Deposit & LVR Rules for Overseas Buyers in New Zealand

Understanding how Loan-to-Value Ratio (LVR) rules and deposit requirements work is essential before you start the buying process.

1. What Is LVR & Why It’s Regulated

LVR (Loan-to-Value Ratio) is the percentage of a property’s value that a bank is willing to lend. A higher LVR means a smaller deposit — and higher risk for the lender. The Reserve Bank of New Zealand (RBNZ) regulates how much high-LVR lending banks can do through macro-prudential policy. These “speed limits” are designed to keep the housing market and banking system stable. The rules limit how much lending can exceed certain LVR thresholds, especially for investors or high-risk borrowers.

2. Standard Deposit & LVR Rules for NZ Residents

For a baseline comparison, here’s how the rules apply to most NZ-based borrowers. Owner-occupiers can usually borrow up to 80% LVR, meaning a 20% deposit. Investors or buyers of existing rental properties are typically limited to around 70% LVR (30% deposit). Some lending is exempt — for example, new builds and some construction loans. Banks may also charge low-equity premiums for borrowers with smaller deposits, reflecting higher perceived risk.

3. How Deposit & LVR Rules Differ for Non-Residents

For overseas buyers, the bar is higher. Most NZ banks require at least a 20–30% deposit, even for standard owner-occupier purchases. Some may demand more depending on your residency status, visa type, or where your income comes from.

Low-deposit or first-home schemes generally don’t apply to non-residents.

Non-resident borrowers are considered higher risk because they lack local credit history, may earn income in a foreign currency, and are harder to pursue legally if defaults occur. Even when Reserve Bank rules allow 80% lending, many banks apply stricter internal policies, reducing LVRs further. For example, they might cap a foreign buyer’s loan at 60–70% LVR, effectively requiring a 30–40% deposit. If you already own property in NZ and want to use equity for another purchase, banks often discount that equity or limit how much can be leveraged. Some lenders won’t accept high-LVR applications from overseas borrowers at all.

Source of deposit is another major hurdle. If funds come from offshore, the bank must verify the origin under Anti-Money-Laundering (AML) rules. You’ll need detailed documentation proving where the funds originated, especially for gifts or transfers from family. If the source isn’t clear or verifiable, parts of the deposit may be excluded from your application.

4. Reserve Bank “Speed Limits” & Their Impact

Even if your personal financials are strong, banks are still bound by Reserve Bank limits on how many high-LVR loans they can issue. These are called speed limits. For example, only around 20% of new lending to owner-occupiers can exceed 80% LVR, and the quota for investor loans above 70% LVR is even smaller. Once a bank has hit its cap for the month or quarter, it may stop accepting high-LVR applications altogether. This means even qualified borrowers can be declined purely because of internal quota limits. Some exemptions apply — new builds, construction loans, and certain refinancing deals are not always counted in the LVR quota.

5. Practical Tips for Structuring Your Deposit

To strengthen your application, consider these strategies.

• Use equity wisely: If you already own NZ property, you can use equity, but expect the bank to discount its value when assessing your LVR as a non-resident.

• Document gifted funds: Gifted deposits from family are fine if fully documented — expect to provide signed legal letters and AML verification.

• Transfer funds early: Move your deposit into a NZ bank account before applying; banks prefer “seasoned” funds already visible locally.

• Add a NZ-resident co-applicant or guarantor: Having a local borrower or guarantor may improve how banks assess your overall LVR and serviceability.

• Consider new builds: Some lenders treat new construction differently, offering higher LVRs or exemptions under RBNZ rules.

• Ask your broker directly: Lending policies vary. Always ask, “Given my non-resident status, what deposit and LVR will you accept?”

6. Risks & Pitfalls to Watch

• Bank risk appetite changes: A policy accepted this month may not be next month. Always check for updates.

• Over-depositing: Don’t tie up more capital than necessary — overpaying deposit can reduce liquidity and limit flexibility.

• Valuation gaps: Banks sometimes use conservative valuations, which can shrink your effective LVR.

• Currency exposure: If your deposit or income is in another currency, exchange rate movements before settlement can affect your deposit value in NZD.

• AML issues: Unverified or complex source-of-funds paths can delay or derail applications.

• Speed-limit exhaustion: Even strong applications can be turned away if the bank has filled its high-LVR quota.

7. Summary & Key Takeaways

Non-resident buyers face higher deposit requirements and tighter LVR rules than NZ residents. Expect to provide at least a 30% deposit in most cases — sometimes more — and be ready with full documentation proving the source of funds. Even if Reserve Bank rules technically allow higher borrowing, each bank applies its own risk filter and quota limits. Always work with a mortgage broker experienced in non-resident and offshore lending — they can match your situation to lenders who actually accept overseas borrowers and help you structure your deposit strategically.

Talk to a New Zealand Mortgages adviser to understand how deposit and LVR rules affect your eligibility — and what steps you can take to improve your approval odds.