For many first-home buyers in New Zealand, saving a 20 percent deposit can feel out of reach. The Kāinga Ora First Home Loan is a government-supported initiative designed to make that challenge more achievable. It allows eligible buyers to purchase a home with as little as a 5 percent deposit, helping people with good income and stable employment but limited savings take the step into homeownership.
At Luminate, we guide clients through options like this every day. Below, we explain how the Kāinga Ora First Home Loan works, who qualifies, and what to be aware of before applying.
What Is the Kāinga Ora First Home Loan?
This loan is a standard home loan offered by selected lenders, but backed by Kāinga Ora. The government acts as a guarantor for the loan, making it possible for the lender to accept a lower deposit than usual.
While Kāinga Ora provides the guarantee, the loan itself is issued by participating banks and non-bank lenders. This product is particularly helpful for people who have a good financial track record but haven’t been able to save the full 20 percent deposit that most banks require.
Key Features
- Minimum deposit required is just 5 percent
- Available through selected participating lenders
- Standard interest rates apply, depending on the lender
- Only for owner-occupied properties
- Income and house price caps apply
- No low equity fee is charged, although some lenders may apply a small interest rate premium
The loan structure can include fixed or floating rates, or a mix of both, depending on the lender’s offerings.
Who Is Eligible?
To qualify for a Kāinga Ora First Home Loan, you must meet specific criteria:
- You must be a New Zealand citizen or permanent resident.
Applicants must hold New Zealand citizenship, permanent residency, or a resident visa that entitles them to remain in New Zealand indefinitely. - You must be a first-home buyer or qualify as a second-chance buyer.
You cannot currently own any property. However, if you have owned a home in the past but are now in a similar financial position to a first-home buyer, you may be eligible. This is assessed by Kāinga Ora on a case-by-case basis. - Your income must fall within the limits.
The income caps are:
- $95,000 or less for a single applicant
- $150,000 or less combined for two or more applicants
- The property you want to buy must be below the regional price cap.
Each region in New Zealand has a specific cap for house prices under this scheme. These vary widely between locations, so it’s essential to check the current limits for the area where you plan to buy. - You must have at least a 5 percent deposit.
The deposit can be made up of your savings, KiwiSaver withdrawal, or a gift from family. - You must intend to live in the property.
You need to move into the home within a reasonable timeframe after settlement and live there for at least six months.
How Do You Apply?
Applications for the Kāinga Ora First Home Loan are made directly through participating lenders, not Kāinga Ora itself. These lenders include:
- Westpac
- The Co-operative Bank
- SBS Bank
- Unity
- NZCU
- NBS
- First Credit Union
Each lender will still assess your financial position, including your income, debts, spending, and credit history. Just because the loan is backed by Kāinga Ora does not mean automatic approval. You still need to demonstrate you can afford the repayments.
At Luminate, we work with all participating lenders and can help you identify the one that suits your financial situation and homeownership goals.
Can It Be Combined with KiwiSaver?
Yes. In fact, many buyers use this loan together with their KiwiSaver First Home Withdrawal. These three tools often work best when used as part of an overall deposit and lending strategy.
- KiwiSaver Withdrawal allows you to access most of your KiwiSaver balance
- Kāinga Ora First Home Loan lets you borrow more with a lower deposit
Together, these supports can help buyers get into the market faster and more affordably.
What to Watch Out For
While this scheme opens doors, there are some important considerations to keep in mind:
Not all banks participate.
Some major lenders do not offer this product, so you may need to switch banks or use a lender you’re less familiar with.
Rates may differ slightly.
Some participating lenders may charge a slightly higher interest rate or require stricter lending terms due to the lower deposit.
Approval is not guaranteed.
You still need to meet the lender’s credit and affordability criteria. Being eligible for the scheme does not mean automatic approval.
Living in the home is required.
You must live in the property. If you rent it out or move shortly after settlement, you may be in breach of the loan agreement.
Delays are possible.
Because the scheme involves a government guarantee, there can be slightly longer processing times, especially if demand is high or additional paperwork is required.
Final Thoughts
The Kāinga Ora First Home Loan is a powerful option for first-home buyers with good income but limited deposit savings. It makes homeownership more accessible and gives buyers more flexibility, especially when used in combination with KiwiSaver.
If you’re unsure whether you qualify or how to begin, the team at Luminate can help. We specialise in guiding first-home buyers through the entire lending process, from deposit planning and eligibility checks to lender selection and loan approval.
Ready to find out if you’re eligible?
Book a free First Home Loan Strategy Session with Luminate.
We’ll review your income, deposit, and location, then match you with the right lender and help prepare your application from start to finish.
👉 Visit www.luminate.co.nz
👉 Call 0800 333 400
👉 Email askus@luminate.co.nz
