Saving a 20% deposit while paying rent is the central challenge of first home buying in New Zealand. The Kāinga Ora First Home Loan exists specifically to break that barrier — allowing eligible buyers to purchase with as little as 5% deposit at standard bank rates.
This guide covers exactly who qualifies, what the house price and income limits are in 2026, how the scheme works, and how to apply.
What Is the First Home Loan?
The First Home Loan is a government-backed scheme administered by Kāinga Ora — Homes and Communities. Rather than lending you money directly, Kāinga Ora underwrites (guarantees) your mortgage to the participating lender. This guarantee protects the bank against the extra risk of a high loan-to-value ratio, allowing them to approve low-deposit applications at standard interest rates.
Key features:
- Minimum deposit: 5% of the purchase price
- Interest rate: standard bank rate (no low-deposit premium)
- No separate Lenders Mortgage Insurance (LMI) premium
- Available through participating banks and non-bank lenders
- Government guarantee means you’re not paying extra for the privilege of borrowing with a small deposit
Without this scheme, buyers with less than 20% deposit either cannot borrow from a mainstream bank at all, or pay a premium of 0.25%–0.75% on top of standard rates.
Who Is Eligible?
Eligibility is assessed across four areas: income, property ownership history, deposit, and property price.
1. Income limits
| Buyer type | Maximum gross income |
|---|---|
| Single buyer | $95,000 per year |
| Two or more buyers | $150,000 per year (combined) |
Income is assessed on your gross (pre-tax) income from all sources. Rental income, interest, and regular overtime may be included. The cap is a hard cutoff — exceeding it by even $1 disqualifies you.
Note: These income caps are set by Kāinga Ora and are reviewed periodically. Check kaingaora.govt.nz for the most current figures before applying.
2. Property ownership history
You must not currently own any residential property anywhere in New Zealand or overseas. If you have previously owned property but no longer do, you may still qualify — provided you don’t currently own and your financial position is comparable to a first home buyer (assessed by Kāinga Ora on a case-by-case basis, called a “second chance” provision).
This differs from the KiwiSaver first home withdrawal rules, which require you to have never owned property (unless specifically approved under the second-chance criteria). It’s worth noting the distinction: you may be eligible for the First Home Loan even if you owned property in the past, but not eligible for the KiwiSaver withdrawal.
3. Deposit
Minimum deposit is 5% of the purchase price. The 5% can come from:
- Personal savings
- KiwiSaver first home withdrawal (most buyers combine the two)
- A gifted deposit from family (subject to lender requirements)
Example: Buying a $700,000 home in Wellington requires a minimum deposit of $35,000. If your KiwiSaver balance is $25,000 and you have $12,000 in savings, you exceed the 5% threshold.
Note: a larger deposit is always better — it reduces your mortgage, your repayments, and the length of time you’re at high LVR. The 5% floor is the minimum, not the target.
4. House price caps
This is the most commonly misunderstood aspect of the First Home Loan. Price caps vary by region and are set by Kāinga Ora:
| Region | Price cap (indicative 2026) |
|---|---|
| Auckland | $875,000 |
| Wellington City | $750,000 |
| Christchurch / Canterbury | $650,000 |
| Hamilton / Waikato | $650,000 |
| Tauranga / Bay of Plenty | $750,000 |
| Dunedin / Otago | $600,000 |
| Napier-Hastings / Hawke’s Bay | $600,000 |
| Nelson / Tasman | $650,000 |
| Queenstown-Lakes | $650,000 |
| All other areas | $600,000 |
These caps are indicative as at early 2026 and are subject to change. Always verify current caps at kaingaora.govt.nz before making an offer on a property.
Critical note: The price cap is a hard limit. If the property costs $1 more than the cap, you are ineligible for the First Home Loan on that property — regardless of your income, deposit, or creditworthiness. In Auckland, where median prices sit at $950,000–$1,050,000, the $875,000 cap excludes most median-priced properties. First Home Loans are most useful in the lower half of the price distribution or in regional areas where caps are more in line with median prices.
How the First Home Loan Works in Practice
Step 1: Check your eligibility
Before anything else, confirm you meet the income cap, don’t currently own property, and have (or can accumulate) a 5% deposit. Also check whether your target property falls within the regional price cap.
Step 2: Find a participating lender
You apply for the First Home Loan directly through a participating lender — not through Kāinga Ora. Participating lenders include:
- ANZ
- ASB
- BNZ
- Westpac
- Kiwibank
- Co-operative Bank
- SBS Bank
- Several non-bank lenders (confirm current list at Kāinga Ora website)
A mortgage broker can apply across multiple participating lenders simultaneously and advise which has the most suitable policies for your situation.
Step 3: Apply for pre-approval
The lender assesses your full application — income, expenses, credit history, deposit — and applies to Kāinga Ora for the government guarantee on your behalf. You’ll receive pre-approval (including the First Home Loan guarantee) which is valid for 60–90 days.
Step 4: Find a property within the cap
Your offer must be on a property within the applicable regional price cap. The lender will confirm the property is eligible before issuing formal approval.
Step 5: Apply for your KiwiSaver withdrawal
If using KiwiSaver as part of your deposit, apply to your provider at least 10–15 working days before settlement. Your solicitor coordinates timing with the lender. For full details on how the withdrawal works, see our KiwiSaver first home withdrawal guide.
Step 6: Settlement
The process from formal approval to settlement is identical to a standard mortgage. Your solicitor manages fund flow; you take the keys on settlement day.
