Saving a house deposit can feel overwhelming, especially in New Zealand's challenging property market. The good news? You don't have to rely on just one savings source. By strategically combining multiple deposit tools, you can reach your homeownership goal faster than you might think.
Quick Answer: You can combine KiwiSaver withdrawal (balance minus $1,000), Kāinga Ora First Home Loan (5% deposit minimum), personal savings, family gifts, and developer cashbacks to purchase your first home in NZ. Bank cashbacks ($2,000-$5,000) are paid after settlement and help with moving costs.
In May 2024, the New Zealand Government discontinued the First Home Grant (also known as the KiwiSaver HomeStart Grant), which previously provided up to $10,000 for couples or $20,000 for new builds. While this was disappointing for many aspiring homeowners, other powerful tools remain available—and when used together strategically, they can still help you achieve homeownership with a relatively small deposit.
This comprehensive guide explains how to combine KiwiSaver, the First Home Loan, cashback incentives, and other deposit sources to maximize your purchasing power and get into your first home sooner.
Before diving into strategies, let's clarify what's currently available to first-home buyers in New Zealand:
The discontinuation of the grant means first-home buyers need to be more strategic about combining the remaining tools effectively.
Your KiwiSaver balance is often the largest component of a first-home buyer's deposit, making it the foundation of your strategy.
To withdraw your KiwiSaver for a first home, you must:
You can withdraw your entire KiwiSaver balance minus $1,000, which must remain in your account. This includes:
Example: If your KiwiSaver balance is $45,000, you can withdraw $44,000 for your deposit.
Your lawyer or conveyancer handles the KiwiSaver withdrawal application on your behalf. Here's the timeline:
Critical timing note: Start the withdrawal process at least 2-3 weeks before your intended settlement date. Delays can jeopardize your purchase if funds aren't available on time.
If you're still building your KiwiSaver and have time before purchasing:
The Kāinga Ora First Home Loan is a government-backed lending scheme that enables eligible first-home buyers to purchase with as little as 5% deposit. This is the most powerful tool available for buyers who don't have a full 20% deposit saved.
Unlike traditional bank lending (which typically requires 10-20% deposit), the First Home Loan allows you to borrow up to 95% of the property value. Kāinga Ora underwrites part of the loan, reducing the lender's risk and enabling them to lend with less security.
Participating lenders include:
To qualify for a First Home Loan, you must meet all of the following:
Income Limits (2025 approximate figures):
Price Caps: Properties must be purchased at or below regional price caps, which vary significantly:
Note: These caps change regularly. Check the current Kāinga Ora website for exact figures in your target area.
First-Home Buyer Status:
Residency:
Property Standards:
With a First Home Loan, your 5% deposit can come from:
Example: For a $600,000 home, you only need $30,000 (5%) as your deposit instead of $120,000 (20%) required by traditional lending.
First Home Loans typically carry interest rates similar to standard home loans from the same lender. However, because you're borrowing at a high loan-to-value ratio (LVR), you may face:
Despite these potential costs, the ability to enter the market years earlier often outweighs the additional interest expense.
If you're purchasing a new build or off-the-plans property, developer cashbacks can significantly boost your deposit or reduce your upfront costs.
Developers offer cashback incentives (typically $10,000-$15,000) to attract buyers to new developments. These funds can be:
Fixed cashback: A set dollar amount (e.g., "$12,000 cashback") Percentage-based: A percentage of purchase price (e.g., "2% cashback") Upgrades in lieu of cash: Free appliances, landscaping, or interior upgrades Deposit contributions: Developer contributes directly to your deposit
Lender requirements: Banks need to know about cashbacks and may adjust their lending calculations accordingly. Full transparency is essential.
Price inflation risk: Sometimes cashback offers come with inflated base prices. Compare the total cost to similar properties in the area.
Timing: Clarify exactly when the cashback is paid—at signing, at title, or after construction completion.
Tax implications: Generally, cashbacks for your primary residence aren't taxable, but confirm with your accountant.
Example in action:
With the First Home Loan, this puts you in a strong position even though you started with just $42,000 in actual cash.
Many banks offer cashback incentives to attract new mortgage customers. These contributions range from $2,000 to $5,000, depending on your loan size.
Critical distinction: Bank cashbacks are paid after settlement and therefore cannot be counted toward your deposit. However, they're incredibly useful for:
Cashback amounts vary by lender and market conditions:
Clawback clauses: If you break your fixed rate or refinance within a specified period (typically 3-4 years), you may have to repay the cashback.
