How much deposit do you need for a second home?
From Aaron’s YouTube: “How big did does your deposit need to be for a 2nd house? #newzealand #firsthome #kiwisaver”
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Posted 13 April 2025
The short version
- New builds can qualify with just 10-15% deposit, regardless of whether you'll live there or rent it out.
- Existing homes need 30% deposit if used as investment properties.
- Many people underestimate the deposit needed for investment properties.
- Having equity in another property doesn't automatically qualify you - income to service both loans also matters.
New builds: less deposit needed
If you're buying a new build as your second property, the deposit rules are more lenient. Banks typically require only 10-15% deposit for new builds, whether you plan to live in the property or use it as a rental. This applies because new properties generally have fewer maintenance issues and hold their value better in the early years.
The exact percentage can vary slightly between banks and depends on the type of construction. This lower deposit requirement makes new builds an attractive option for those looking to expand their property portfolio without tying up as much capital upfront.
Existing homes have stricter rules
For existing (older) homes, the deposit required depends on whether you'll occupy it or use it as an investment property. If you're buying an existing home to live in, standard residential deposit rules apply (typically 20%). However, if it will be a rental property, the deposit requirement jumps to 30% of the purchase price.
Aaron notes that this 30% threshold is where many potential investors get caught out. They might assume the equity in their current home is enough, but banks look at both the deposit requirement and whether your income can cover both mortgages. The 30% rule applies consistently across banks for investment properties.
Common pitfalls to avoid
A common misunderstanding is thinking that equity in your current home automatically qualifies you for another property. As Aaron explains, you need both sufficient equity (to meet the deposit requirements) and sufficient income to service both loans. The banks will assess whether you can afford repayments on both properties, especially at higher test interest rates.
Many prospective investors don't realise they might fall short on one or both counts. Aaron suggests getting professional advice early to understand your exact position. A mortgage adviser can run the numbers on your equity, income and the specific property type you're considering to give you a clear picture before you start house hunting.
This is general information, not personalised financial advice. For advice on your situation, talk to Aaron.
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