Buying your first home can feel like a difficult goal when you’re trying to build a deposit from scratch, but help from your parents doesn’t necessarily mean being handed a huge sum of cash. From gifting or lending money to using equity in an existing property, there are several ways parents can help first-home buyers get onto the property ladder.
In this episode, James and Michael unpack why first-home buyers are active in the current market and explore three of the main ways the ‘Bank of Mum and Dad’ can help.
Why first-home buyers are active in the current market
For those buying their first home, the current property market is creating opportunities that haven’t necessarily been available in recent years.
First-home buyers accounted for 27.7% of all New Zealand property purchases in the first quarter of 2026, compared with a long-term average of 22%. Around 25,000 properties were purchased by first-home buyers over the previous 12 months – the highest number since 2021.
One reason is simply that there is less competition.
The housing market has remained relatively weak, while fewer investors are actively buying. With more properties available and fewer homes clearing at auction, first-home buyers can often negotiate rather than compete in an auction environment.
Standalone homes also made up nearly 77% of first-home buyer purchases in 2026. Michael pointed out that lower property prices have made homes that were previously out of reach more accessible to some buyers.
For parents considering helping their children buy their first home, this softer market can also mean their contribution goes further.
How to ask your parents for help buying your first home
Even when parents have previously mentioned helping, starting the conversation can be uncomfortable. The key is to remember that help doesn’t automatically mean asking them to hand over cash.
Michael recommends focusing the conversation on the property and the opportunity. If you’ve found a property and are close to having the deposit you need, explain what you’re trying to achieve, how much you’re short and whether there is a way they could help bridge that gap.
If you’re not ready to buy yet, simply talking about buying your first home as a goal can be a good place to start. It gives your parents an opportunity to understand what you’re working towards and potentially raise the idea of helping themselves.
It’s also important not to make assumptions about what your parents can afford. Owning a mortgage-free home or investment property doesn’t necessarily mean someone has large amounts of cash available. Their wealth may instead be tied up in their assets.
That distinction becomes important because there are different ways parents can provide support.
Option 1: Gifting money towards the deposit
The simplest option is a cash gift.
Parents can provide some or all of the additional money needed for a deposit, with the bank typically requiring a gifting certificate confirming that the money is genuinely a gift. This means it isn’t a loan, isn’t interest-bearing and doesn’t require regular repayments.
It’s generally a straightforward arrangement, but there can be additional considerations. Michael notes that issues can arise where the money may become relationship property or where funds are coming from a trust.
That’s where the second option can become useful.
Option 2: Lending the money
Rather than gifting the deposit, parents can lend the money to their child.
One way this can be structured is through a formal deed of acknowledgement of debt. Michael explains that, for the bank, the loan generally needs to meet specific requirements: it can’t be interest-bearing, there can’t be regular repayments and the parents can’t demand repayment before the property is sold or the mortgage has been fully repaid.
This arrangement is more complicated than a straightforward gift and will usually require the assistance of a solicitor.
So why might a family choose it?
For some parents, it could simply be because they’re contributing a significant amount of money and eventually want it returned. For others, the intention may be to protect the contribution if their child is purchasing with a partner.
Michael explains that structuring the contribution as a loan rather than a gift can help protect that money from becoming relationship property. However, anyone considering this approach specifically for relationship property reasons should speak with a family lawyer.
Clearly documenting the arrangement can also help keep expectations between family members clear when significant amounts of money are involved.
Option 3: Using your parents’ equity
Parents don’t necessarily need to have $100,000 sitting in the bank to help with a $100,000 deposit shortfall.
If they own a property with sufficient equity, that equity can potentially be used to help.
Michael gives the example of someone purchasing a $1 million property with a $100,000 deposit. If another $100,000 would take them to a 20% deposit, they may be able to borrow that additional amount against their parents’ property and use the funds towards the purchase.
Getting to a 20% deposit can have advantages. Michael notes that buyers may be able to access better interest rates, higher cashback and easier lending criteria compared with purchasing with a 10% deposit.
But this strategy introduces risk for the parents.
If things go wrong, they need to be in a financial position to deal with the debt. Banks therefore assess these arrangements carefully and consider the parents’ overall financial position, including their income and other assets.
Michael gives the example of retired parents whose only major asset is their mortgage-free home. A bank may be reluctant to approve a significant loan against it. However, parents who also own paid-off investment properties may be in a stronger position because there are other assets available without putting their family home directly at risk. Ultimately, these arrangements are assessed case by case.
Where equity is used, Michael also believes there should be a clear plan to remove the parents from the arrangement as quickly as possible rather than allowing the loan to remain in place for many years.
Key takeaways
- Parents helping with a first home doesn’t always mean handing over a large cash gift.
- First-home buyers accounted for 27.7% of New Zealand property purchases in Q1 2026.
- Parents can help by gifting money, lending money or using equity in an existing property.
- A gift is generally the simplest option, but families should consider the implications of relationship property and trusts.
- A formal family loan can provide more structure and potentially protect the parents’ contribution.
- Using parents’ equity can help buyers increase their deposit without requiring their parents to have the equivalent amount sitting in cash.
- Equity arrangements still carry risk for parents and are assessed carefully by banks.
- Whatever option is used, the parents’ own financial position needs to come first.
Next steps
If you’re buying your first home and want to understand your deposit and lending options, speak with the Lighthouse Financial mortgage team about what could work for you and your family.
If you’d like to watch more, check out this episode below.
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Disclaimer:
The information in this article is general information only, is provided free of charge and does not constitute professional advice. We try to keep the information up to date. However, to the fullest extent permitted by law, we disclaim all warranties, express or implied, in relation to this article – including (without limitation) warranties as to accuracy, completeness and fitness for any particular purpose. Please seek independent advice before acting on any information in this article.
