For many aspiring homeowners in New Zealand, saving a 20% deposit feels like an insurmountable challenge. Property prices continue to rise faster than most people can save, creating a frustrating gap between the dream of homeownership and the financial reality of getting there.
The Kāinga Ora First Home Loan allows eligible New Zealand first-home buyers to purchase with just 5% deposit. Income limits are $95,000 (single) or $150,000 (couple), with regional house price caps ranging from $400,000 to $950,000. Available through 7 participating lenders including Westpac, Co-operative Bank, and SBS Bank.
The Kāinga Ora First Home Loan is a government-supported initiative specifically designed to address this challenge. It enables eligible buyers to purchase a home with as little as 5% deposit, helping people who have good income and stable employment—but limited savings—take that critical first step into homeownership.
At Luminate Financial Group, we work with first-home buyers navigating this scheme every day. This comprehensive guide explains exactly how the Kāinga Ora First Home Loan works, who qualifies, the application process, and what you need to be aware of before applying.
The Kāinga Ora First Home Loan is a standard home loan offered by selected lenders but backed by a government guarantee through Kāinga Ora (formerly known as Housing New Zealand). This government backing is the key difference that makes low-deposit lending possible.
In traditional lending, banks view loans with less than 20% deposit as high risk. If property values decline or the borrower defaults, the bank could lose money. This risk makes banks reluctant to lend with small deposits.
With the First Home Loan, Kāinga Ora acts as guarantor, essentially telling the lender: "If this borrower can't repay and you lose money, we'll cover part of your loss." This government backing reduces the lender's risk, enabling them to accept deposits as low as 5%.
Important clarification: While Kāinga Ora provides the guarantee, the loan itself is issued and serviced by participating banks and non-bank lenders. You won't be dealing with Kāinga Ora directly for day-to-day loan matters—that's handled by your chosen lender.
This scheme is particularly valuable for people who:
It's designed for those who can genuinely afford the repayments but are held back by the deposit hurdle alone.
The standout feature is the ability to purchase with only 5% deposit. For a $600,000 home, that's just $30,000 compared to $120,000 (20%) required by traditional lending.
Not all banks participate in the scheme. As of 2025, participating lenders include:
Each lender has their own specific criteria, interest rates, and loan products within the First Home Loan framework.
Interest rates are generally comparable to standard home loans from the same lender. However, some lenders may add a small premium (typically 0.25%-0.50%) to reflect the higher risk of low-deposit lending.
The positive news: Kāinga Ora itself doesn't charge a low equity fee, unlike standard bank low-deposit lending which often includes substantial fees ($500-$2,000+).
This loan is strictly for properties you'll live in as your primary residence. Investment properties, holiday homes, or properties you intend to rent out don't qualify.
To ensure the scheme helps those who genuinely need support (rather than high-income buyers choosing to save less), there are caps on both buyer income and property prices. These caps vary by region and are reviewed periodically.
Once approved, you can typically choose between:
The loan structure options are similar to standard home loans, giving you flexibility to match your financial strategy and risk tolerance.
Meeting the eligibility criteria is essential. Here's exactly what you need to qualify:
You must be:
Temporary work visas or student visas don't qualify, even if you have substantial income and savings.
The basic rule: You cannot currently own any property—residential, investment, or otherwise.
The exception: If you previously owned a home but are now in a similar financial position to a first-home buyer, you may qualify as a "second-chance buyer." Kāinga Ora assesses these cases individually based on:
Important note: If you currently own an investment property, even if you've never owned a home you lived in, you won't qualify. The scheme is for genuine first-home buyers only.
Your gross (before-tax) annual income must fall within these caps:
Single applicant: $95,000 or less Two or more applicants (couples, groups): $150,000 or less combined
What counts as income:
What doesn't count:
Regional variations: Some high-cost regions (particularly Auckland and Queenstown) may have higher income caps. Check the current Kāinga Ora guidelines for your specific area.
