The Reserve Bank of New Zealand (RBNZ) sets loan-to-value ratio (LVR) restrictions that determine how much deposit property investors need. For investors, the rules are significantly stricter than for owner-occupiers.
As of 2026, NZ property investors need a minimum 30% deposit on investment properties (LVR 70%). Banks can lend up to 10% of their new investment lending at higher LVRs (eased from 5% on 1 December 2025), so limited exceptions exist. On a $700,000 investment property, this means at least $210,000 as a deposit — which most investors fund using equity from an existing property.
Current LVR Rules (2026)
| Borrower type | Maximum LVR | Minimum deposit |
|---|---|---|
| Owner-occupier | 80% | 20% |
| Owner-occupier (first home buyer, some exceptions) | 90% | 10% |
| Residential property investor | 70% | 30% |
These are the RBNZ’s speed limits — banks must limit the share of new lending above these thresholds. At 70% maximum LVR for investors, up to 10% of new residential investor lending can exceed this threshold (eased from 5% on 1 December 2025); no more than 25% of owner-occupier lending can exceed 80% LVR (eased from 20%).
What Is LVR?
Loan-to-Value Ratio = Loan amount ÷ Property value
Example:
- Property value: $800,000
- Loan: $500,000
- LVR: $500,000 / $800,000 = 62.5% (below the 70% investor cap ✅)
At the maximum (70%):
- Property value: $800,000
- Maximum loan: $800,000 × 70% = $560,000
- Required deposit: $240,000
Where Most Investors Get the Deposit
Few investors have $210,000+ in cash sitting idle. Most fund the investment property deposit using:
1. Equity in an existing property (most common) If you own a home worth $1,000,000 with a $500,000 mortgage, you have $500,000 equity. Your bank may allow you to borrow against this equity to fund the rental deposit.
The bank will top-up your home loan with a separate “investment” purpose sub-loan. The interest on this sub-loan is deductible (as it funds the rental investment).
Example:
- Home equity drawn: $240,000 (from home refinance)
- Investment property loan: $560,000
- Total debt: $800,000
- Investment property value: $800,000 (equity funded by home)
2. KiwiSaver first home withdrawal First home buyers can use KiwiSaver for their first home. This does not apply to investment property purchases (KiwiSaver first home funds must be used for owner-occupied property).
3. Gifted funds or family support Banks accept gifted deposits as equity, provided the gift is evidenced as non-repayable.
LVR and Multiple Properties
When you own multiple properties, banks assess your LVR position across the portfolio:
- Some banks use a portfolio LVR — total debt across all properties ÷ total property values
- Portfolio LVR must typically stay at or below 70% (investor rules)
- This limits how many properties an investor can accumulate without additional equity
Equity recycling: As property values rise, investors refinance to extract equity and use it as deposits on additional properties. This strategy has driven NZ’s concentrated property wealth. It requires sufficient equity after each refinance to maintain 70% LVR on the new property.
Banks’ Discretionary Lending (High-LVR Exceptions)
The RBNZ allows banks to lend at higher LVRs for up to 10% of new residential investor lending (eased from 5% on 1 December 2025). This means:
- A small number of investor loans above 70% LVR are permitted each year
- These are typically reserved for lower-risk borrowers (strong income, long banking relationship, smaller loan)
- Do not rely on this exception when planning — it’s limited and competitive
New Builds: Different LVR Rules
New builds purchased off the plans or newly completed have historically received higher LVR allowances. Check with your bank — LVR exemptions for new builds may allow investors to borrow with a smaller deposit, subject to RBNZ guidance at the time of purchase.
This is one reason why new builds have attracted strong investor demand: a smaller deposit requirement and (until interest deductibility was fully restored on 1 April 2025) maintained interest deductibility during the phase-out.
LVR and Non-Bank Lenders
Non-bank mortgage lenders (e.g., Resimac, Pepper Money, Liberty Financial) are not subject to RBNZ LVR restrictions. They can lend at higher LVRs for investment properties — but charge materially higher interest rates (often 1–3% above bank rates).
Using a non-bank at 80% LVR for an investment property at a higher rate defeats much of the yield benefit. This is usually only appropriate for investors who cannot access bank funding and believe near-term capital growth will improve their LVR to refinance with a bank.
Stress Testing
When you apply for an investment property loan, the bank will stress-test your servicing capacity. In 2026, most banks apply a test rate of approximately 8–9% (significantly above actual mortgage rates), ensuring you can service the debt if rates rise.
Banks also:
- Include only 70–80% of rental income in affordability assessments (allowing for vacancy and costs)
- Assess all existing debts (home mortgage, car loans, credit cards)
- Apply debt-to-income (DTI) limits (only 20% of a bank’s new investor lending can go to borrowers above 7× income)
Debt-to-Income (DTI) Limits — Also Apply From 2024
From July 2024, the RBNZ introduced DTI limits alongside LVR rules:
- Owner-occupiers: maximum 6× income (with 20% allowance above)
- Investors: maximum 7× income (with 5% allowance above)
DTI = Total debt ÷ Annual gross income
Example: Annual gross income $160,000. Maximum total debt (investor): $160,000 × 7 = $1,120,000.
For high-income earners, DTI limits are less binding. For median-income earners, DTI may be more restrictive than LVR.
Frequently Asked Questions
Can I use equity in my home to avoid needing a 30% deposit? Yes — cross-collateralisation or a top-up on your home loan is the most common mechanism. The bank will still assess whether your overall equity meets their LVR requirements.
If property prices fall, does LVR affect me? LVR restrictions apply at origination (when the loan is taken). If your LVR increases above 70% after purchase due to price falls, you don’t need to pay down the loan to re-comply — but you won’t be able to refinance at the same level without re-meeting LVR standards.
Are there higher deposits for apartments? Some banks require higher deposits (40–50%) for apartments, particularly high-rise apartments in central Auckland, due to perceived valuation and liquidity risks. This is a bank credit policy, not an RBNZ rule.