Borrowing Power · 17 August 2026
What the current loan to value limits require, what the Reserve Bank confirmed in August 2026, and why clearing the deposit threshold is only the first gate you have to get through.
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In 2026 the Reserve Bank's loan to value ratio restrictions allow banks to write no more than 25% of their new owner occupier lending at an LVR above 80%, and no more than 10% of their new investor lending at an LVR above 70% (Source: RBNZ). In practice that puts the working deposit figure at 20% for most owner occupiers and 30% for most investors buying an existing property, with a limited share of each bank's lending available above those thresholds.
Your LVR is simply the loan measured against the value of the property. A $640,000 loan on an $800,000 property is an 80% LVR. The lower the ratio, the more of the purchase your own money covers, and the smaller the loss the lender would face if prices fell.
Source: Reserve Bank of New Zealand, loan-to-value ratio restrictions.
Nothing has changed this year. These settings have applied since December 2025, and on 13 August 2026 the Reserve Bank's Financial Policy Committee decided to maintain them in its annual review of macroprudential policy. Assistant Governor Financial Stability Angus McGregor said that housing risks are currently contained, that house prices nationally have remained broadly flat in recent years, and that mortgage lending growth has been modest. The next review is intended in around 12 months, though it can be brought forward if conditions warrant (Source: RBNZ).
Two limits on the rules are worth knowing early. They apply to new lending only and are not applied retrospectively, so an existing mortgage is not reassessed when settings move. The exception is a top up that takes your total LVR above the relevant threshold, which is treated as new lending (Source: RBNZ).
This is the part almost every explainer skips, and it changes how the whole thing behaves.
The 25% figure is not a right you hold as a borrower. It is a cap on the bank's own book. The Reserve Bank calls it a speed limit for a reason: it limits the share of new lending a bank can write above the threshold over a given lending period, either three months or six months depending on the size of the bank, and a bank that exceeds it is in breach of its conditions of registration (Source: RBNZ).
Three things follow from that, and none of them appear in the standard deposit table.
Every low deposit approval a bank writes draws down the same limited allowance. You are not being measured against a fixed rule, you are competing for a slice of a quota that other applicants are drawing on at the same time.
Because the allowance is measured across a rolling three or six month window, a lender's appetite above the threshold is not constant. The same file can meet a different reception in a different month.
The Reserve Bank is explicit that banks still apply their own lending criteria and may decline finance or offer it only at lower LVRs (Source: RBNZ). A no above 80% often says more about that lender's allowance than about the strength of your application.
Lending above the threshold is usually priced differently, commonly through a low equity margin or fee that varies by lender and by how far above the line you sit. It is a cost of the door you use, not a reflection of you.
In our experience at Trebla, this is the single most common reason a buyer walks away discouraged when they did not need to. One lender's answer at 85% LVR gets read as the market's answer, when the useful question is which lenders currently have room and appetite at that ratio. Two banks can look at the same income, the same deposit and the same property in the same week and reach genuinely different conclusions, and neither is being unreasonable.
If you are working with a deposit under 20%, the mechanics of the different low deposit routes matter more than the headline rate. We cover them in detail in our guide to low deposit home loans in New Zealand.
If the speed limit is a queue, the exemptions are the lending that never joins it. The Reserve Bank lists categories that the LVR restrictions simply do not apply to (Source: RBNZ):
There is also a combined collateral exemption for borrowers with both owner occupied and investment property security, which allows finance up to 70% of the value of the investment properties and 80% of the value of the owner occupied property (Source: RBNZ).
Most articles print this list as trivia at the bottom of the page. It is worth more attention than that, because these are the only routes that change the rationing itself rather than trying to argue with it. Whether a purchase is a new build or an existing home, or whether a scheme loan is available, can move a deposit requirement in a way that no amount of presentation will.
Two of these have their own guides: the scheme route in our article on the Kāinga Ora First Home Loan, and the buy before you sell route in our guide to bridging finance in New Zealand.
LVR answers one question only: how much deposit you need. It says nothing about how much you can borrow. That is set by servicing, by how the lender assesses your income and outgoings, and by the debt to income restrictions the Reserve Bank runs alongside LVR. The Reserve Bank describes DTI restrictions as complementing LVR restrictions and acting as a guardrail against the build up of high risk lending (Source: RBNZ). Passing one test tells you nothing about the other.
It is common to see the two confused in opposite directions. A buyer with a large deposit assumes borrowing capacity follows, and finds servicing is the binding constraint. A buyer with strong income assumes the deposit will be waved through, and meets the rationing described above. Both are surprised by the wrong gate.
One practical detail also gets missed: the value in the ratio is the value your lender accepts, which is not automatically the price you agreed. Where a registered valuation is required, that figure can differ from the purchase price, and the LVR is calculated on what the lender works to. It is a difference worth understanding before an auction rather than after one.
For the full picture of what sets your loan size rather than your deposit, start with our guide to how much you can borrow on a New Zealand mortgage, and then check where you sit with the LVR and DTI calculator.
For most owner occupiers buying an existing home the working figure is a 20% deposit, because the Reserve Bank classifies owner occupier lending above 80% LVR as high LVR and caps it at 25% of a bank's new owner occupier lending. For investors buying an existing property the working figure is a 30% deposit, because investor lending above 70% LVR is capped at 10% of new investor lending (Source: RBNZ). Lending is available above those thresholds, but only within those limited shares, and each lender still applies its own criteria on top.
No. The current settings have been in place since December 2025, and on 13 August 2026 the Reserve Bank's Financial Policy Committee decided to maintain them in its annual review of macroprudential policy. Assistant Governor Financial Stability Angus McGregor said housing risks are currently contained, with house prices broadly flat in recent years and modest mortgage lending growth. The next review is intended in around 12 months, but can be brought forward if conditions warrant (Source: RBNZ).
Yes, this lending exists, but it is rationed rather than freely available. Banks may write up to 25% of new owner occupier lending above 80% LVR, so low deposit applications compete for a limited share of each lender's book, measured over a three month or six month lending period depending on the size of the bank (Source: RBNZ). Pricing usually differs above the threshold as well, commonly through a low equity margin or fee that varies by lender.
They control different things. LVR compares the loan to the value of the property, so it governs how much deposit you need. DTI compares total borrowing to income, so it governs how large the loan can be. The Reserve Bank runs both, and describes DTI restrictions as complementing LVR restrictions and acting as a guardrail against the build up of high risk lending (Source: RBNZ). Clearing one does not clear the other.
Construction lending is exempt. The Reserve Bank lists construction loans among the exemptions, covering a borrower constructing a new home or purchasing a newly built home from the developer within 6 months of completion. Kāinga Ora loans including First Home Loans, refinancing where the new loan value does not exceed the original, portability, bridging finance and property remediation are also exempt (Source: RBNZ). Being exempt from the restrictions does not remove the lender's own criteria.
No. The Reserve Bank states that LVR restrictions apply only to new lending and are not applied retrospectively to existing loans. A change to LVR settings will only affect an existing borrower who takes out a top up loan that pushes the total LVR above the relevant threshold (Source: RBNZ). If your LVR has fallen because you have repaid principal or your property has gained value, that is a matter for your lender rather than the restrictions.
Trebla Partners Limited (FSP728251) is a licensed Financial Advice Provider based at 105a Allum Street, Kohimarama, Auckland. If you want to know which lenders currently have room at your deposit level, you can book a free chat with one of our Financial Advisers at book.trebla.nz/book.
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This article is general in nature and is not financial advice. Lending criteria, lender policies, and relevant rules vary and change regularly. Always seek advice specific to your situation before making decisions. Read our disclosure statement →
