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If you’ve been saving for your first home, there’s some cautiously good news on the horizon. From 1 December 2025, the Reserve Bank will loosen its loan-to-value ratio (LVR) rules - the limits that control how much of a deposit you need and how freely banks can lend.
The change is designed to make lending a little easier for first-home buyers without letting risk run away. But the fine print can be confusing, so let’s break down what’s actually changing in plain English.
Please note: This article is for general information only and is not financial advice. If you’re thinking about buying your first home, it’s worth speaking with a licensed mortgage or financial adviser.
What’s Changing - in Plain English
The LVR rules affect two different things:
- Your deposit – how much of the property’s value you must contribute yourself (usually 20%).
- The bank’s lending limit – how much of its new lending can go to people with smaller deposits.
At the moment, those two numbers overlap, which causes confusion. Here’s how the change works:
| Before 1 Dec 2025 | After 1 Dec 2025 | |
| Typical buyer deposit | Still around 20 % of the property price | Still 20 % |
| How much of a bank’s new lending can go to buyers with < 20 % deposit | 20 % of its total new lending | 25 % of its total new lending |
Example:
If a bank lends $100 million in new home loans this month:
- Before the change, only $20 million could go to buyers with less than a 20 % deposit.
- After the change, it can lend up to $25 million to that group.
So buyers still need roughly a 20 % deposit, but a few more borrowers with 10 – 15% deposits may now be approved instead of being told the bank has “run out of low-deposit slots.”
For property investors, the limit for low-deposit lending rises from 5 % to 10 %, but they remain subject to strict debt-to-income (DTI) caps.
What It Means for You
1. More Opportunities - But Still a Reality Check
This easing gives first-home buyers a slightly better chance of being approved, especially if they have a stable income and a modest deposit. But it’s not open slather: banks must still check affordability carefully under DTI rules.
In practice, that means more approvals for strong borrowers on the margin — not an across-the-board deposit holiday.
2. A Bigger Deposit Still Helps
Even if you qualify for a smaller-deposit loan, aiming for 20 % is still smart because it:
- Lowers your repayments and total interest
- Improves your approval odds
- Can reduce or remove the need for lender’s mortgage insurance
Your deposit is your financial shock-absorber — it protects you if rates rise or house prices soften.
3. Budget for the Long Term
Before celebrating an approval, test how your repayments would look if rates rose by 1 – 2 percentage points. Sorted’s mortgage calculator makes that easy.
Economists expect rates to stabilise, but the past few years have shown how quickly things can change. Building flexibility into your budget now keeps stress levels lower later.
4. Protect Your Purchase — and Your Future
Buying a home is exciting, but it also introduces new financial responsibilities. HealthCarePlus members have access to several support services that can help make home ownership safer and more sustainable:
- Life and Income Protection Insurance: Through our partners, members can access cover designed to keep the household secure if illness, injury or redundancy affects income.
- Home and Contents Insurance Discounts: Member-exclusive offers help protect your property and belongings without paying premium prices.
- Legal and Wills Services: Once you own an asset, it’s important to formalise your wishes. Our discounted wills and estate-planning services make this simple.
- Financial Wellbeing Resources: Ongoing guides, blogs and e-guides help you manage debt, budget smarter and strengthen your long-term security.
Together, these supports help you protect both your new home and the financial resilience that got you there.
The Bottom Line
The Reserve Bank’s new LVR settings don’t change the basic rulebook — you’ll still need a meaningful deposit — but they do widen the door slightly for well-prepared buyers.
If you’re close to your goal, this could be the nudge that makes the difference. Take time to:
- Revisit your savings plan and KiwiSaver balance
- Stress-test your budget at higher interest rates
- Protect your income and assets once you buy
At HealthCarePlus, our aim is to help members become financially resilient — so every step toward home ownership also builds long-term security and peace of mind.
Sources:
- rbnz.govt.nz – Loan-to-Value Ratio and Debt-to-Income Framework Updates
- 1news.co.nz – Reserve Bank announces changes to home-lending rules
- sorted.org.nz – Mortgage calculator and budgeting tools
- healthcareplus.org.nz – Member insurance and wellbeing resources
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