The property you purchase must be at or below the price cap for that region. These caps are reviewed regularly (typically annually) and vary significantly:
| Region | Approximate Price Cap (2025) |
|---|---|
| Auckland | $875,000 |
| Wellington | $650,000 |
| Christchurch | $550,000 |
| Hamilton | $600,000 |
| Tauranga | $750,000 |
| Dunedin | $500,000 |
| Palmerston North | $500,000 |
| Nelson/Tasman | $650,000 |
| Queenstown-Lakes | $950,000 |
| Napier/Hastings | $550,000 |
| New Plymouth | $550,000 |
| Rotorua | $550,000 |
| Invercargill | $400,000 |
| Whangarei | $650,000 |
| Provincial/Rural Areas | $450,000 - $550,000 |
Critical: These figures are approximate and subject to change. Always verify the current cap on the Kāinga Ora website before committing to a property search in a specific area.
You must have at least 5% of the purchase price as genuine deposit. This can come from:
Acceptable sources:
Unacceptable sources:
Lenders will scrutinize your deposit sources carefully. All funds must be legitimate and properly documented.
You must:
Why this matters: If you rent out the property immediately after purchase or don't move in, you're breaching the loan agreement. This could result in the loan being recalled or legal consequences.
Life changes: If your circumstances change unexpectedly (job relocation, relationship breakdown, health issues), contact your lender immediately to discuss your options rather than breaching the agreement.
Applications are made directly through participating lenders, not through Kāinga Ora. Here's the complete process:
Step 1: Confirm your eligibility Use the self-assessment checklist in the next section to verify you meet all basic requirements. Don't waste time applying if you clearly don't qualify.
Step 2: Check the price cap for your target area Visit the Kāinga Ora website to confirm current price caps. This determines where you can realistically buy and at what price point.
Step 3: Calculate your deposit capacity Add up all available deposit sources:
If you have 5% for a property within your regional cap, you're in a position to proceed.
Step 4: Gather required documentation Collect all necessary paperwork:
Income verification:
Financial records:
Identification:
Having everything organized speeds up the process significantly.
Step 5: Choose a participating lender Research the available lenders or work with a mortgage adviser who has access to all of them. Consider:
Interest rates: Compare current rates and any special offers
Lending criteria: Some lenders are stricter than others about credit history, employment type, or property standards
Customer service: Read reviews and ask about their support for first-home buyers
Processing times: Some lenders are faster than others
Relationship banking: If you already bank with a participating lender, that may simplify the process
Luminate tip: A mortgage adviser with First Home Loan experience can match you with the lender most likely to approve your application and offer favorable terms.
Step 6: Submit pre-approval application Apply through your chosen lender. They'll assess:
Be honest and thorough. Any inconsistencies or omissions can delay or derail your application.
Step 7: Receive pre-approval (conditional approval) If approved, you'll receive confirmation of:
Important: Pre-approval is conditional and doesn't guarantee final approval. The lender still needs to assess the specific property you want to buy.
Step 8: Find a suitable property Armed with pre-approval, start your property search. Look for properties that:
Work with real estate agents who understand First Home Loan buyers and price caps.
Step 9: Make a conditional offer When you find the right property, make an offer including these essential conditions:
Finance condition: Specifically worded for First Home Loan approval (not just standard finance approval)
Building inspection condition: Allows you to have the property professionally inspected
LIM report condition: Gives you time to review council records
KiwiSaver withdrawal condition: If applicable, ensures funds will be available
Settlement period: Typically 6-8 weeks to allow time for all processes
Never go unconditional immediately, no matter how competitive the market. These conditions protect you.
Step 10: Complete building inspection Book a qualified building inspector immediately after your offer is accepted. Attend the inspection if possible to:
The report will reveal:
If major issues emerge: Negotiate with the seller for repairs, price reduction, or consider walking away if problems are too severe.
Step 11: Review LIM report Your lawyer orders this from the local council. It contains:
Red flags to discuss with your lawyer:
Step 12: Apply for KiwiSaver withdrawal (if applicable) Your lawyer handles this application to your KiwiSaver provider. Required documents include:
Timeline: Allow 10-15 business days for processing. Start this early (2-3 weeks before intended settlement).