Minimum loan size: Cashbacks usually require a minimum loan amount (e.g., $300,000+).
New customer requirement: Most cashback offers apply only to new mortgage customers, not existing ones refinancing.
Luminate Tip: While cashbacks are attractive, never choose a lender solely based on this incentive. A slightly lower interest rate over the life of your loan will save far more than a one-time cashback. Consider the total cost over your expected loan term.
Family support remains one of the most common ways first-home buyers bridge the deposit gap.
Family members (usually parents) can provide non-repayable cash gifts to boost your deposit.
Bank requirements:
A guarantor (typically a parent) uses equity in their own property as additional security for your loan, enabling you to:
Critical considerations:
The real power comes from combining multiple deposit sources strategically. Here are proven approaches:
Best for: Buyers who want to enter the market as soon as possible with minimum savings
Combination:
Example – Single Buyer, Provincial Center:
Best for: Buyers with moderate savings who want better loan terms
Combination:
Example – Couple, Wellington:
Best for: Buyers purchasing new construction with developer incentives
Combination:
Example – Couple, Auckland:
| Deposit Tool | Typical Amount | When Paid | Counts Toward Deposit? | Can Combine With |
|---|---|---|---|---|
| KiwiSaver Withdrawal | Balance minus $1,000 | Before settlement | Yes | Everything |
| Personal Savings | Variable | Before settlement | Yes | Everything |
| First Home Loan (5%) | Reduces deposit needed | Part of loan structure | N/A – it's the loan itself | KiwiSaver, savings, gifts, cashbacks |
| Family Gift | Variable | Before settlement | Yes | Everything |
| Developer Cashback | $10,000-$15,000 | At or before settlement | Yes (with lender approval) | KiwiSaver, First Home Loan, savings |
| Bank Cashback | $2,000-$5,000 | After settlement | No | Cannot count toward deposit, but supports post-settlement costs |
Log into your KiwiSaver provider's website to check:
If you haven't reached three years yet, note when you will and plan accordingly.
Review the Kāinga Ora First Home Loan criteria:
Use the Kāinga Ora website calculator or speak with a mortgage adviser to confirm eligibility.
Add up all your available deposit sources:
Available now:
Potential additions:
Post-settlement support:
This gives you your total purchasing power.
If using First Home Loan (5% deposit):
If aiming for 10% deposit:
Critical check: Ensure your maximum price is within the Kāinga Ora regional price cap for your area.
Contact participating lenders (or work with a mortgage adviser who has access to multiple lenders) and provide:
Pre-approval gives you:
Focus your search on properties that:
If considering new builds: Research developer reputations, compare cashback offers, and understand construction timelines.
When you find the right property, include these conditions in your offer:
Never go unconditional until all these conditions are satisfied.
Once your offer is accepted (conditional), instruct your lawyer to:
Important: Your KiwiSaver provider sends funds directly to your lawyer's trust account—not to you personally.
Work through each condition systematically:
Building inspection: Book promptly and attend if possible. Review the report with your inspector and lawyer. Negotiate repairs or price adjustments if significant issues emerge.
LIM report: Your lawyer orders and reviews this. Ask them to explain any concerns or unusual items.
First Home Loan approval: The lender will conduct their own valuation and final assessment. Stay responsive to any requests for additional information.
KiwiSaver confirmation: Your lawyer tracks the application and confirms when funds are approved.
Home insurance: Get quotes from 2-3 insurers and arrange coverage to start on settlement day.
Once all conditions are satisfied:
Your various deposit sources (KiwiSaver, savings, gifts, developer cashbacks) will combine in your lawyer's trust account and transfer to the seller on settlement day.
Buyer profile:
Purchase details:
Outcome: Successfully purchased using First Home Loan. The developer cashback combined with strong KiwiSaver balance allowed entry into Auckland market despite high prices. Bank cashback covered moving costs and new furniture.
Buyer profile:
Purchase details:
Outcome: Purchased with deposit above 10%, avoiding most low equity premiums and securing competitive interest rates. Bank cashback and savings buffer covered immediate maintenance needs identified in building report.
Buyer profile:
Purchase details:
Outcome: First Home Loan enabled purchase with comfortable deposit margin above the 5% minimum. Lower provincial prices and developer incentives made homeownership achievable on single income.
Instead of waiting 5-7 years to save 20% deposit independently, combining tools can get you into homeownership in 3-4 years or less.
