Episode 2
How to Buy a House with No Deposit?
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Key Points of the Podcast
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Usable equity can replace a cash deposit.
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Banks apply strict affordability tests.
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100% borrowing is common in New Zealand.
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Good debt can build long-term wealth.
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Property affordability has improved.
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Planning for ongoing costs is essential for sustainable investing.
In Episode 2 of The Alternative Guide to Property Investment, Mike and Matt dig into the question every Kiwi asks - how the hell do you actually afford to buy an investment property?
The experts from Staircase Financial reveal how ordinary homeowners can tap into the value of their existing property. Many New Zealand homeowners already have the ability to invest in property without realising it. This discussion explains how the value in an existing home, known as usable equity, can be used as a deposit to buy another property without needing cash savings.
What is Usable Equity?
Usable equity is the portion of a home’s value that is not tied to the mortgage.
For example:
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A house is worth $1,000,000
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The remaining mortgage is $500,000
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The $500,000 difference is equity.
Banks may allow part of that equity to be borrowed against to fund another property. This method is often referred to as buying with no money down.
Good Debt vs Bad Debt
Borrowing against your home can seem risky, but it depends on how the money is used. Borrowing for an appreciating asset such as property is considered good debt because it can build long-term wealth. Borrowing for short-term spending such as holidays or credit cards is bad debt. When lending is structured properly and affordability is tested, good debt can be a sound way to grow wealth.
100% Borrowing Is More Common Than You Think
Many people assume that 100% borrowing is only for high-income earners, but it is common among homeowners who have built equity over time. Those who have owned their home for five to ten years often have enough equity to fund another property. Around two-thirds of New Zealand investors use bank lending rather than paying in cash.
Property Affordability in New Zealand
Despite common belief, affordability has improved in recent years. Lower mortgage rates and steady prices mean more people qualify for lending. A couple on minimum wage could potentially borrow up to $600,000, which is enough to buy a new townhouse in Auckland with a deposit of around $30,000.
Banks carefully assess whether borrowers can manage repayments. They test affordability by applying higher interest rates and including scaled rental income from the new property. If a loan is approved, it means the borrower has already passed strict financial stress tests.
Many New Zealanders already have the financial foundation to invest — they just need to understand how to use it. This episode explains how homeowners can turn their equity into an opportunity for long-term growth without needing a cash deposit.
If you want to find out how much usable equity you have and whether you can invest, book a free consultation with Staircase Property to explore your options.
Frequently Asked Questions — EP2: How to buy a House with no deposit?
In the episode, Kieran Trass explains that “no money down” refers to using the equity in your existing home as a deposit for a new investment property. Instead of paying cash, you borrow against the value you already own — called usable equity.
Usable equity is the portion of your home’s value that you can borrow against.
Liam Cox, Staircase National Sales Manager, gives the example: if your home is worth $1 million and your mortgage is $500,000, you have $500,000 of equity. The bank may allow you to use part of that as a deposit to buy another property.
Liam Cox explains that borrowing more against your home can feel daunting, but it’s important to understand the difference between good debt and bad debt. Borrowing for an appreciating asset like property (good debt) can build wealth, while borrowing for things like holidays or credit cards (bad debt) doesn’t create value.
Banks also apply strict affordability tests before approving lending, ensuring borrowers can handle the repayments even if interest rates change.
Yes. According to Kieran Trass, Staircase Head of Research, many ordinary homeowners can — it’s not just for the wealthy. If you’ve owned your home for several years and its value has increased, you may already have enough usable equity to buy an investment property without needing cash savings.
Kieran describes 100% borrowing as “very common” among experienced investors. It’s not an exclusive privilege — it’s a method used by many who understand how to leverage equity responsibly. Only about one-third of investors buy property without a mortgage; most use bank lending.
Banks assess lending risk carefully. They calculate affordability based on your income, expenses, and potential rental income from the new property — tested at higher interest rates to ensure you can manage repayments even if rates rise.
If a bank approves your loan, it means they’ve already confirmed you can realistically afford it.
Kieran points out that while property prices have risen over time, affordability has actually improved recently due to lower interest rates and steady prices. He gives an example: a young couple on minimum wage could potentially borrow up to $600,000 — enough to buy a brand-new townhouse in Auckland with a modest deposit.
Liam outlines typical costs such as rates, insurance, property management fees, and loan interest. Investors should project these expenses over time to understand their weekly outgoings and ensure the investment remains affordable.
Staircase Property helps clients assess how much usable equity they have and whether they can borrow to buy a rental property. Their in-house finance team works with banks to structure loans, calculate affordability, and manage the process from start to finish.
Liam shares the story of a young family who thought they couldn’t afford an investment property. After assessing their home equity, Staircase helped them buy a new-build property in Papamoa in 2017. Six years later, their property increased in value, and they’re now expanding their portfolio — all starting with equity, not cash.
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