Why new-build finance can be easier (even at low deposits)

If you’re weighing up a turnkey or off-plan purchase, there are two policy settings that often make new builds more achievable than existing homes - especially when your deposit is tight.

1) LVR rules don’t apply to loans that finance new residential construction

New-build construction lending is exempt from the Reserve Bank’s loan-to-value ratio (LVR) restrictions. Banks still run full serviceability checks and can set their own internal LVR limits, but the national LVR “speed limits” that constrain low-deposit lending do not bite when the lending is for a new dwelling.

What this means in practice

• With strong income and clean credit, some buyers can proceed on 10% (sometimes 5%) deposits for new builds - subject to bank criteria and DTI.
• Developers’ turnkey structures (10% now, balance on completion) reduce cashflow strain during the build.

2) First Home Loan: deposits from 5% (with an updated premium)

For eligible first-home buyers, First Home Loan (via Kāinga Ora and participating lenders) can support deposits from 5%. From 1 July 2025, the mortgage insurance premium for new applications increased to 1.2% of the loan (payable upfront or over the loan term).

Why it helps

• Couples or singles with strong incomes but smaller savings pools can bridge the deposit gap on a compliant new-build purchase.
• Works neatly with turnkey contracts where the balance isn’t due until Code Compliance/settlement.

A quick reality-check: DTIs and serviceability still matter

Since 1 July 2024, banks must keep most lending within DTI “speed limits” (generally ≤6× income for owner-occupiers and ≤7× for investors, with limited allowances above these levels). Your income, other debts, and expenses still determine the size of loan you can safely service - LVR flexibility doesn’t override that.

Example pathway (typical new-build buyer)

1. Pre-approval with a participating lender (note DTI + servicing).
2. Select a turnkey package; pay the 10% deposit.
3. Colour/spec selections while the builder progresses consents and construction.
4. On CCC/settlement, your home loan draws down the balance.

Key takeaways

• New-build construction lending is LVR-exempt nationally - banks still test affordability and can set their own policies.
• First Home Loan can reduce the deposit to 5%, with a 1.2% premium for new applications from 1 July 2025.
• DTI rules apply to all lending, so income and existing debts remain critical.

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Keen to see whether a new build works on your numbers? Ask us how this could work for your situation - we’ll map deposit options, DTI headroom and turnkey timelines for the properties you’re eyeing.

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