The financial services sector watchdog AFM has watered down its plans to stop banks extending mortgages which are higher than the value of the property.
The authority now stays home owners can borrow more than 100% of the purchase price, if they commit to paying the excess back within five to seven years.
House buyers without savings often borrow more than the cost of their new home to pay legal and survey fees and renovation costs.
In April, the AFM said it planned to ban 100% plus mortages but was heavily criticised by the home owners association and the finance ministry.
AFM chairman Hans Hoogervorst told the Telegraaf some 27% of borrowers have mortages which represent more than 112% of the value of their home. The organisation is concerned that households are over-stretching themselves financially and could be hit by negative equity if house prices fall.
The plan still needs ministerial approval, the paper said.