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First Home Loan Scheme

The First Home Loan scheme makes getting into your own home easier with just 5% deposit needed.


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With soaring house prices in many parts of New Zealand, purchasing a first home is becoming more and more out of reach for many Kiwis. And let’s not forget the need for at least 20% deposit in most cases – at least $80,000 is required to purchase a $400,000 home. With rent payments, bills and other outgoings, saving this amount of money can take many years unless you’re earning a six-figure salary.

However, it’s not all doom and gloom, as eligible New Zealanders that earn under a certain amount are able to purchase their first home with a low deposit thanks to the First Home Loan.

What is the First Home Loan?

The First Home Loan replaces the Welcome Home Loan, which instead of needing 10% deposit to purchase a home, only 5% is now required. This scheme is underwritten by Kāinga Ora Homes & Communities and gives Kiwis the chance to get into a new home much earlier rather than needing to save for many years to reach the 20% deposit that is usually required.

The First Home Loan is also beneficial for lower-income households, with a maximum salary cap applicable for individuals and couples. While the First Home Loan is not available through all banks or finance companies, Kāinga Ora has partnered with a select group of lenders around the country to deliver this service to eligible New Zealanders that would normally be outside of their lending criteria standards.

Am I eligible for a First Home Loan?

To be eligible for a First Home Loan you need to meet the following eligibility criteria:

  • Age. Be at least 18 years of age.
  • Residency. You need to be a NZ citizen or permanent resident. Other visa holders who normally live in New Zealand are also eligible.
  • Deposit. Have a minimum deposit of 5% of the value of the home you wish to take the loan out for.
  • Be a first home buyer. Be purchasing a home for the first time, or alternatively, be a previous homeowner that is wanting to buy a new home but is in a similar financial position to a first home buyer.
  • Income. If you are a single person, your income can not be any more than $85,000 per year. For couples and groups of people, your combined income must not be more than $130,000.
  • Price cap. The home you want to buy must have a price that is less than the regional house price cap. Price caps sit between $400,000 and $650,000 depending on what part of the country you are in and whether it is an existing or new home. Your maximum loan amount will be the house price cap minus your deposit.
  • Living situation. You can not own any other home and you will need to live in the home that you are buying rather than use it as an investment property.
  • Lender’s Mortgage Insurance. Anyone with a First Home Loan is obligated to pay a premium of 1% of the total loan amount for Lender’s Mortgage Insurance, so you will need to agree to this before applying.

Even though Kāinga Ora set the eligibility criteria for First Home Loans, you will also need to meet the lending criteria of participating lenders. Criteria can be different according to the lender, but they will want to assess:

  • Your credit history. Do you have a good history of making repayments to credit cards or loans and have you managed your accounts sufficiently in the past? You can check your credit history by requesting a free copy of your credit report.
  • Financial situation. How much do you earn, what debts do you owe and do you have any assets?
  • Repayment ability. Once your weekly, fortnightly or monthly commitments are paid, do you have the ability to pay back the loan without leaving you in financial difficulty?

Which lenders offer First Home Loans?

Coming up with a 5% deposit

Having a 5% deposit is a minimum requirement for taking out a First Home Loan. If you want to buy a house that is $400,000 you will need $20,000, and for a home that is $600,000 you will need $30,000. It may take you a few years to save for a deposit, but you can also ask family members to help you out.

Alternatively, if you have been contributing to Kiwisaver for at least three years, you may be able to get the First Home Grant which can be up to $20,000 for couples who are purchasing a brand new home. You may also be eligible for the First-home Withdrawal, which allows you to use your Kiwisaver contributions for your deposit as long as you leave $1,000 in your account.

Benefits of a First Home Loan

  • Low deposit. Traditional mortgages generally require a 10-20% deposit. Thanks to only needing a 5% deposit, you can get into your first home sooner than otherwise possible.
  • Low-income requirements. With a maximum salary cap of $85,000 for individuals and $130,000 for couples, lower-income households are eligible to apply for a home loan.
  • Choice of lenders. First Home Loans are available from nine lenders so you can find the one that suits your needs or there may be one that you already have a banking relationship with.
  • Kiwisaver deposit help. Kiwisaver customers can take advantage of the First Home Grant or First-home Withdrawal if they are having trouble saving their deposit.
  • Existing or new homes. You can choose to purchase a new home or an existing one, and some lenders will allow you to build a home with your First Home Loan.

How do I apply?

Before applying, first check that you meet the eligibility criteria set out by Kāinga Ora and that you have the 5% deposit. Next, research the participating lenders to find one that you feel comfortable with by looking at the interest rates, loan terms, fees and any other benefits that may be on offer. If you already have a financial relationship with one of the lenders such as holding a bank account, the process may be slightly easier than applying to a new bank.

While there are different lenders to choose from, you may be limited in your choice based on where you live. For example, Nelson Building Society only has branches in the upper South Island, and SBS Bank has only 14 branches nationwide.

Once you have chosen a lender, you will need to complete a lenders loan application. To do this, you should make an appointment to speak to a loan consultant in your nearest branch, or Westpac has mobile lending managers that can come to you if you live rurally or are unable to get into a branch. The loan consultant or lending manager that you deal with will assess your application and financial circumstances according to their lending criteria and let you know their decision.

When you apply, you can opt for pre-approval or final approval. Pre-approval means that the lender will confirm the amount that they are willing to lend you, so you can search for your new home with that figure in mind. Or, if you have already been looking around and have your mind set on a property that you have seen, you can apply for final approval by giving the details of the home with your application.

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