Quick Answer: To qualify for New Zealand's First Home Loan scheme, you need to be a first-time buyer (or second-chance buyer), earn $95,000 or less as an individual ($150,000 for couples), have at least a 5% deposit, and purchase a property within regional price caps. The scheme is backed by Kāinga Ora and allows you to buy with just 5% deposit through participating lenders.
Buying your first home in New Zealand can feel like a daunting financial challenge. With rising house prices and strict deposit requirements, many first-home buyers struggle to get their foot on the property ladder. But for eligible Kiwis, the First Home Loan could make the difference between renting and owning.
This government-backed scheme makes it easier for first-home buyers to secure a mortgage, even with a smaller deposit. Many don't realise they qualify or don't fully understand how it works. This guide covers everything you need to know: how the First Home Loan works, who's eligible in 2025, how to apply, and common pitfalls to avoid.
What is the First Home Loan Scheme?
The First Home Loan is a New Zealand government initiative designed to help first-time buyers purchase a home with as little as 5% deposit. It's offered by select lenders and underwritten by Kāinga Ora (Homes and Communities), which means the government takes on part of the risk to make lending more accessible.
Unlike traditional home loans that often require a 10–20% deposit, the First Home Loan can open the door to home ownership for those with strong financial habits but limited savings. This scheme specifically targets Kiwis who can afford mortgage repayments but struggle to save large deposits in New Zealand's competitive housing market.
How Does the First Home Loan Work?
Kāinga Ora doesn't lend directly to home buyers. Instead, they partner with specific banks and non-bank lenders who offer the First Home Loan. The key benefit is that these participating lenders will accept a smaller deposit (as low as 5%) because the loan is underwritten by the government through Kāinga Ora's Welcome Home Loans programme.
Key benefits of the scheme:
- Get into your first home faster with lower deposit requirements
- Reduce the time spent saving for a traditional 20% deposit
- Avoid extra costs like rent and rising property prices while you wait
- Access to multiple participating lenders across New Zealand
Keep in mind, while the deposit requirement is lower, you'll still need to meet the lender's standard home loan criteria such as proof of income, affordability assessments, and responsible credit history. The First Home Loan doesn't bypass normal lending requirements—it simply reduces the deposit barrier.
First Home Loan Eligibility Criteria 2025
To apply for a First Home Loan in New Zealand, you must meet these eligibility requirements:
Personal eligibility:
- Be a first-home buyer (or a previous homeowner in a similar financial position to a first-time buyer)
- Be 18 years or older
- Be a New Zealand citizen, permanent resident, or resident visa holder
Financial eligibility:
- Have a household income of $95,000 or less (single buyer) or $150,000 or less (two or more buyers)
- Have at least a 5% deposit saved
- Demonstrate you can afford mortgage repayments based on current lending criteria
Property eligibility:
- Be buying a home to live in, not as an investment property
- Be purchasing a property within the regional house price caps set by Kāinga Ora
- Property must meet minimum standards for health and safety
You'll also need to demonstrate good credit history and responsible financial management. Participating lenders still carry out full affordability assessments and apply responsible lending requirements under New Zealand's Credit Contracts and Consumer Finance Act (CCCFA).
Income and House Price Caps 2025
To ensure the First Home Loan scheme helps those who need it most, both income and house price limits apply. These caps vary depending on where you're buying in New Zealand.
Income Caps
- Individual buyer: $95,000 gross annual income or less
- Two or more buyers: $150,000 combined gross annual income or less
These income limits are reviewed periodically by Kāinga Ora to reflect economic conditions and housing affordability in New Zealand.
House Price Caps by Region
House price caps depend on your region and whether you're buying an existing home or a new build. New builds typically have higher price caps to encourage construction.
Examples of regional caps (check Kāinga Ora for current figures):
- Auckland: Higher caps due to property prices
- Wellington: Mid-range caps
- Regional areas (Gisborne, Southland, etc.): Lower caps reflecting local markets
The price cap applies to the purchase price of the property, not the loan amount. Even if you have a large deposit, if the purchase price exceeds the regional cap, you won't qualify for the First Home Loan.
Important: Always check the current Kāinga Ora website for the most up-to-date regional price caps, as these figures are reviewed and adjusted regularly.
