New Build Deposit Requirements in NZ

New builds offer a significant advantage for many buyers: lower deposit requirements than existing homes. While existing properties typically require 20 percent deposit, new builds can proceed with as little as 10 percent for owner-occupiers. Understanding how these requirements work helps you plan your path to home ownership.

The lower deposit threshold exists because banks view new construction differently from existing properties. New homes come with warranties, meet current building standards, and represent lower risk for lenders. This risk assessment translates into more accessible deposit requirements.

Standard Deposit Requirements

For owner-occupiers purchasing new builds, banks typically require a 10 percent deposit. On a $700,000 property (land and build combined), that means $70,000 rather than the $140,000 required for an existing property.

This difference makes new builds accessible to buyers who might otherwise spend years saving for a larger deposit. First home buyers particularly benefit, as reaching 10 percent while paying rent is substantially more achievable than reaching 20 percent.

Investment new builds require 20 percent deposit. While higher than the owner-occupier requirement, this remains lower than the 30 to 35 percent typically required for existing investment properties. Investors building new rental properties face more favourable terms than those purchasing existing rentals.

How Deposit Is Calculated

The deposit calculation considers the total project cost, not just the building contract. Land purchase plus construction cost equals the total value against which your deposit is assessed.

For house and land packages, the total package price determines your deposit requirement. A $200,000 section and $500,000 build creates a $700,000 project requiring $70,000 deposit at 10 percent.

If you already own the land, its value counts toward your equity position. Land purchased previously and now worth more than you paid contributes equity that reduces the additional deposit needed for construction.

Progress Payments and Deposit

Unlike existing home purchases where the full amount changes hands at settlement, construction loans release progressively. Your deposit provides the initial buffer, with borrowed funds releasing as work completes.

The deposit typically covers initial payments under the construction contract. Builder deposits paid at contract signing come from your deposit funds. Subsequent progress payments come from drawn-down mortgage funds.

Understanding this staged release helps plan your cash flow. Your deposit needs to cover the builder's initial payment plus any costs that arise before the first loan drawdown.

KiwiSaver Contribution

KiwiSaver withdrawal can form part or all of your deposit. After three years of membership, you can withdraw nearly your entire balance toward a first home purchase, keeping just $1,000 in your account.

For many first home buyers, KiwiSaver represents a substantial portion of their deposit. Someone with $50,000 in KiwiSaver may need only $20,000 in additional savings to reach a 10 percent deposit on a $700,000 new build.

First Home Loan Scheme

Kāinga Ora's First Home Loan scheme enables some buyers to purchase with just 5 percent deposit. This scheme is available for new builds meeting certain criteria, making construction even more accessible.

Income caps apply to First Home Loan eligibility. The scheme targets modest-income earners who can service a mortgage but struggle to save a standard deposit. Property price caps also apply, varying by location.

Not all new builds qualify, and not all lenders participate in the scheme. Your mortgage adviser can assess whether this option suits your situation.

Bank Preferences

Different banks have different appetites for new build lending. Some actively encourage construction lending with competitive rates and flexible terms. Others are more restrictive about construction loans.

Working with a mortgage adviser provides access to multiple lenders. Your adviser knows which banks best suit new build lending and can present your application to the most appropriate options.

Pre-approval before committing to a builder or section confirms your borrowing capacity and deposit adequacy. This prevents discovering financing gaps after signing contracts.

Protecting Your Deposit

Construction contracts require deposits to builders, typically 5 to 10 percent of the build cost. This money is at risk if the builder fails before completing your home.

Master Build Guarantee and similar schemes provide deposit protection up to specified limits. Ensuring your builder participates in a guarantee scheme protects your deposit if things go wrong.

Paying deposits to a solicitor's trust account rather than directly to builders provides additional security. Funds held in trust can be protected even if the builder encounters financial difficulty.

Planning Your Path

Calculate your total project cost including land, construction, landscaping, and contingency. Apply the appropriate deposit percentage to understand your savings target.

Factor in time. If you need 18 months to save your deposit, land and construction prices may increase during that period. Building contingency into your target helps account for market movements.

Explore all options for assembling your deposit. KiwiSaver, the First Home Loan scheme, family assistance, and personal savings all contribute. Understanding what resources you can access helps set realistic timelines.