Buying your first home is a huge milestone. But before you start browsing listings or heading to open homes, the most important question to answer is: how much can you actually afford?
Your borrowing power is influenced by more than just your income. It also depends on your deposit, debts, spending habits, and the type of property you're looking to buy. At Luminate Financial Group, we help first-home buyers across New Zealand understand what they can realistically afford and how to plan a smart budget that supports long-term success, not just loan approval.
This guide will help you get clear on what lenders look at, how to build your home-buying budget, and what hidden costs to prepare for.
Understand What the Bank Looks At
When a lender reviews your application, they don't just look at how much you earn. They also assess:
- Income – wages, salary, commission, bonuses, rental income, and sometimes flatmates or boarders (if accepted)
- Expenses – fixed costs like rent, subscriptions, car repayments, and a realistic estimate of your day-to-day spending
- Existing debt – credit cards, personal loans, student loans, and Buy Now Pay Later accounts (even if unused)
- Deposit – the amount you’ve saved, including KiwiSaver and any gifted funds
- Credit history and account conduct – whether you pay your bills on time, have good savings habits, and avoid overdrafts
- Loan term – most first-home buyers choose 25 to 30 years. A shorter term means higher repayments but less interest
Lenders also apply a stress test, which means they check whether you could afford the repayments if interest rates were to rise above current levels.
Deposit Size and What It Really Means
In New Zealand, most banks require a 20 percent deposit. However, if you're a first-home buyer and meet certain criteria, you may be able to buy with less than this through options like:
- The First Home Loan scheme (through Kāinga Ora–approved lenders)
- Certain bank products tailored for low-deposit buyers
- Help from family in the form of a gift or guarantor
- Non-bank lenders who have different assessment criteria
For example, if you’re buying a $700,000 property, a 10 percent deposit means you’ll need $70,000, plus additional funds for legal and moving costs. A 20 percent deposit would be $140,000, which could give you access to sharper interest rates and lower risk margins.
How Much Will the Bank Lend You?
Every lender is different, but as a general rule, banks in New Zealand will usually lend around five to six times your annual household income, assuming your expenses and debts are modest.
For example:
- A couple earning $130,000 combined might be able to borrow between $650,000 and $780,000
- With a 10 percent deposit ($75,000), they may be able to purchase a home worth around $825,000
- With a 20 percent deposit ($165,000), they could purchase closer to $950,000
These figures can shift based on debt levels, the number of dependents, spending patterns, and whether you’re using KiwiSaver or other first-home buyer schemes. The best way to get an accurate picture is to work with a mortgage adviser who can assess your position across multiple lenders.
Don’t Forget the Other Costs
The purchase price and deposit aren’t the only costs to think about. First-home buyers in New Zealand should also budget for:
Legal fees – usually $1,500 to $2,500
LIM report – around $300, depending on the council
Builder’s report – between $500 and $800
Registered valuation – sometimes required, costing around $700
Insurance – house insurance must be in place before settlement
Rates – payable from the day you take ownership
Moving expenses – truck hire, cleaners, internet connection, power setup
KiwiSaver funds can only be used for the deposit or settlement, not for legal or moving expenses. So it’s important to have some cash savings set aside for these additional costs.
Create a Repayment Budget
Once you know your purchase range, it's time to work out what your repayments will look like.
Let’s say you borrow $600,000 at an interest rate of 6 percent over 30 years. Your weekly repayments would be around $830. Add insurance, rates, and maintenance costs, and your weekly home ownership cost could be closer to $1,000 to $1,100.
Ask yourself:
- Could I still afford this if interest rates increased by one or two percent?
- Would I still be able to save or manage unexpected costs?
- What would happen if my income dropped for a few months?
Use your current rent or savings habits as a guide. If you’re comfortably saving $400 per week while paying rent, that might give you a sense of how much you could sustainably repay once you own a home.
Should You Buy at the Top of Your Budget?
Just because the bank will lend you $750,000 doesn’t mean you should spend it all. If you buy at the very top of your limit, you may be vulnerable to interest rate increases or unexpected costs.
Many first-home buyers choose to buy slightly below their maximum to allow for flexibility, savings, or upcoming life changes. It’s often better to buy a solid first home within your comfort zone than stretch too far for a dream that might be hard to sustain.
Final Thoughts
Your first home should be a financial stepping stone, not a burden. Understanding how much you can afford gives you the power to make smart decisions, stay in control of your finances, and enjoy the journey.
At Luminate, we work with first-home buyers across New Zealand to calculate borrowing power, compare lenders, and structure loans that fit your lifestyle — not just your bank’s formula.
Want to know exactly what you can afford?
Book a free First-Home Budget Session with Luminate.
We’ll show you your borrowing range, review your deposit and goals, and help you prepare for every part of the journey.
Visit www.luminate.co.nz | Email askus@luminate.co.nz | Call 0800 333 400
