then pass them on through their lending criteria. The effect is that borrowers must meet minimum deposit requirements depending on whether they are buying a home to live in or an investment property.
LVR restrictions are a macroprudential tool designed to reduce risk in the banking system — not to restrict individual buyers. When house prices fall, highly leveraged borrowers are most at risk of going into negative equity. By limiting high-LVR lending, the RBNZ reduces the chance of widespread mortgage distress affecting the whole financial system.
Current LVR Limits in 2026
The RBNZ reviews LVR settings periodically. The limits below have been in place since November 2021 and remain current in 2026. New builds remain exempt, and the First Home Loan scheme provides a pathway for eligible buyers with smaller deposits.
The speed limit is the small percentage of new mortgage lending banks are allowed to make above these LVR limits. For owner-occupiers it is around 15% of new residential lending; for investors it is around 5%. This is how some borrowers with sub-20% deposits still get approved — but banks are selective about who qualifies.
Owner-Occupier Rules — 20% Deposit
If you are buying a property to live in as your primary home, you need at least a 20% deposit. For most NZ cities, that means saving $120,000–$200,000 before approaching a bank for a standard mortgage.
Banks may sometimes lend above 80% LVR within their speed limit. When they do, they typically charge a low equity margin — an extra percentage point or so added to your interest rate. This extra cost persists until you have paid down enough of the loan that your LVR drops below 80%.
- Low equity margin. Most banks charge an additional 0.25%–1% on the interest rate for loans above 80% LVR. On a $600,000 loan, 0.5% extra costs roughly $3,000 per year.
- Speed limit approval is not guaranteed. Even within the speed limit, banks choose which borrowers to lend high-LVR money to. Expect stricter income and serviceability scrutiny.
- Deposit sources. Your 20% can come from savings, a KiwiSaver first home withdrawal, a gifted deposit from family, or equity in another property. Most banks require you to explain large gift deposits.
- Bank valuation matters. LVR is calculated on the lower of the purchase price or bank valuation. If you pay $750,000 but the bank values it at $700,000, your LVR is calculated on $700,000 — meaning your 20% needs to be $140,000 regardless of what you paid.
Investor Rules — 35% Deposit
If you are buying a residential property as an investment — one you will rent out rather than live in — the RBNZ requires banks to enforce a 65% LVR cap. You need at least 35% as a deposit.
The stricter requirement reflects the higher risk profile of investment lending. During market downturns, investors are more likely to sell than owner-occupiers, which can amplify price declines. The 35% deposit requirement means investors have more equity buffer before they hit negative equity.
You buy a property and move in as your primary home. Even if you rent a room out, you pay owner-occupier LVR rules: 20% deposit required.
You buy a property entirely for rental income and do not live there yourself. Investor rules apply: 35% deposit required.
Any new build purchase — whether for owner-occupation or investment — is exempt from RBNZ LVR restrictions. Banks set their own criteria.
A holiday home or bach that is not your primary residence is treated as an investment property. You need 35% deposit under the investor LVR rules.
If you already own a property with equity in it, many banks will allow you to use that equity as the deposit for an investment property — effectively borrowing against your existing home. This is called a “top-up” or equity release. Your combined LVR across both properties must still be within limits, but it means you don’t need separate cash savings for the full 35%.
New Builds — The LVR Exemption
New residential builds are fully exempt from RBNZ LVR restrictions. This means a bank can, in theory, lend at any LVR on a new build. In practice, individual banks still have their own serviceability and credit requirements, so you will not get 100% financing, but you may be able to borrow with a deposit smaller than 20%.
The exemption applies from the moment the property receives its Code Compliance Certificate (CCC) — the point at which it becomes a legally habitable new dwelling. It does not apply to substantial renovations of existing properties.
- Qualifies: a brand-new house or apartment built to CCC standard that has never been previously occupied as a residential dwelling.
- Qualifies: off-the-plan. Buying off-the-plan (before the build is complete) is treated as a new build for LVR purposes once construction is finished and a CCC is issued.
- Does not qualify: an old house that’s been renovated. Even a fully gutted and rebuilt interior on an existing structure does not qualify as a new build under RBNZ rules unless a new title is created.
- Banks still have their own criteria. Even with RBNZ exemption, most banks will want at least 10%–15% deposit on a new build due to construction risk, off-the-plan valuation uncertainty, and their own internal credit policies.
The RBNZ exempts new builds to encourage housing supply. If LVR rules applied equally to new and existing homes, developers would struggle to sell off-the-plan and construction activity would slow. The exemption is a policy lever to incentivise building without relaxing lending standards broadly across the market.
First Home Loan — 5% Deposit Pathway
The First Home Loan is a government-backed mortgage scheme operated through Kāinga Ora (formerly Housing New Zealand). It allows eligible first home buyers to purchase with as little as a 5% deposit by having the government guarantee part of the loan, reducing the risk to lenders.
Eligibility is based on income, purchase price, and housing history. It is available through participating banks including ANZ, ASB, BNZ, Co-operative Bank, Kiwibank, SBS Bank, TSB, and Westpac.
First Home Loan has maximum purchase price caps that differ across NZ. Auckland has higher caps than regional centres. These caps are updated periodically by Kāinga Ora. Always check the current caps on the Kāinga Ora website before relying on eligibility — the property you want may exceed the regional cap even if your income qualifies.
How to Calculate Your LVR
Your LVR is simply your loan amount divided by the property value. The lower the result, the less you are borrowing relative to what the property is worth.
Example — owner-occupier buying in Hamilton:
Example — investor buying a rental in Dunedin:
Strategies to Close a Deposit Gap
If your current savings put you below the minimum LVR requirement, you have several options. Most buyers combine more than one approach.
- Keep saving. The most straightforward option. Every extra dollar reduces your LVR. Parking savings in high-interest accounts or term deposits accelerates your timeline. Budget to reach 20% (or 25% for safety) before applying.
- Withdraw KiwiSaver. After 3 years of membership, most of your KiwiSaver balance is available for a first home purchase. Contributions, employer contributions, and member tax credits all count. This can add tens of thousands to your deposit.
- Buy a new build. New builds are LVR-exempt. You may be able to purchase with a 10%–15% deposit even as an investor. The trade-off is that new builds often carry a price premium and limited choice of location.
- Apply for the First Home Loan. If you meet income and price-cap eligibility, the First Home Loan lets you buy with just 5% deposit. You can combine it with a KiwiSaver withdrawal to use any balance toward the 5% minimum.
- Family guarantee or gifted deposit. A parent or close family member can gift funds toward your deposit or act as guarantor using equity in their own home. Banks treat gifts and guarantees differently — ask your broker which structure works best for your situation.
- Buy at a lower price point. The same deposit represents a different LVR at a lower purchase price. If your savings are $140,000, that is 20% of a $700,000 property but only 14% of a $1,000,000 property. Targeting a lower-priced suburb or property type can bring you within the LVR limit sooner.
- Use equity from an existing property. If you already own a home with equity in it, you may be able to use that equity as the deposit on an investment purchase via a top-up mortgage. Your total borrowing across both properties must still be serviceable, but no additional cash savings are required.
Run the numbers on your property purchase
Use our free NZ property calculators to check your LVR, model your mortgage, and plan your deposit strategy.