How to Get a Loan for an Investment Property
Understanding investment property deposit NZ requirements is the first step before you make an offer. The biggest question most investors ask isn’t “should I invest“; it’s “how much deposit do I actually need, and will the bank say yes?“
Getting a loan for an investment property is quite a bit different than getting one for your regular home. Banks have much stricter deposit requirements; they assess your rental income in specific ways and consider your entire portfolio.
The good news? With the right kind of structuring and advice, it’s well within reach! And if you’re reading this post because you want to know how to qualify, chances are you’ll also be happy to hear you can use the equity on your existing home to help you make it happen faster than you’d think.
Here’s what you should know before applying, including the latest deposit and LVR requirements for investment properties in New Zealand.
Investment property loan requirements: Deposit & LVR
The Reserve Bank of New Zealand (RBNZ) requires investors to have a larger deposit than people buying a home to live in. There are also loan-to-value ratio (LVR) limits, which set how much high-LVR lending each bank is allowed to do.
| Buyer Type | Typical Minimum Deposit | Maximum Standard LVR | Notes |
| Owner-occupier – existing property | 20% | 80% | Banks can allocate up to 25% of new lending above 80% LVR |
| Investor – existing property | 30% | 70% | Banks can allocate up to 10% of new lending above 70% LVR |
| Investor – new build | Often lower (as low as 20%, bank-dependent) | Can exceed 70% | New builds are currently exempt from RBNZ investor speed limits |
| Owner-occupier – new build | Often lower (as low as 10%, bank-dependent) | Can exceed 80% | New builds are currently exempt from RBNZ speed limits |
Usually, buying an existing investment property means you’ll need a 30% deposit, while owner-occupiers need about 20%. Banks also use debt-to-income (DTI) limits along with LVR. Most investor loans are capped at about seven times your gross income, compared to around six times for owner-occupiers. Rental income can help you meet the higher deposit requirement.
New-build properties get more favourable treatment because they are not currently included in the RBNZ’s investor lending limits. This is why many investors consider new builds as part of their strategy.
The RBNZ reviews LVR and DTI settings from time to time, so the exact numbers can change. Our team stays up to date with every change.
Contact us, and we’ll let you know the current requirements for your situation before you make an offer.
Can I use equity in my home to buy an investment property?
Often, yes. This is one of the most common ways people in New Zealand start investing in property. If you have equity in your home, you can use it for some or all of your deposit on an investment property, instead of saving up a large amount of cash.
Banks also use something called a combined collateral exemption. If you use both your home and the investment property as security, you can borrow up to 80% against your home and 70% against the investment property together. This means you may need to pay less cash upfront.
The best loan structure depends on your current mortgage, how much equity you have, and your overall goals. This is where a mortgage adviser can really help.
Does rental income count towards my borrowing power?
Lenders will also take a percentage of your expected rental income into account (usually around 65–75%) to help determine if you can service your new loan. They’ll use this figure as part of their calculation for how much they are happy to lend you.
Lenders will consider your rental income alongside other factors such as your existing income, expenses, and debts. Your lenders will each have different ways of assessing your rental income, so be sure to compare a few lenders.
Are investment property loans harder to get than home loans?
The paperwork isn’t harder, but the requirements are stricter. In addition to needing a bigger deposit, banks will look closely at:
- Your overall debt-to-income ratio across all properties
- Rental income and vacancy assumptions
- Your existing portfolio and equity position
- Tax settings, including current interest deductibility rules for property investors
If your application is well-prepared and clearly shows your numbers, loan structure, and background, banks are more likely to respond quickly and positively.
Are investment property interest rates higher?
Investment property loans may have slightly different interest rates compared to owner-occupied loans. If you borrow above the standard LVR limit, you might pay a low equity margin, which is extra interest on high-LVR loans. Setting up your deposit and loan structure correctly from the start helps you avoid extra costs.
The best loan structure for your situation
These can range from simple structures like a regular home loan right through to complex combinations of interest-only periods, offset accounts, redraw facilities and more. It’s all about structuring what will work for you: Do you want to consolidate? Grow your portfolio? Plan for your next purchase?
We have hands-on experience across residential, commercial and land banking. Our expertise isn’t limited to theory. Whether you’re working with an accountant or a solicitor, we’ll ensure our advice fits into your big picture financial plans.
Buying from overseas? We can still help.
We often help New Zealand expats and overseas buyers purchase investment property here. Thanks to our national network in the property industry, you’ll get practical, informed advice no matter where you live.
FAQ
1. How much deposit do I need for an investment property?
Under current RBNZ settings, most banks require a minimum deposit of 30% for an investment property purchase (a maximum LVR of 70%), compared with 20% for an owner-occupied home. New-build properties may allow a lower deposit, as they currently fall outside the standard investor lending restrictions.
2. Are investment property loans harder to get than home loans?
It’s not harder to apply, but the requirements are stricter. You’ll need a bigger deposit, face tighter debt-to-income limits, and banks will look more closely at your rental income and portfolio. Good preparation and advice can make approval much easier.
3. Does rental income count towards my borrowing power?
Yes. Banks typically count a portion of expected rental income (commonly 65-75%) towards your servicing calculation, which can increase how much you’re able to borrow.
4. Can I use equity in my home to buy an investment property?
Often, yes. Many investors use equity from their existing home as some or all of their deposit, and banks can structure lending across both properties (up to 80% against your home and 70% against the investment property) to reduce the cash needed upfront.
5. Are investment property interest rates higher?
Interest rates for investment properties can be a bit higher than for owner-occupied homes. If you borrow above the standard LVR limit, you might also pay a low equity margin. Having the right loan structure and deposit can help keep these costs down.
Ready to grow your property portfolio?
Ready to look into an investment property loan NZ banks will actually approve? Get in touch today. Our team can explain the current deposit requirements, help with loan structuring, and show you how to make the most of your equity.
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