What is the First Home Loan?

It’s never been easy for first home buyers to get onto the first rung of the property ladder. But Kāinga Ora’s First Home Loan makes buying a first home a little easier. So what is the First Home Loan?

It’s always been tough to save a deposit to buy a first home. However, there is some assistance available for first home buyers. And one option is the First Home Loan from Kāinga Ora. So what is it? Canstar guides you through:

What is the First Home Loan

The First Home Loan is a financial support program offered by Kāinga Ora. Most lenders currently require a minimum 20% deposit for a home. But with a First Home Loan you only need a 5% deposit. This is because Kāinga Ora underwrites the loan, allowing lenders to provide loans that would otherwise sit outside their lending standards.

Can anyone get the First Home Loan?

No, to be eligible for the First Home Loan you must meet strict criteria. So it’s not for everyone. Below is an overview of the key requirements:

  • Income cap – a maximum yearly income of up to $95,000 (before tax) for one person. A combined maximum yearly income of up to $150,000 (before tax) for two or more applicants, or a maximum yearly income of $150,000 for an individual buyer with one or more dependants
  • Minimum deposit – a minimum 5% of the purchase price of the house you want to buy
  • You must live in the home you buy – a First Home Loan cannot be used to buy an investment or rental property
  • You need to pay Lender’s Mortgage Insurance (LMI) (and any loan application fees) – this LMI premium is 0.5% of the loan amount and is usually added onto your mortgage
  • First home buyers only – or you can be a previous homeowner who is in a similar financial position to a typical first home buyer
  • You must be an NZ citizen – or permanent New Zealand resident or a resident visa holder who is ordinarily resident in New Zealand
  • Small(ish) property – must be purchasing a property of less than one hectare
  • Not own any other property or land – this does not include ownership of Māori land

You can get more details from the Kāinga Ora website here.

Is the First Home Loan the same thing as the First Home Grant?

No. They are both offered through Kāinga Ora but they are not the same thing, although they can be used together.

The First Home grant is available to FHBs who have been contributing at least the minimum amount to KiwiSaver for three years or more. It providers eligible FHBs with:

  • a grant of up to $5000 for individuals and up to $10,000 for two or more eligible buyers to put towards the purchase of an existing/older home
  • a grant of up to $10,000 for individuals and up to $20,000 for two or more eligible buyers to help with the costs of purchasing a brand new home

You receive $1000 for each year you have been a KiwiSaver member, up to a total of five years. This means you could get $3000, $4000, or $5000 to put towards a deposit. If you’re buying a new build the grant doubles to $2000 per year, with the most you can receive topping out at $10,000.

Note: regional price caps still apply for homes available to purchase under the First Home Grant scheme. You can get more details from the Kāinga Ora website here.

→Related article: What is the Kāinga Ora First Home Grant? And How Much is It?

Compare KiwiSaver

The First Home Grant isn’t all KiwiSaver can offer. While it may be a retirement fund, KiwiSaver is increasingly popular as a first home deposit scheme. How you plan on using your KiwiSaver could impact the kind of fund you need. After all, different KiwiSaver funds suit different people. If you’re looking for a first home, are you in the right fund for your needs?

Additionally, KiwiSaver providers charge fees for their services, and some charge more than others. Plus, your KiwiSaver funds get invested into a range of shares. How does your return on investment compare with other providers?

At Canstar we compare a range of KiwiSaver funds and award the best providers accordingly. If you want to know more, or want to see how your KiwiSaver fund stacks up, click the button below:

Compare KiwiSaver providers

Looking for a home loan?

If you’re currently considering a home loan, the table below displays some of the 2-year fixed-rate home loans on our database (some may have links to lenders’ websites) that are available for first home buyers. This table is sorted by Star Rating (highest to lowest), followed by company name (alphabetical). Products shown are principal and interest home loans available for a loan amount of $500K in Auckland. Before committing to a particular home loan product, check upfront with your lender and read the applicable loan documentation to confirm whether the terms of the loan meet your needs and repayment capacity. Use Canstar’s home loan selector to view a wider range of home loan products. Canstar may earn a fee for referrals.

About the author of this page

This report was written by Canstar Content Producer, Caitlin Bingham. Caitlin is an experienced writer whose passion for creativity led her to study communication and journalism. She began her career freelancing as a content writer, before joining the Canstar team.

You can like us on Facebook and get social, or sign up to receive more news like this straight to your inbox.

By subscribing you agree to the Canstar Privacy Policy

Share this article