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For Home Buyers

The First Home Loan: What It Is and Who Qualifies

The Chaperone Team··4 min read

Saving a deposit is one of the biggest hurdles for first-home buyers in New Zealand, and the First Home Loan scheme was designed to help bridge that gap. Administered by Kainga Ora - Homes and Communities and available through participating lenders, the scheme allows eligible buyers to purchase a home with a deposit of just five percent in most cases. At Chaperone, we often work with first-home buyers exploring whether they qualify, and the details are worth understanding before you assume you are in or out.

How the First Home Loan Works

Under the First Home Loan scheme, the government provides a guarantee to participating lenders, which allows those lenders to offer mortgages with a deposit of five percent without needing to apply the standard low-equity margin that would otherwise apply to such a high loan-to-value ratio loan. In effect, the guarantee reduces the lender's risk and makes it more viable to lend at a high LVR to eligible borrowers.

It is important to understand that the First Home Loan is a bank loan, not a government grant. You still borrow the full amount and repay it with interest. The benefit is that you can enter the market with a smaller deposit, which can make a significant difference to the timeline for buyers who are finding it difficult to reach the standard twenty percent deposit threshold through saving alone.

Eligibility Requirements

To qualify for a First Home Loan, you generally need to meet several criteria set by Kainga Ora. You must be a New Zealand citizen, permanent resident, or eligible visa holder, and the property you are buying must be your first home. There are income caps that apply: at the time of writing, these are $95,000 for a single buyer and $150,000 combined for two or more buyers, though these figures can change and it is worth checking the current figures with Kainga Ora or a mortgage adviser.

There are also house price caps that vary by region, reflecting the different price levels across New Zealand. A property in Auckland is subject to a higher cap than one in a smaller regional centre, but buyers in high-cost markets may find the caps are still limiting relative to current market prices. Again, these caps are reviewed periodically and current figures should always be verified.

The Deposit and KiwiSaver

The five percent deposit can often be sourced in part or in full from your KiwiSaver first-home withdrawal, which makes the combination of the two schemes particularly powerful for eligible buyers. If you have been contributing to KiwiSaver for at least three years, you may be able to withdraw most of your balance to use as a deposit, subject to the KiwiSaver rules. Many first-home buyers combine a KiwiSaver withdrawal with their own savings to reach the minimum deposit amount.

It is also worth noting that the First Home Loan and the First Home Grant are separate schemes, and some buyers may be eligible for both. The First Home Grant provides a cash contribution towards your deposit based on the number of years you have contributed to KiwiSaver. A mortgage adviser can help you map out which combinations apply to your situation.

  • A five percent deposit is required, which can often be sourced from KiwiSaver savings
  • Income caps apply: around $95,000 for single buyers and $150,000 combined - check current figures
  • Property price caps vary by region and are reviewed over time
  • The loan is a standard bank mortgage - not a grant - and must be repaid
  • The First Home Loan and First Home Grant are separate and may be available simultaneously

Navigating the eligibility rules, price caps, and how these schemes work alongside each other can feel complex when you are doing it for the first time. At Chaperone, we help first-home buyers work through the options clearly so you know where you stand before you start making offers.

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