Getting financial support for buying your first home in New Zealand
It pays to do your research.
Last updated: 6 July 2023
What you’ll learn:
- The average house price in New Zealand
- Where you can find financial help for buying your first home
- Other methods to save for your deposit
If you’re in this position, you should be doing everything to find ways to reduce the financial hit you’re going to take. You’d be amazed at how much help is out there to help you buy your first home and you might find that spending a few hours doing some intensive research could save you a whole heap of money.
To get you started, we’ve brought together a list of the main tools Kiwi use to help reduce the costs of buying their first home.
Financial help for buying your first home
1. Using your KiwiSaver
Okay, so this is still partly your money, as most people contribute to KiwiSaver through their pay cheques, but it still represents a good way to boost your home deposit.
To use your KiwiSaver, you’ll need to have contributed to it for at least three years, and also need to meet a bunch of other criteria, such as:
- Buying a home or land in Aotearoa New Zealand
- Intending this property to be your main place of residence.
- Never having owned a house or land before. There are exceptions to this, including the ownership of Māori land.
Some funds may allow you to withdraw everything except the final $1,000 in your account, including your employers’ and Government contributions, as well as your own. If you’ve been contributing to your KiwiSaver for some time, this could be a relatively substantial boost to your house deposit.
Your KiwiSaver can be a big help when buying a home.
2. First Home Grant
The First Home Grant can provide eligible home buyers with up to $5,000 towards an existing property, or $10,000 towards a new home.
Again, this is tied to your KiwiSaver. To be eligible for the First Home Grant, you need to have been contributing at least the minimum rate into your KiwiSaver for at least three years.
There are also other criteria you need to meet to be eligible for this grant, including:
- Being 18 or over
- Aiming to buy your first home, or be in a similar financial situation to a first home buyer
- Having an income of $95,000 or less before tax from the last 12 months for an individual buyer, without dependents or
- Having an income of $150,000 or less before tax from the last 12 months for an individual buyer with one or more dependents or
- Having a combined income of $150,000 or less before tax from the last 12 months for two or more buyers regardless of the number of dependents
- Being able to contribute a minimum deposit of 5% towards the home purchase
- Intending to live in the home as your primary residence
- Committing to living in the home for at least six months from the settlement date or when the code compliance certificate is issued
- Purchasing an equal share in the home proportionate to the number of buyers. For example, if you were buying with a partner, you’d each need to own 50% of the property.
3. First Home Loan
The First Home Loan helps you out financially by lowering the amount of deposit you need to as low as 5%, compared to the standard 20%. The scheme is designed for first home buyers who are finding it hard to save for a deposit but who can afford to make regular home loan repayments.
There are a number of criteria you’ll need to meet to be eligible for the First Home Loan:
- Be an NZ citizen, permanent resident or resident who is ordinarily resident in the country
- Be a first home buyer or someone who’s owned a home before but is in a similar financial position to a first home buyer
- Earn no more than $95,000 (before tax) for the last 12 months for a single person with no dependents, or
- Earn no more than $150,000 (before tax) for the last 12 months for a single person with 1 or more dependents, or
- Earn no more than $150,000 (before tax) for the last 12 months for two or more buyers, regardless of dependents
- Intend to live in the home you’re buying as your primary residence
- Be able to contribute a minimum deposit of 5% towards the home price
- Meet the lending requirements from the lender for a home loan
- Not own other property (excluding ownership of Māori land)
- Pay a 1% Lender’s Mortgage Insurance (LMI) premium and loan application fee (if applied by the lender).
You and your partner might be eligible for the same financial help, meaning you can build a bigger deposit together.
4. Kāinga Whenua Loans
Kāinga Whenua Loans were designed by Kāinga Ora and Kiwibank to help Māori build, purchase or relocate a home on multiple-owned land. It can also be used for repairs and maintenance on such land.
Unlike most home loans, where the loan is secured against the property and the land, a Kāinga Whenua Loan is secured only against the property. An individual can be loaned up to $500,000 for the purchase or construction of a property, as long as certain conditions are met.
To be eligible for a Kāinga Whenua Loan:
- The land must be Māori land that can’t be mortgaged, and either owned by multiple beneficial owners, or the land ownership is vested in the trustees of a trust or incorporation created under Te Ture Whenua Māori Act 1993.
- You need to access a licence to occupy the land you wish to build on.
- At least one of the people borrowing through the scheme must live in the property full time.
- You’ll have to provide satisfactory proof of income to Kiwibank.
- You’ll need to have a good credit history that is acceptable to Kiwibank.
In addition, the property you’re planning to build or relocate:
- Be built on piles
- Have one storey of at least 50 square metres
- Have reasonable road access
- Be on the mainland of either the North or South Island.
5. Help from family
Your family, most often your parents, might also be able to help out. There are a number of shapes this can take:
- A cash gift: the most obvious way parents can financially support their children to buy a home is by providing them with a one-off cash gift.
- Using their house as equity: your parents could borrow against their home, or another property they own, to make up a shortfall in your deposit.
- Guaranteeing a loan: this is usually done under a split, whereby you guarantee most of the loan, and your parents guarantee a smaller chunk.
*We hope this article has provided some helpful information. It's based on our experience and is not intended as a complete guide. Of course, it doesn’t consider your individual needs or situation. If you're thinking about buying or selling a property, you should always get specific advice.
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