Step 13: Lender completes property valuation The lender arranges a registered valuation to:
If valuation comes in low: You may need to negotiate a lower purchase price, increase your deposit, or find additional funds to bridge the gap.
Step 14: Receive formal loan approval Once the lender has reviewed:
They issue formal approval with final loan terms, interest rate confirmation, and settlement instructions.
This is your green light to proceed. Don't go unconditional before receiving formal written approval.
Step 15: Arrange home insurance Contact insurance companies to:
Budget: $1,000-$2,500 annually depending on property and location.
Step 16: Review and sign loan documents Your lender provides final documentation including:
Review everything carefully with your lawyer before signing. Ask about anything you don't understand.
Step 17: Go unconditional Once you have:
Instruct your lawyer to remove all conditions from your offer. The purchase is now binding.
Step 18: Prepare for settlement In the final days before settlement:
Step 19: Settlement day Your lawyer manages the settlement process:
This typically happens mid-morning on settlement day, though timing varies.
Step 20: Move in and meet residency requirements Remember your obligations:
Keep records of when you moved in (utility connection dates, mail redirections, etc.) in case you ever need to demonstrate compliance.
Use this checklist to determine if you likely qualify:
If you checked all or most boxes: You likely qualify! Contact a mortgage adviser or participating lender to confirm eligibility and start the application process.
If you missed several boxes: You may not qualify yet, but work on the areas that need improvement (paying down debt, building savings, improving credit history) and reassess in 6-12 months.
One of the most powerful strategies is using your KiwiSaver First-Home Withdrawal together with the Kāinga Ora First Home Loan. These two government initiatives work seamlessly together:
KiwiSaver provides your deposit: You can withdraw your balance (minus $1,000) to form most or all of your required 5% deposit.
First Home Loan reduces the deposit needed: Instead of needing 20% ($140,000 on a $700,000 home), you only need 5% ($35,000).
Together, they dramatically reduce the cash requirement and timeline to homeownership.
Scenario 1 - Single Buyer, Wellington:
Scenario 2 - Couple, Auckland:
Scenario 3 - Single Buyer, Provincial:
KiwiSaver eligibility: You must have contributed for 3+ years and be buying your first home.
Processing coordination: Your lawyer can handle both the KiwiSaver application and First Home Loan processes simultaneously.
Timing alignment: Start the KiwiSaver withdrawal when you make your offer, allowing 2-3 weeks for processing before settlement.
Understanding how this compares to traditional low-deposit lending helps you appreciate the benefits:
| Feature | Kāinga Ora First Home Loan | Standard 10% Bank Loan |
|---|---|---|
| Minimum Deposit | 5% | 10% |
| Income Caps | Yes ($95k single / $150k couple) | No |
| Price Caps | Yes (varies by region) | No |
| Low Equity Fee | None from Kāinga Ora | Typically $500-$2,000+ |
| Interest Rate | Standard + possible small premium | Standard + low equity premium |
| Property Type | Owner-occupied only | Owner-occupied or investment |
| Lender Options | Limited (7 participating lenders) | All major banks |
| Approval Time | 2-4 weeks | 1-3 weeks |
| Government Backing | Yes | No |
| Living Requirement | Must live in property 6+ months | No specific requirement |
| Availability | Must meet eligibility criteria | Available to anyone with 10% |
While the Kāinga Ora First Home Loan opens doors, be aware of these factors:
The challenge: Only 7 lenders currently participate. The major banks (ANZ, ASB, BNZ) don't offer it as of 2025, meaning you may need to:
The upside: The participating lenders specialize in first-home buyers and understand the scheme thoroughly. They're often more supportive and flexible with first-time applicants.
What to expect: Some participating lenders may charge slightly higher interest rates (typically 0.25%-0.50% more) than what major banks offer for standard 20% deposit loans.
Do the math: A higher rate might cost you $1,000-$2,000 extra per year. However, this often pales in comparison to:
Example calculation:
The slight rate premium is usually worthwhile compared to the alternatives.
Common misconception: "If I'm eligible for the scheme, I'll definitely get approved."
