What is LVR?
Loan-to-Value Ratio (LVR) is the size of your mortgage as a percentage of the property's value. For example, if you buy a $600,000 home with a $120,000 deposit, your LVR is 80% (you're borrowing $480,000 against a $600,000 asset).
Why does the Reserve Bank set LVR limits?
The Reserve Bank of New Zealand (RBNZ) uses LVR restrictions as a macroprudential tool to promote financial stability. By limiting high-LVR lending, they aim to reduce the risk of a housing market correction causing widespread mortgage defaults.
Current LVR limits
The RBNZ sets different rules for owner-occupiers and investors:
| Borrower Type | Maximum LVR for Most Lending | High-LVR Speed Limit |
|---|---|---|
| Owner-occupier | 80% | Up to 15% of new lending can exceed 80% LVR |
| Investor | 65% | Up to 5% of new lending can exceed 65% LVR |
This means most owner-occupiers need at least a 20% deposit, while investors generally need 35% or more.
Low-equity margins
If your deposit is below 20%, you'll typically pay a low-equity margin (LEM) — an extra 0.25%–1.00% added to your interest rate. The exact margin depends on your LVR tier. Check current rates by LVR tier on our mortgage comparison page.
Exemptions and special cases
Banks have a limited allocation of high-LVR loans (the "speed limit"). Common uses include:
- First home buyers — often prioritised for high-LVR lending
- New build purchases — RBNZ has previously exempted new builds from LVR restrictions to encourage housing supply
- Welcome Home Loans — Kāinga Ora-backed loans available with as little as 5% deposit
How to improve your LVR
- Save a larger deposit
- Withdraw KiwiSaver for your first home
- Apply for the First Home Grant
- Look at properties in a lower price range
- Consider a guarantor arrangement with family support
Browse today's mortgage rates to see how LVR affects pricing across different lenders.
Frequently asked questions
What is LVR and why does it matter for my mortgage?
LVR (Loan-to-Value Ratio) is the percentage of your property's value you're borrowing. For example, a $500,000 property with a $450,000 loan has 90% LVR. Lower LVR means a bigger deposit, less risk for lenders, and better interest rates for you.
What are the current LVR restrictions in New Zealand?
Most lenders require a minimum 10–20% deposit (80–90% LVR maximum) for residential properties and owner-occupiers. Investors typically need 20–25% deposits (75–80% LVR). Some special exemptions apply (first home buyers, community housing). Check with your lender for their specific limits.
What is a low-equity margin and why do I pay more for high LVR loans?
A low-equity margin is an extra interest rate charged when you borrow above 80% LVR. This can add 0.50–1.00% to your rate, reflecting higher lender risk. Save a larger deposit to avoid this penalty and access better-priced loans.
Are there exemptions to LVR restrictions for first home buyers?
Yes. First home buyers can sometimes access loans with 95% LVR (5% deposit) through special schemes or lender programmes, though this typically comes with higher interest rates and insurance costs. Learn about first home buyer assistance options to see if you qualify.
How can I improve my LVR to access better rates?
Increase your deposit by saving more, or reduce the purchase price of your target property. Even moving from 90% to 80% LVR can save 0.50% on your interest rate—potentially tens of thousands over the loan term. Use our calculator to see the impact.
See how LVR affects your mortgage rate
Compare interest rates at different deposit levels across all NZ lenders and find the best deal for your situation.