When Gifted Equity Counts As Deposit Artwork

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That Home Loan Hub

When Gifted Equity Counts As Deposit

December 31, 2025 • Zebunisso Alimova

0:00 | 5:11

A small policy misunderstanding nearly derailed a family home transfer, and the fix came down to one line: the 5% “genuine savings” rule only applies when you don’t have a 20% deposit. We walk through the full scenario—parent-to-child sale, equity gift as deposit, and a lender pushback that didn’t match the actual policy—and show exactly how to frame the deal so credit says yes.

We break down the difference between high LVR files and those at or below 80% LVR, and why that threshold matters more than most people realise. You’ll hear how Kainga Ora pathways let buyers use fully gifted funds to meet the 5% test, where non-Kainga Ora high LVR loans usually need genuine savings, and why KiwiSaver typically qualifies. We also share practical steps to defuse misinterpretations: present clear deposit maths, confirm the LVR early, reference the correct policy, and, when possible, point to recent, like-for-like approvals at the same bank to anchor consistency.

This is a short, punchy guide for anyone navigating family sales, equity gifting, or first-home finance. If you’re overseas without local savings, or you’re relying on KiwiSaver to round out your deposit, you’ll get a simple framework to avoid last-minute declines. Most importantly, you’ll gain the confidence to push back—politely—when a decision doesn’t fit the rulebook. Subscribe, share with a friend who’s house-hunting, and tell us: have you seen a lender apply the 5% rule when it shouldn’t?

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SPEAKER_01 0:10

Hello, welcome back. This is the episode for you because I'm so happy. So because I just saved a deal. I just saved a deal, Kunch. Kyoda. Hello. How

A Deal Saved And Joy Shared

SPEAKER_01 0:20

are you? Good. I just feel so proud of myself in this moment. I cannot share the joy. Tell us about it. Alright, so deal. We have this family where a person is buying a house of the parent. So child buying a house of the parent. Parent is gifting

The Family Sale And Gifted Equity

SPEAKER_01 0:39

them equity in a house. We've done that lots. We've done this heaps. Yeah. Now the curveball here is I think either the banker that we were dealing with is not experienced enough or it's just a Christmas glitch. I don't know. But what happened was the banker pushed back saying that they cannot accept the full gift of an equity as they deposit. That

Banker Pushback On Genuine Savings

SPEAKER_01 1:04

the client has to come up with at least 5% genuine savings for this deal. They didn't have a Kiwi Saver? They did not have a Kiwi Saver. They don't have any savings because they don't live in this country, they live overseas. So this is like a family home that is getting passed on from elderly parents to a child, and the child just needs a little mortgage to pay back the parents something. So the interesting bit here is we've done hundreds of deals like this, and usually it flies. But as I said, it must have been a glitch because when the banker pushed back, the first reaction was like, What really did we get something wrong here? But I remember clearly the rules are, and this is something you cannot find in their guides. So all those new advisors listen up, and all those clients that have been pushed back, listen up. So the rules are if you don't have 20% deposit, if you don't have 20% deposit, that's when the bank requires you to have at least 5%

The 20% Deposit Rule Clarified

SPEAKER_01 2:03

genuine savings. Yep. This rule came into place. I was at the bank at that time, so we're talking between 2012 and 2015. I recall. That's when I think it came out.

SPEAKER_00 2:14

I think that's when triple CFA and all that came in.

SPEAKER_01 2:17

Correct. So RBNZ rule is you have to have at least 5% genuine savings if you do not have 20% deposit. Now, in this client's case, they did have 20% deposit. They did. So what that meant is that rule does not apply to them. Yep. Correct. To get away from that rule. However, about three years ago, I did do a case, and there is an interesting curveball here. If it's a Kayanga aura deal,

Kainga Ora Versus High LVR Nuance

SPEAKER_01 2:49

then you can use all of that as gifted, even if you don't have 5% genuinely saved. So the whole 5% can be gifted to you. But if it's outside of Kayanga Aura deal, so if it's a high L VR, non-Kayanga Aura deal, then you do have to have 5% genuine savings. So this is where things get a little bit muddy. And this is where you have to clearly understand what the rules are. So you can't push back on the banker because sometimes they get it wrong too. They only humans, just like us. And look, if I'm getting something wrong in this episode, please do let me know because I would love to hear your thoughts. But the uh outcome of this was that we just won a deal and we just made it approved and pushed it across the line. So there you go. That's my big win. Woo-hoo, well done. You sound so excited for me. Well done. I think because you and I know this thing.

SPEAKER_00 3:44

Yeah, I was just like, okay, well, that's normal. And like, I guess it's also open to interpretation, right? It's how bankers interpretate their policy and how advisors would interpret that. And it's just open discussion, I think, with the bankers and the advisors to ensure that we're getting the right outcome for the client. Yeah.

SPEAKER_01 4:04

Because I think the other

Policy Interpretation And Recent Wins

SPEAKER_01 4:06

saving grace was that we've just done a deal literally that same week with the same bank, with the same scenario, and it went through no problems, no questions asked.

SPEAKER_00 4:15

So it was really strange how this bank and like I said, we've done we've done a few of those scenarios with no issues.

SPEAKER_01 4:22

No, but I just thought I'll remind people about this whole 5% genuine savings rule and in what situation it does apply and what situation it does not apply.

SPEAKER_00 4:31

And just to recap, KiwiSaver is classified as genuine savings. It is. Yeah. Yeah, KiwiSaver is genuine savings. So those people who are

KiwiSaver Counts As Genuine Savings

SPEAKER_00 4:41

like, oh, I don't have 5% in my bank account, it's okay.

SPEAKER_01 4:44

It's okay. We can make that work. Yeah. Awesome. Well, thank you so much. This was my highlight. We're gonna keep it short and simple. And cool, well done. If I did get something wrong, guys, do let me know. Or share your stories of your success, um, of how you managed to get your deals

Quick Wrap And Listener Invites

SPEAKER_01 4:59

to work. Thank you so much. Thanks, bye.

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