First Home Loan vs Standard 20% Deposit: The Numbers
The benefit of the First Home Loan is getting into the market years earlier. Here’s what that looks like:
Scenario: Buying a $650,000 home in Christchurch
| First Home Loan (5%) | Standard mortgage (20%) | |
|---|---|---|
| Required deposit | $32,500 | $130,000 |
| Savings gap (from $10,000 saved) | $22,500 | $120,000 |
| Time to save at $1,000/month | ~2 years | ~10 years |
| Loan amount | $617,500 | $520,000 |
| Monthly repayment (6% / 25yr) | $3,978 | $3,345 |
| Extra monthly cost | $633 | — |
| Equity gained in first 5 years | ~$50,000 | ~$65,000 |
The First Home Loan costs more per month due to the larger loan — but it gets you into the market 8 years sooner. Over those 8 years, a borrower in a standard mortgage pathway is still renting (and building no equity), while the First Home Loan borrower is already accumulating equity and benefiting from any property appreciation.
Combining the First Home Loan with KiwiSaver
Most First Home Loan buyers use their KiwiSaver withdrawal as part — or all — of the 5% deposit. This is specifically designed to work together.
Example: Joint purchase, $700,000 in Wellington
| Source | Amount |
|---|---|
| Buyer 1 KiwiSaver (7 years, 3%) | $28,000 |
| Buyer 2 KiwiSaver (5 years, 3%) | $18,000 |
| Joint cash savings | $9,000 |
| Total deposit | $55,000 (7.9%) |
This exceeds the 5% floor ($35,000) comfortably, reduces the loan to $645,000, and uses the First Home Loan guarantee to access standard rates without a 20% deposit.
To understand your KiwiSaver withdrawal eligibility and estimate your balance at purchase, see:
What the First Home Loan Does NOT Cover
Understanding what this scheme doesn’t do is as important as understanding what it does:
It does not: give you extra borrowing capacity. Your maximum loan is still determined by the bank’s DTI and serviceability tests, just as it would be for any other applicant.
It does not: waive LVR restrictions permanently. You’re borrowing above 80% LVR — you just have the government guarantee protecting the lender. Once your equity exceeds 20% (through repayments and/or price appreciation), the guarantee is no longer relevant to your ongoing loan.
It does not: apply to investment properties. This scheme is strictly for owner-occupiers who intend to live in the property.
It is not: the same as the First Home Grant. The First Home Grant (formerly HomeStart Grant) was closed in May 2024 and is no longer available. The First Home Loan is a separate and still-active scheme. See our First Home Grant guide for background on the now-closed grant.
Risks of Buying with a 5% Deposit
The First Home Loan gets you into the market earlier, but it comes with higher risk than buying with a larger deposit:
Negative equity risk
If house prices fall after you purchase, your 5% equity buffer can be wiped out quickly. On a $650,000 purchase, a 6% price fall leaves you owing more than the property is worth. This is uncomfortable but not catastrophic if you intend to stay long-term — prices have historically recovered.
Higher repayments
A larger mortgage means larger repayments. At 6%, a $617,500 loan (95% LVR) costs ~$633/month more than a $520,000 loan (80% LVR) on the same property. Stress-test your budget before committing.
More interest over the loan life
That extra $97,500 in borrowing accrues interest throughout the loan. Over 25 years at 6%, the extra borrowing costs approximately $106,000 in additional interest.
The trade-off is access to property equity 5–10 years earlier, and the avoidance of 5–10 years of rent that builds no equity. For most buyers in a stable income situation, buying earlier with the First Home Loan is the better financial outcome.
Frequently Asked Questions
Can I use the First Home Loan if I’ve owned property before? Possibly. The scheme has a “previous owner” provision — if you currently own no residential property and your financial position is comparable to a genuine first home buyer, Kāinga Ora may approve your application. This is assessed case by case. Contact Kāinga Ora directly or through your lender.
Does the First Home Loan affect my interest rate? No. You pay standard bank rates — the same as any borrower with a 20%+ deposit. The Kāinga Ora guarantee absorbs the lender’s risk at no cost to you. This is the main advantage over unguaranteed high-LVR lending, which typically attracts a rate premium.
Can two people jointly apply if one earns over the income cap? If buying with someone else, the income cap applies to your combined income ($150,000). Both incomes are counted. If your combined income exceeds the cap, you are not eligible — even if one person individually would qualify.
Can I build a new home with the First Home Loan? Yes. The scheme applies to both existing homes and new builds, subject to the price caps. Some participating lenders have more experience with new build financing under the scheme than others — a broker can advise.
What if the property valuation comes in below the purchase price? The lender will base the LVR on the lower of the purchase price or bank valuation. If the valuation is significantly below the price, you may need a larger cash deposit to bring the LVR to an acceptable level, or you may need to renegotiate the purchase price.
Is the First Home Loan available in all of New Zealand? Yes, though the house price caps vary significantly by region. In regional NZ, caps are more aligned with median prices, making the scheme more accessible. In Auckland, the $875,000 cap excludes a large proportion of available stock.
How long does the First Home Loan pre-approval take? The same as standard pre-approval — typically 3–7 business days once documentation is complete. The Kāinga Ora guarantee assessment is processed by the lender alongside the standard credit assessment.
What to Read Next
- First Home Buyer Guide NZ — the complete first home pathway
- How Much Deposit Do I Need? — deposit requirements explained
- Saving for a House Deposit NZ — strategies to build your deposit faster
- KiwiSaver First Home Withdrawal — using KiwiSaver as your deposit
- KiwiSaver First Home Eligibility — withdrawal rules in full
- Getting a Mortgage in NZ — the full application process
- NZ Mortgages Complete Guide — everything in one place