Using a Gifted Deposit to Buy Your First Home

For many first home buyers, pulling together a deposit can feel like the biggest hurdle on the path to homeownership. That’s why more and more Kiwis are turning to what’s affectionately known as the Bank of Mum and Dad, receiving help from family in the form of a gifted deposit.

What is a gifted deposit?

A gifted deposit is exactly what it sounds like - a sum of money given by a family member (usually parents or grandparents) to help a buyer purchase their first home. It’s not a loan and doesn’t need to be paid back. Instead, it’s a genuine gift, provided solely to help boost the deposit.

To use this method, most lenders will require the gifter to sign a gift declaration or gifting certificate, confirming that the funds are indeed a gift and there’s no expectation of repayment.

Can I use a gifted deposit as my full deposit?

This depends on your lender. While gifting is a great way to top up your deposit, many banks still want to see that you’re contributing at least 5% of the property price through your own savings. This is often referred to as 'genuine savings'.

However, if your gifted deposit covers 20% or more of the property’s value, the 5% savings rule typically no longer applies. Every lender has their own criteria, so it’s important to get advice based on your unique situation.

Why do banks care about genuine savings?

Lenders like to see that borrowers have a track record of managing their finances and can show financial discipline. Having some of the deposit saved yourself demonstrates this and can strengthen your overall application.

That said, gifted deposits remain a very common and helpful way to make homeownership more achievable - especially today where saving a full deposit can be a challenge!

What do I need to provide?

If you’re planning to use gifted funds as part of your deposit, you’ll need to provide:

• A signed gifting certificate or declaration from the gifter
• Evidence of the gifted funds being transferred into your bank account
• Proof of your own savings covering at least 5% of the property’s value (if required)

Get expert guidance

Every bank and lender has different requirements around gifted deposits, so getting expert advice can save you a lot of time and stress. At Loan Market Dunedin, we help first home buyers navigate these requirements and find lenders that are a good fit for your situation.

If you’re looking at ways to build your deposit, whether through savings, gifting, or both, then we’d love to help guide you through your options. Book your free appointment with us today.