Gifted Deposits: How They Work for NZ Buyers

Family financial support plays a significant role in helping New Zealanders into their first home. Whether it is parents contributing toward a deposit, a grandparent gifting a lump sum, or other family members wanting to help, gifted money is a legitimate and commonly used source of deposit funds. At Chaperone, we see gifted deposits regularly, and while lenders do accept them, there are specific requirements and considerations that both the recipient and the gift provider need to understand before the application is submitted.

What Is a Gifted Deposit?

A gifted deposit is money provided to a home buyer by a family member or other party with no expectation of repayment. This is the critical distinction between a gift and a loan. If the funds are expected to be repaid in any form, lenders treat them as a liability and factor the repayments into the affordability assessment. A genuine gift, with no repayment obligation, is treated as equity and does not affect your debt-to-income position in the same way.

Lenders will require written confirmation of this. The standard approach is a signed gift letter from the person providing the funds, stating clearly that the money is a genuine gift, that there is no expectation of repayment, and that the donor will not have any claim over the property. Some lenders have a specific template for this letter, while others accept a clearly worded statement meeting the same requirements.

How Much of the Deposit Can Be a Gift?

Lender policies vary on this point. Some lenders require that a certain proportion of the deposit comes from genuine savings held by the borrower, meaning savings accumulated over a period of time in the borrower's own account. The reasoning is that the ability to save demonstrates financial discipline, which is a relevant factor in assessing the likelihood of successful loan servicing.

Other lenders accept a deposit made up entirely of gifted funds, particularly for buyers with a strong income and low existing debt. Under the CCCFA's affordability requirements, the focus is on whether you can service the loan rather than solely on where the deposit came from. Getting advice on which lenders are most receptive to gifted deposit structures for your specific situation is worthwhile before you start applying.

Documentation Requirements

The gift letter is the primary documentation, but lenders will also typically want to see the gifted funds sitting in the borrower's bank account for a period before settlement, often referred to as a seasoning period. This shows the money is genuinely available and not a short-term loan that will be repaid after settlement. The length of time varies but is commonly around three months before the application or before the funds are needed.

Lenders may also ask for evidence of the donor's ability to provide the funds, such as a bank statement showing the gift originated from the donor's account and was not borrowed. This is part of the overall anti-money laundering due diligence that lenders are required to conduct. While it can feel intrusive, it is a standard part of the process.

Tax and Legal Considerations

In New Zealand, there is no gift duty, meaning there is generally no tax consequence from giving or receiving a cash gift for a house deposit. However, if the relationship between the borrower and the gift provider is a de facto partnership or they are living together, the gift may become subject to the Property (Relationships) Act if the relationship ends. For substantial gifts, legal advice from a family lawyer is a sound precaution.

It is also worth the gift provider considering the future. Large gifts can affect financial plans, retirement savings, or future estate arrangements. While it is entirely a personal decision, thinking it through carefully before committing is prudent.

Using a Gift Alongside Other Deposit Sources

Many buyers combine a gifted deposit with their own savings and a KiwiSaver first home withdrawal. This can make the deposit target achievable much sooner than relying on one source alone. When preparing the mortgage application, all sources of the deposit need to be clearly documented and accounted for, so that the lender has a complete picture of how the equity is being assembled.

At Chaperone, we help buyers who have gifted deposits navigate the documentation requirements and identify which lenders are best suited to their specific deposit structure. Starting that conversation early, ideally while the funds are still being organised, makes the process much smoother.