New Zealand's loan-to-value ratio (LVR) restrictions don't work quite the way most people assume. They're not a hard rule blocking any individual borrower with a small deposit — they're a cap on how much of each bank's total new lending can go to high-LVR borrowers, known as a "speed limit." Individual approval still depends on the bank's own criteria and how much of that speed-limit headroom they have left.
The Current Settings
Owner-occupiers: loans above 80% LVR (deposits under 20%) are classed as high-LVR. As of 1 December 2025, banks can direct up to 25% of their new owner-occupier lending to high-LVR borrowers (eased from 20%).
Investors: loans above 70% LVR (deposits under 30%) are classed as high-LVR for this category. As of 1 December 2025, banks can direct up to 10% of new investor lending to high-LVR borrowers (eased from 5%).
Both settings have loosened meaningfully over the past two years as part of the Reserve Bank's broader easing cycle — worth checking for further changes, since these thresholds move periodically based on financial stability conditions.
New Builds Get a Genuine Exemption
New build properties (houses and units under new title) are generally exempt from LVR restrictions entirely, for both owner-occupiers and investors — an explicit policy choice to support new housing supply. In practice: owner-occupiers can borrow up to 90% LVR (10% deposit) on a new build without touching the bank's high-LVR allowance; investors can borrow up to 80% LVR (20% deposit) on a new build without hitting the standard 70% investor threshold.
Worked Example
A first home buyer purchasing a $700,000 property:
| Scenario | Deposit Needed | LVR | Counts Against Bank's Limit? |
|---|---|---|---|
| Existing home, standard lending | $140,000 (20%) | 80% | No — under threshold |
| Existing home, low deposit | $70,000 (10%) | 90% | Yes — high-LVR, uses speed limit |
| New build, low deposit | $70,000 (10%) | 90% | No — new build exemption applies |
| Kāinga Ora First Home Loan | As little as $35,000 (5%) | 95% | No — exempt entirely |
The same 90% LVR looks completely different depending on whether it's an existing home (uses up scarce speed-limit allowance, harder to get approved) or a new build (exempt, easier to access at the same deposit level).
Common Mistakes
Buyers frequently think LVR restrictions are a personal rule applied to their specific loan — it's actually a portfolio-wide cap on the bank, meaning your individual approval odds depend partly on how much high-LVR lending that particular bank has already done that quarter, not just your own financial profile.
Buyers also miss the new-build exemption entirely, assuming a 10% deposit purchase is equally hard to finance whether it's an existing home or a newly built one — the exemption can make a real, practical difference in which properties are realistically accessible at a given deposit level.
A third mistake: not checking whether refinancing (without increasing the loan) is exempt — it generally is, since it doesn't add new leverage to the system, which matters for existing high-LVR borrowers looking to switch lenders.
Where This Calculator Has Limits
It reflects the current RBNZ-set thresholds and speed limits, which are reviewed periodically and have changed multiple times in recent years — always confirm current settings before relying on this for a live purchase. It also can't predict which individual banks currently have speed-limit headroom available, since that varies by lender and time of year.
Frequently Asked Questions
Is the LVR restriction the same as a hard deposit requirement?
Not exactly — it's a cap on how much high-LVR lending each bank can do overall, so approval for a specific low-deposit loan depends on the bank's current lending mix, not just a fixed rule.
Are new builds always exempt from LVR restrictions?
Generally yes, which is a deliberate policy choice to support housing supply — confirm the exact definition of "new build" your bank is applying, since it typically requires the property to be under new title or newly constructed within a set window.
Does the LVR restriction apply to refinancing?
Refinancing without increasing the loan amount is generally exempt, since it doesn't add new leverage to the system.
When did the settings last change?
Most recently on 1 December 2025, when both the owner-occupier and investor speed limits were eased — worth checking for further updates given how often these settings have moved historically.
Are Kāinga Ora First Home Loans subject to LVR restrictions?
No — they're explicitly exempt, which is part of why they're such a significant tool for genuinely low-deposit first home buyers.
Related Tools
DTI Calculator · Mortgage Calculator · First Home Buyer
Educational content, not financial advice. LVR thresholds and speed limits are set by the Reserve Bank of New Zealand and reviewed periodically — confirm current settings with a licensed New Zealand mortgage adviser. Written by the MortgagePro Global team; settings referenced against the RBNZ's rules in effect from 1 December 2025.