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First Home Grants vs First Home Loans: Understanding the Difference

The Chaperone Team··4 min read

If you are working toward your first home in New Zealand, you have likely come across two terms that sound similar but serve quite different purposes: the First Home Grant and the First Home Loan. Both are government-backed initiatives designed to help eligible first-home buyers into the market, but they operate through different mechanisms and have different eligibility criteria. At Chaperone, we regularly help buyers understand how these schemes fit together, because using them well can make a meaningful difference to your deposit and borrowing position.

The First Home Grant: Free Money Toward Your Deposit

The First Home Grant is a government contribution toward your deposit, administered through Kainga Ora. It is not a loan, and it does not need to be repaid. Eligible buyers can receive up to $5,000 for purchasing an existing home and up to $10,000 for purchasing a new build or building a new home. If two eligible buyers are purchasing together, both can apply, which means a couple buying a new build could receive up to $20,000 combined.

To qualify for the First Home Grant, you generally need to have contributed to KiwiSaver at the minimum required rate for at least three years. There are also income caps, which are based on your pre-tax income in the previous 12 months, and property price caps that vary by region. The property must be in New Zealand, and it must be the principal place of residence, meaning you cannot use the grant to purchase an investment property. Current eligibility details and regional price caps are maintained on the Kainga Ora website, as these figures are updated periodically.

The First Home Loan: A Low-Deposit Pathway

The First Home Loan is a different type of assistance. It is not a grant or a contribution to your deposit. Instead, it is a government guarantee scheme that allows eligible buyers to purchase with as little as a 5 percent deposit. The loan itself is provided by a participating lender, not the government, but Kainga Ora provides a guarantee to the lender that covers a portion of the risk associated with lending at a high LVR. This guarantee enables lenders to offer 5 percent deposit lending to eligible borrowers without applying the same risk premiums they would charge outside the scheme.

The First Home Loan has its own eligibility criteria, including income caps and property price caps that may differ from those of the First Home Grant. Applicants must have a deposit of at least 5 percent, though this can include KiwiSaver savings. The property must be a new purchase intended as a primary residence, and the scheme is only available through participating lenders, not all banks or lending institutions.

Can You Use Both at the Same Time?

Yes, in most cases eligible borrowers can use both the First Home Grant and the First Home Loan together, along with a KiwiSaver first home withdrawal. The three are designed to complement each other. The KiwiSaver withdrawal provides funds from your own savings; the First Home Grant adds a government contribution on top; and the First Home Loan provides the framework for borrowing with a smaller deposit from a participating lender.

Using all three together can allow eligible buyers to access homeownership with a total deposit as low as 5 percent, of which a significant portion may come from sources other than cash savings. This combination is genuinely powerful for eligible buyers, though the eligibility requirements for each scheme do need to be met individually. If one partner has previously owned property, for example, they may not be eligible for some components while their co-buyer is.

Key Differences at a Glance

  • The First Home Grant is a non-repayable cash contribution to your deposit. The First Home Loan is a government-backed lending pathway, not a cash contribution.
  • The First Home Grant requires KiwiSaver contributions for at least three years. The First Home Loan requires only a 5 percent deposit from any source.
  • Both have income and property price caps, but the specific figures may differ.
  • The First Home Loan is only available through participating lenders. The First Home Grant can be combined with any standard mortgage.

Getting the Right Advice

Eligibility for both schemes has specific conditions that can be easy to misread, and the interaction between them and a KiwiSaver withdrawal adds further complexity. At Chaperone, we can connect you with a mortgage adviser who works regularly with first-home buyers and understands how to assess your eligibility accurately, calculate what you might receive, and structure your application to make the most of the assistance available to you.

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