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, how to apply, and common pitfalls to avoid.
What is the First Home Loan?
The First Home Loan is a 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, 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.
How Does It Work?
Kāinga Ora doesn’t lend directly — instead, they partner with specific banks and lenders who offer the First Home Loan. The key benefit is that these lenders will accept a smaller deposit (as low as 5%) because the loan is underwritten by the government.
This can help you:
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Get into your first home faster
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Reduce the time spent saving
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Avoid extra costs like rent and rising property prices while you wait
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, and responsible credit history.
Who Is Eligible?
To apply for a First Home Loan, you must meet certain eligibility requirements:
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Be a first-home buyer (or a previous homeowner in a similar financial position to a first-time buyer)
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Be 18 years or older
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Be a New Zealand citizen, permanent resident, or resident visa holder
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Have a household income of $95,000 or less (single buyer) or $150,000 or less (two or more buyers)
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Be buying a home to live in, not as an investment
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Be purchasing a property within the regional house price caps set by Kāinga Ora
You’ll also need to demonstrate that you can afford mortgage repayments and have good credit history. Lenders still carry out full assessments.
What Are the House Price and Income Caps?
To ensure the scheme helps those who need it most, both income and house price limits apply. These vary depending on where you're buying:
Income caps
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Individual: $95,000 or less
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Two or more buyers: $150,000 combined
House price caps
These depend on your region and the type of property (new or existing). For example, in Auckland, the cap may be higher than in regions like Gisborne or Southland.
Check the Kāinga Ora website for the most up-to-date figures.
How Do You Apply?
You apply for a First Home Loan directly through a participating lender. Here’s how to get started:
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Check your eligibility based on income, deposit, house price, and property use
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Choose a participating lender – these include some major banks and non-bank lenders
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Submit a mortgage application, just like you would for a standard home loan
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Provide documentation including ID, proof of income, bank statements, and details about the property you're purchasing
Working with a mortgage adviser like Luminate Financial Group can simplify this process. We’ll guide you through lender selection, eligibility checks, and loan approval requirements.
What About Second-Chance Buyers?
If you’ve previously owned property but no longer do, you may still qualify as a “second-chance buyer.” Kāinga Ora assesses whether you’re in the same financial position as a first-time buyer. You’ll need to apply to Kāinga Ora and provide evidence of your assets, income, and liabilities.
Common Pitfalls to Avoid
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Overlooking regional price caps – Even being slightly over can disqualify your application
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Assuming approval is guaranteed – You still need to meet the lender’s lending criteria
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Not allowing enough time – Loan approvals can take longer when underwritten by Kāinga Ora, so start early
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Using the wrong loan structure – Choosing the wrong repayment type or term can cost you more in the long run
Working with an adviser at Luminate can help you sidestep these issues and position your application for success.
Why the First Home Loan Matters
The First Home Loan is a lifeline for many buyers who can afford mortgage repayments but struggle to save a large deposit. It bridges the gap between renting and owning, helping you avoid rising house prices and get a foot on the property ladder sooner.
Used in combination with KiwiSaver and other tools, it’s a smart way to move toward financial independence through home ownership.
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. But to make the most of the opportunity, it’s crucial to understand the rules, check your eligibility, and plan your application carefully.
At Luminate Financial Group, we specialise in helping first-home buyers navigate the lending landscape. From deposit planning to lender selection, we’ll walk you through the process and give you the best shot at approval.
Want help checking your eligibility?
Book a free First-Home Loan Strategy Session with Luminate.
We’ll assess your financial position, confirm what you’re eligible for, and help you structure your deposit to improve your chances of success.
Visit www.luminate.co.nz | Email: askus@luminate.co.nz | Call 0800 333 400