How to Apply for the First Home Loan
You apply for a First Home Loan directly through a participating lender—not through Kāinga Ora. Here's the step-by-step application process:
Step 1: Check Your Eligibility
Confirm you meet the income requirements, have sufficient deposit (minimum 5%), fall within the house price caps for your region, and intend to live in the property.
Step 2: Choose a Participating Lender
Select from approved lenders including major banks and specialist non-bank lenders. Not all New Zealand lenders participate in the scheme, so check Kāinga Ora's list of approved providers.
Participating lenders include:
- Major banks (selected branches)
- Non-bank specialist lenders
- Credit unions and building societies
Step 3: Submit Your Mortgage Application
Apply for a home loan just as you would for a standard mortgage. The lender will assess your application using their normal lending criteria.
Step 4: Provide Required Documentation
You'll need to supply:
- Photo identification (passport or driver's licence)
- Proof of income (payslips, tax returns, employment contracts)
- Bank statements (usually 3-6 months)
- KiwiSaver statements if using for deposit
- Property purchase agreement or sale and purchase agreement
- Proof of deposit savings
Step 5: Await Approval
The lender will assess your application and, if approved, will arrange underwriting through Kāinga Ora. This process can take longer than standard home loans due to the government backing requirement.
Pro tip: Working with a mortgage adviser like Luminate Financial Group can simplify this process significantly. We'll guide you through lender selection, eligibility checks, documentation requirements, and loan approval processes—often securing better outcomes than applying directly.
Second-Chance Buyers: Can You Qualify?
If you've previously owned property in New Zealand but no longer do, you may still qualify as a "second-chance buyer" under the First Home Loan scheme. Kāinga Ora assesses whether you're in a similar financial position to a first-time buyer.
Second-chance buyer requirements:
- You must have previously owned a home but sold it or lost it
- Your current financial position must be comparable to a first-home buyer
- You need to apply directly to Kāinga Ora for second-chance buyer approval before approaching lenders
- You'll need to provide evidence of your assets, income, liabilities, and reasons for your changed circumstances
Common situations where second-chance buyer status may apply include relationship separation, financial hardship, or returning to New Zealand after living overseas.
Common First Home Loan Pitfalls to Avoid
1. Overlooking Regional Price Caps
Even being slightly over the price cap can completely disqualify your application. Check the exact cap for your region before house hunting.
2. Assuming Approval is Guaranteed
Meeting Kāinga Ora's eligibility criteria doesn't guarantee loan approval. You still need to meet the participating lender's full lending criteria, including affordability assessments and credit checks.
3. Not Allowing Enough Time
Loan approvals through the First Home Loan scheme can take longer than standard mortgages due to the government underwriting process. Start your application early, especially if you're in a competitive buying situation.
4. Using the Wrong Loan Structure
Choosing an inappropriate mortgage structure (fixed vs. floating, loan term, repayment type) can cost you thousands over the life of your loan. Consider getting professional mortgage advice.
5. Forgetting About Additional Costs
Remember to budget for legal fees, building inspections, insurance, moving costs, and potential low equity margins or fees even with the 5% deposit.
6. Not Combining with KiwiSaver HomeStart
Many first-home buyers miss the opportunity to combine the First Home Loan with the KiwiSaver HomeStart Grant, which could give you up to $10,000 additional deposit funds.
Working with a mortgage adviser at Luminate can help you sidestep these issues and position your application for success.
Combining First Home Loan with KiwiSaver
You can use your KiwiSaver funds for your deposit while applying for the First Home Loan. Additionally, you may qualify for the KiwiSaver HomeStart Grant:
KiwiSaver HomeStart Grant amounts:
- Up to $5,000 per person for existing homes
- Up to $10,000 per person for new builds
- Couples can receive up to $10,000 combined (existing) or $20,000 (new builds)
This combination can significantly reduce the cash you need to save personally. For example, a couple buying an existing home could access:
- Their KiwiSaver balances (minus $1,000 required to remain)
- Up to $10,000 HomeStart Grant
- Only need to save the remaining deposit amount
First Home Loan vs. Traditional Mortgage: Comparison
| Feature | First Home Loan | Traditional Mortgage |
|---|---|---|
| Minimum Deposit | 5% | 10-20% (typically 20% to avoid LVR fees) |
| Income Limits | $95k individual / $150k couple | No income limits |
| Price Caps | Regional caps apply | No price caps |
| Property Type | Owner-occupied only | Investment or owner-occupied |
| Lender Options | Participating lenders only | All lenders |
| Approval Time | Longer (government underwriting) | Standard timeframes |
| Eligibility | First-time or second-chance buyers | Anyone |
Why the First Home Loan Matters
The First Home Loan scheme is a lifeline for many New Zealand buyers who can afford mortgage repayments but struggle to save a large deposit in our expensive housing market. It bridges the gap between renting and owning, helping you:
- Avoid rising house prices while you continue saving
- Get a foot on the property ladder sooner
- Build equity instead of paying rent
- Access government support designed specifically for first-home buyers
When used in combination with KiwiSaver and professional mortgage advice, the First Home Loan is a smart way to move toward financial independence through home ownership.