The First Home Loan scheme was designed specifically to help buyers like you. Taking advantage of this support is smart financial planning, not "cheating" the system.
Even with a 5-10% deposit, you start building equity immediately through:
By combining multiple smaller sources rather than relying on one large sum, you maintain financial flexibility and don't drain all your savings.
Your KiwiSaver would otherwise sit in the account potentially for decades. Using it for homeownership gives you:
Start planning 6-12 months before you want to buy:
Allow proper processing time:
Just because you can borrow up to the price cap doesn't mean you should. Consider:
Even after settlement, maintain an emergency fund for:
Recommended reserve: 3-6 months of living expenses, plus $2,000-$5,000 home maintenance fund.
In a rising market: Getting in sooner (even with 5% deposit) might be wise, as property gains can outweigh additional interest costs.
In a falling or flat market: Taking extra time to save a larger deposit (10-20%) might be smarter, avoiding potential negative equity situations.
Your mortgage adviser can help you assess current market dynamics and timing.
Work with a mortgage adviser who:
Engage a good lawyer who:
Professional fees ($1,500-$2,500 total) are worthwhile investments that can save you thousands and prevent costly mistakes.
Yes, absolutely. You can withdraw your KiwiSaver balance (minus $1,000) for your deposit and still apply for the Kāinga Ora First Home Loan which allows you to purchase with just 5% deposit. These programs are designed to work together to help first-home buyers enter the market.
The First Home Grant (also called KiwiSaver HomeStart Grant) was discontinued by the New Zealand Government in May 2024. This grant previously provided up to $5,000 for singles or $10,000 for couples buying existing homes, and double those amounts for new builds. However, KiwiSaver withdrawal and the First Home Loan scheme remain available.
After contributing to KiwiSaver for at least three years, you can withdraw your entire balance minus $1,000 which must remain in your account. This includes all your contributions, employer contributions, and government contributions, plus any investment returns earned.
Income caps vary by region, but typically are around $95,000 for single buyers or $150,000 for households (couples or co-buyers) in most areas. Higher caps may apply in Auckland and other high-cost regions. Check the Kāinga Ora website for current limits in your area.
Price caps vary significantly by region. For example, Wellington's cap might be around $650,000, while Auckland could be $875,000 or higher. These caps are regularly reviewed and adjusted. Check the current Kāinga Ora regional price caps before house hunting.
Yes. Developer cashbacks (often $10,000-$15,000 for new builds) can be used alongside your KiwiSaver withdrawal and First Home Loan. However, lenders may require documentation showing how the cashback is being used and may include it in their deposit calculations.
No. Bank cashback contributions (typically $2,000-$5,000) are paid after settlement and cannot be counted as part of your deposit. However, they're useful for covering moving costs, furniture, or building your emergency maintenance fund.
Generally no, unless you haven't owned a home in at least three years. The First Home Loan is specifically designed for genuine first-home buyers. If you've previously owned investment property or a home, you likely won't qualify unless sufficient time has passed.
The KiwiSaver withdrawal application process typically takes 10-15 business days. Your lawyer or conveyancer will handle the application, but you should initiate it at least 2-3 weeks before your intended settlement date to ensure funds are available on time.
While the discontinuation of the First Home Grant was disappointing, first-home buyers in New Zealand still have powerful tools available—especially when used strategically together.
By combining your KiwiSaver withdrawal, the Kāinga Ora First Home Loan, personal savings, potential family assistance, and developer or bank cashbacks, you can enter the property market with as little as 5% deposit. This means homeownership is achievable far sooner than if you were trying to save 20% independently.
The key is understanding:
Every buyer's situation is unique, and the right combination of tools depends on your income, location, timeline, and property preferences. What works for someone in provincial New Zealand might differ from an Auckland buyer, and a single person's strategy will differ from a couple's approach.
At Luminate Financial Group, we specialize in helping first-home buyers navigate these options and create customized strategies that maximize available resources. We work with you to assess eligibility, structure applications, compare lenders, and coordinate the entire process—from initial planning through to settlement.
Book a free First-Home Buyer Strategy Session with Luminate.
We'll help you:
Don't navigate this complex process alone. Expert guidance ensures you use every available tool effectively and avoid costly mistakes.
Contact Luminate Financial Group:
📞 Call 0800 333 400
📧 Email askus@luminate.co.nz
🌐 Visit luminate.co.nz
Your first home is within reach. Let's create the strategy to get you there.