The Smart Buyer’s Guide to Getting Mortgage Approval in New Zealand (2025 Edition)

Why Getting Approved in 2025 Is Different

The rules have tightened – but so has opportunity for those who understand the game. Banks are lending, but they’re more selective than ever.

• CCCFA pressure remains: While softened slightly, it still drives more rigorous expense analysis and income verification.

• Stricter income checks: Especially for self-employed borrowers, contractors, and those earning overseas. Expect to prove stability, not just gross income.

• LVR caps are back: Most owner-occupiers need 20 % deposit; only a small pool of high-LVR lending (≤ 10 %) is permitted.

• Rates may ease, but tests haven’t: Even though 1-year fixed rates hover around 6.5 %, banks stress-test at ~8 % or more. In short – you can still get approved, but the evidence bar is higher.

For current market context, see our Latest Mortgage & Market Update for the latest OCR decisions and lending trends shaping approvals.

Step-by-Step Mortgage Approval Process (2025 Edition)

Financial Readiness Check

• Start six months before you apply. Banks want to see clean conduct and consistent saving habits.

• Debt-to-income (DTI) caps ≈ 6–7× gross income. Stress-test rates around 8 %.

• Stable savings and no late payments signal discipline.

• Avoid BNPL, credit-card splurges, or big lifestyle spends near your application – these now count heavily against servicing.

To prepare strategically, read our Refinancing Strategy: How to Optimise in a Falling-Rate Environment for insights on how rate changes impact borrowing capacity and timing.

Key Documentation

Having your paperwork complete speeds approval dramatically. You’ll need:

• Valid ID (passport / driver licence) + proof of address.

• 3–6 months of bank statements and payslips.

• Employer confirmation letter.

• KiwiSaver statements + withdrawal eligibility letters.

• Gifting declarations (if family support).

• For self-employed borrowers: two years of financials + tax returns.

If you want to get ahead, download our Mortgage Documentation Checklist to make sure you’re application-ready before contacting lenders.

Choosing the Right Lender & Product

Each bank has quirks in policy. What fails at ASB might sail through at Westpac. Compare criteria across major banks or use a broker to match your profile. Pick rate type for your plan: Fixed for certainty, Floating for flexibility, Offset to cut interest via linked savings.

Check schemes like First Home Loan and Kāinga Ora – great for low-deposit buyers.

If you’re unsure which structure fits your goals, see Fixed vs Floating: What Should You Choose When Refixing Your Home Loan? for a breakdown of options and trade-offs.

Conditional Approval & Property Review

After assessment, you’ll receive conditional approval – but that’s not the finish line.

• Valuation condition: Some banks accept desktop vals; others require registered valuations.

• Insurance & building reports: these may be conditions too. At this stage, you can start house shopping with confidence – but only remove conditions once you have a contract.

Final Approval & Settlement

Your lawyer checks titles, completes signing, and handles funds on settlement day. That’s when the mortgage is drawn down and ownership transfers.

2025 Lending Snapshot

• Standard deposit: 20 % (10 % with Kāinga Ora support).

• Average 1-year fixed rate: ~5 % (stress-tested at 7 %).

• 2-year terms most popular – balancing rate certainty and flexibility. Banks tight on non-standard income (commission, bonuses, rental).

Common Approval Pitfalls

Avoid these if you want a yes on your first submission:

• Hiding short-term or BNPL debt – it will show up anyway.

• Spending spikes before applying – banks pull live expense reports.

• Applying to only one bank – policies differ massively. Confusing conditional and unconditional approval.

Approval-Boosting Strategies

• Perfect account conduct – no missed payments or gambling transactions.

• Stable employment and consistent salary income.

• Submit a complete pack – don’t drip-feed docs. Work with an adviser who knows each bank’s policy exceptions.

For Borrowers in 2025: Practical Tips

Track your expenses for 3–6 months – banks use real numbers, not estimates. Build your deposit discipline early – steady savings carry weight. Get a scenario review before you apply to know your likely borrowing limit. If you own already, refinance smart: use our Refinancing Break-Even Calculator to see when switching makes sense.

The Bottom Line

Getting approved in 2025 is less about luck and more about preparation. Banks want clarity, stability, and evidence that you manage money well under pressure. If you can tick those boxes, you can still secure a competitive loan – even in a tight credit cycle.

Ready to see where you stand? Book a free scenario review today – we’ll show you how much you can borrow and which lender is best placed to approve you in 2025.