Real Example: First Home Loan in Action
Sarah, Auckland first-home buyer:
- Annual income: $85,000
- KiwiSaver balance: $35,000
- HomeStart Grant: $5,000
- Personal savings: $15,000
- Total deposit: $55,000 (combining all sources)
Sarah found a property for $750,000 (within Auckland's price cap). With 5% deposit ($37,500 required), she had sufficient funds and qualified for the First Home Loan. Without this scheme, she would have needed 20% ($150,000) to avoid low equity fees—taking years longer to save.
Frequently Asked Questions
Can I use the First Home Loan to buy an investment property?
No, the First Home Loan is only available for properties you intend to live in as your primary residence. Investment properties are not eligible under this government scheme.
What happens if I earn slightly more than the income cap?
Unfortunately, income caps are strict limits. If you earn $95,001 as an individual or $150,001 as a couple, you won't qualify. The caps are assessed on your gross annual income.
Which banks offer the First Home Loan in New Zealand?
Several major banks and non-bank lenders participate in the scheme, but not all branches or lenders are approved. Check the Kāinga Ora website for the current list of participating lenders, or speak with a mortgage adviser who can guide you to approved providers.
How long does First Home Loan approval take?
Approval times vary but typically take 2-4 weeks longer than standard home loan applications due to the government underwriting process through Kāinga Ora. Allow extra time when making offers on properties.
Can I apply for the First Home Loan if I'm self-employed?
Yes, self-employed buyers can apply for the First Home Loan, but you'll need to provide additional documentation such as tax returns, financial statements, and proof of consistent income. Lenders may require 2+ years of trading history.
Do I still pay low equity fees with a 5% deposit?
This depends on the lender. Some participating lenders may still charge low equity fees or margins even though the loan is government-backed. Your mortgage adviser can help you find lenders with the most favorable terms.
What if the property I want is $5,000 over the regional price cap?
Unfortunately, even being slightly over the price cap disqualifies the property from the First Home Loan scheme. You'll need to find a property within the cap or pursue a traditional mortgage with a larger deposit.
Can I get a First Home Loan for a house and land package?
Yes, house and land packages can qualify if they fall within the regional price cap and meet all other eligibility criteria. New builds often have higher price caps than existing properties.
Final Thoughts
If saving a 20% deposit feels out of reach, the First Home Loan could be your ticket to buying sooner than you thought possible in New Zealand's challenging housing market. But to make the most of this government scheme, it's crucial to understand the eligibility rules, check regional price caps, and plan your application carefully.
The First Home Loan isn't right for everyone—income and price caps mean some buyers won't qualify. However, for eligible Kiwis, it's one of the most valuable tools available for getting onto the property ladder.
At Luminate Financial Group, we specialise in helping first-home buyers navigate New Zealand's lending landscape. From deposit planning and KiwiSaver optimization to lender selection and application support, we'll walk you through the process and give you the best shot at approval.
Ready to check your First Home Loan eligibility?
Book a free First-Home Loan Strategy Session with Luminate. We'll assess your financial position, confirm what schemes you're eligible for (including KiwiSaver HomeStart Grant), and help you structure your deposit and application to improve your chances of success.
📞 Call 0800 333 400
📧 Email askus@luminate.co.nz
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Luminate Financial Group - helping first-home buyers across Auckland, Wellington, Christchurch, and throughout New Zealand achieve home ownership since 1998.