Reality: Eligibility for the Kāinga Ora scheme is just the first hurdle. The participating lender still assesses:
You can meet all the scheme requirements but still be declined if the lender isn't satisfied with your financial position or the property.
Improve your chances:
Non-negotiable rule: You must live in the property as your primary residence.
What this means:
If circumstances change: Life happens. If unexpected situations arise (job relocation, relationship changes, health issues), contact your lender immediately. They may have options or solutions rather than immediately penalizing you.
Long-term: After you've met the initial residency requirement and built equity, you may have more flexibility. Discuss with your lender if your situation evolves.
Be prepared for: Slightly longer processing times compared to standard lending because:
Timeline expectations:
Plan accordingly:
The constraint: The price caps, while generous in some areas, can be restrictive in high-demand markets.
Example - Auckland:
Strategies to navigate this:
Remember: The cap is your maximum, not your target. Buying below the cap gives you more buffer for costs and future equity building.
The Kāinga Ora First Home Loan is a government-backed lending scheme that allows eligible first-home buyers to purchase a property with as little as 5% deposit. Kāinga Ora acts as guarantor for the loan, reducing the lender's risk and enabling them to lend with lower deposits than standard bank lending requires.
The income caps are $95,000 or less for single applicants, or $150,000 or less combined income for two or more applicants. These limits apply to gross (before-tax) income and include salary, wages, and other regular income sources.
Price caps vary by region. Examples include approximately $875,000 in Auckland, $650,000 in Wellington, $550,000 in Christchurch, and lower amounts in provincial areas. These caps are reviewed regularly by Kāinga Ora, so check their website for current limits in your target area.
Yes, absolutely. You can withdraw your KiwiSaver balance (minus $1,000) to contribute toward your 5% deposit requirement. Many buyers combine KiwiSaver withdrawal with personal savings and the First Home Loan to maximize their purchasing power.
Participating lenders include Westpac, The Co-operative Bank, SBS Bank, Unity, NZCU Baywide, Nelson Building Society (NBS), and First Credit Union. Not all major banks participate, so you may need to work with a lender you're less familiar with.
Interest rates are generally similar to standard home loans from the same lender. However, some lenders may apply a small premium (typically 0.25%-0.50%) due to the higher risk of low-deposit lending. There's no low equity fee charged by Kāinga Ora itself.
No. The Kāinga Ora First Home Loan is only available for owner-occupied properties. You must intend to live in the property as your primary residence and move in within a reasonable timeframe after settlement (typically within 6 months).
You generally must be a first-home buyer or not have owned property in at least 3 years. However, Kāinga Ora assesses "second-chance buyers" case-by-case if you previously owned a home but are now in a similar financial position to a first-home buyer.
The approval process typically takes 2-4 weeks, potentially slightly longer than standard lending due to the government guarantee requirements. Processing times can increase during periods of high demand or if additional documentation is needed.
Your deposit can come from personal savings, KiwiSaver withdrawal, or non-repayable family gifts. All deposit sources must be fully documented and verified by the lender.
The Kāinga Ora First Home Loan is one of the most valuable tools available to first-home buyers in New Zealand today. By reducing the deposit requirement from the standard 20% down to just 5%, it makes homeownership achievable years sooner for people with good income but limited savings.
The key benefits are clear:
However, success with this scheme requires:
The scheme isn't right for everyone. If you:
...then you may need to pursue alternative pathways to homeownership.
But for the majority of first-home buyers with stable income, good financial habits, and limited savings, the Kāinga Ora First Home Loan can be life-changing. It turns the seemingly impossible dream of homeownership into an achievable reality.
At Luminate Financial Group, we've helped hundreds of first-home buyers successfully navigate the Kāinga Ora First Home Loan process. We understand the scheme intimately, work with all participating lenders, and know how to structure applications for the best chance of success.
Book a free First Home Loan Strategy Session with Luminate.
In this session, we'll:
Don't navigate this complex process alone. Having expert guidance increases your approval chances, helps you avoid costly mistakes, and often gets you better interest rates and loan terms.
Contact Luminate Financial Group:
📞 Call 0800 333 400Your first home is closer than you think. Let's make it happen together.