Understanding loan-to-value ratio

LVR stands for loan-to-value ratio (LVR) and it looks at how much you're looking to borrow, relative to the value of the house you want to buy.

What is an LVR?

A loan-to-value ratio (LVR) is the measurement of the size of your loan in comparison to the value of your property. For example, if your house is worth $500,000 and you have a deposit of $100,000, you need a home loan of $400,000, which would make your LVR 80%.

Why do we have LVRs?

The Reserve Bank of New Zealand is New Zealand’s central bank, and it supervises all registered banks operating in the country.

In October 2013, the Reserve Bank introduced LVR restrictions due to its concerns about rapidly rising house prices, coupled with an increasing use of low-deposit loans. The central bank hoped that not only would LVRs take some of the heat out of the housing market, by making it harder to buy a property, but that having a larger deposit would also provide borrowers with a bigger buffer if property prices fell.

You can read more about LVR restrictions and why they were put in place on the Reserve Bank’s website.

Working out how big a deposit you need


  • If you’re buying a house to live in, you’ll generally need a deposit of at least 20% - this will give you an LVR of 80%
  • If you have 5% deposit, then you may be eligible for the First Home Loan initiative.
  • If you have 10% - 19% deposit, then you might want to look at our low deposit options available for first time buyers.
  • 0% deposit options aren't available – you'll always require a deposit, but it may be less than you first thought.

You'll still need to meet our servicing critera to ensure that you're able to make repayments on your loan.


LVR restrictions are higher for investors, due to higher risks associated with these types of loans. If you're buying a residential investment property, you'll require a minimum deposit of 35% of the property purchase price, which means your LVR will be at most 65%. You'll still need to meet our standard home loan terms and conditions.

Exceptions to the rule

When it comes to LVRs over 80%, exceptions can be made in certain circumstances. It’s still worth talking to one of our home loan specialists about your options.

If you’re a first-time buyer, there are also lower deposit options worth exploring, like the Kāinga Ora First Home Loan and First Home Partner initiatives, which can help first timers buy houses with deposits of just 5%.

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