Back toHome loansThere are several things to consider when you’re thinking about buying a house – what size deposit you’ll need, how you’ll save for your deposit, and how you’ll afford your ongoing home loan payments. It might seem a bit back to front, but rather than starting with the type of house you want, try starting with the level of home loan payments you’ll be able to afford.
Work out what payments you can afford
Find out how much you will be able to put towards home loan payments by doing a budget to see how your weekly, fortnightly and monthly expenses compare to your income. Or use our home loan repayment calculator as a guide to work out what your repayments could be.
Use our online calculator to figure out how much you could borrow based on the loan payments you can afford to pay each fortnight or month.
Calculate how much you’ll need for a deposit
If you are a first home buyer looking to purchase an existing home, in most instances you will be required to have a deposit that is 20% of the home’s value. This means that for a home worth $500,000, you will likely need a deposit of $100,000.
If you have a deposit less than 20% of the home’s value, you may still be able to get a loan. However, due to Reserve Bank of New Zealand LVR restrictions, any application for home lending with less than 20% deposit will have to undergo a review to see if we can approve your lending application. A low equity fee may also apply.
Property investors
Property investors wanting to invest in residential property in New Zealand will need a 35% deposit, unless the property they’re looking to buy meets exemption criteria.
Make a plan to save for your deposit
Now you know what your goal is, it’s time to start some serious saving. Here are the basic steps.
- Use your income vs expenses budget to decide on a regular amount that you can comfortably save towards your deposit.
- Have that amount transferred each time from your everyday account into a higher-interest savings account.
- Use a savings calculator to find out when you’ll reach your goal.
- As your savings grow, ask the bank about moving some of it into a low risk investment option, like a term deposit that might pay more interest.
- When you get close to reaching the deposit needed, you can start planning! Begin by thinking about things like house size, location and proximity to amenities like schools, public transport and shops.
Find out how we can help you reach your savings goals
FAQs
You should shoot for a down payment of at least 20%—that'll keep you from having to pay for private mortgage insurance (PMI). PMI is a yearly fee that runs about 1% of your loan balance, so avoiding it will save you big-time money. Plus, a bigger down payment means smaller monthly payments and less debt.
How do I get enough money for a house deposit? ›
- Help cut the cost of your rent. Paying less rent is an obvious way to free up money for a deposit, so think carefully about your rental options. ...
- How your family can help. There are lots of ways your family might be able to give a helping hand. ...
- Get a hand from the government. ...
- Be a savvy saver.
How much do most people save for a house deposit? ›
When buying a home, you'll generally need to put down a deposit that is equal to at least 5% of the value of the property. Ideally, you'll want to save as much as you can for a deposit because you won't have to borrow as much from a bank or lender. This means you'll pay back a smaller amount of interest.
How to save 20% down payment for a house? ›
How to save for a down payment: 8 ways
- Park the savings somewhere you can earn more money. ...
- Automate your savings. ...
- Explore additional sources of income. ...
- Look for down payment assistance programs. ...
- Reduce your expenses. ...
- Request a raise. ...
- Ask for a gift. ...
- Reprioritize your savings goals.
How much of savings to put down on a house? ›
First-time home buyers have long considered a down payment of 20% on a mortgage the standard amount. But this initial payment can sometimes be set as low as 5% for a conventional loan—and buyers always have the option of paying more than 20% of the purchase price.
How to quickly save for a house? ›
It may seem impossible to save so much in a short period of time, but it can be doable with a plan.
- Assess Your Current Financial Situation. ...
- Set a Clear Savings Goal. ...
- Cut Back on Expenses. ...
- Increase Your Income. ...
- Explore Down Payment Assistance Programs. ...
- Save Windfalls and Extra Income. ...
- Monitor and Adjust Your Savings Plan.
What is the lowest down payment for a house? ›
FHA loan: 3.5 percent down payment
For a Federal Housing Administration (FHA) loan, the minimum down payment is 3.5 percent with a credit score of at least 580. If you have a credit score between 500 and 579, you can still get approved, but you'll need a 10 percent down payment.
How to save for a house in 2 years? ›
Let's get started.
- Step 1: Set a clear savings goal. The first step in saving for a house is to know the exact dollar amount you actually need. ...
- Step 2: Tighten your spending (temporarily). ...
- Step 3: Hold off on your retirement savings (temporarily). ...
- Step 4: Boost your income. ...
- Step 5: Cut the extras and save even more.
What is an appropriate deposit for a house? ›
In most real estate markets, the average good faith deposit is between 1% and 3% of the property's purchase price. It can be as high as 10% for highly competitive homes with multiple interested buyers.
How to come up with a down payment for a house fast? ›
Here are some options.
- Receive gift money. A gift from a family member or someone else with whom you have a close relationship may be part of your down payment, in some cases. ...
- Take a loan from your 401(k) or other retirement plan. ...
- Sell something. ...
- Receive a windfall. ...
- Give your savings a boost.
4 home loans that require little or no down payment
- FHA loans. FHA loans are loans insured by the Federal Housing Administration and provided by traditional lenders. ...
- VA loans. ...
- HomeReady loans. ...
- Conventional 97 loan.
Do most people put 20% down on first home? ›
Many first-time homebuyers mistakenly believe they must put 20 percent down to qualify for a mortgage. Fortunately, that's not the case. The typical down payment for a first-time homebuyer was 8 percent in 2023, according to the National Association of Realtors (NAR).
How much house can I afford if I make $70,000 a year? ›
The good news is that if you earn $70,000, most estimates show that you can afford to spend around $2,100 a month on housing expenses so a home should be within reach.
Is $10,000 enough to put down on a house? ›
To purchase a $200,000 house, you need a down payment of at least $40,000 (20% of the home price) to avoid PMI on a conventional mortgage. If you're a first-time home buyer, you could save a smaller down payment of $10,000–20,000 (5–10%). But remember, that will drive up your monthly payment with PMI fees.
Is it better to put more money down on a house or save money? ›
Your decision should be based on what works best for your current situation and future plans. But if your budget allows for a larger down payment, it can potentially lead to lower monthly mortgage payments and less interest paid over the life of your loan, providing long-term financial benefits.
How much money should I save before buying a house? ›
A good number to shoot for when saving for a house is 25% of the sale price to cover your down payment, closing costs and moving expenses. (This amount is separate from saving up 3–6 months of your typical living expenses in a fully-funded emergency fund—which I recommend you do first, before saving up for a home.)
How to save for a house in 3 years? ›
For those planning to purchase a home within the next 3 years, Fidelity suggests holding down payment cash in checking, regular savings, or high-yield savings accounts—or in cash-like investments such as money market funds or certificates of deposit (CDs) that will mature before you anticipate needing the money.
What's the best savings account for first time buyers? ›
5 of the best saving accounts for First Time Buyers
- Lifetime ISA. Launched in April 2017, the Lifetime ISA can be used towards the purchase of a first home priced up to £450,000. ...
- Help to Buy ISA. ...
- Nationwide FlexDirect. ...
- First Direct Regular Saver. ...
- Tesco Bank.