Are you eligible?
House Price Cap
What about if I want to build a house?
Some participating lenders allow you to build a new house with a First Home Loan. Please ask your preferred lender if they do and what their criteria is.
Maximum amount you can borrow
The maximum amount you can borrow with a First Home Loan depends on the region you are buying in. Each region has a house price cap. The maximum loan for that region is the house price cap less your 5% deposit.
As well as having a 5% deposit, you need to meet certain criteria including an income cap and regional house price cap. You will also need to meet the speciﬁc lending criteria of the participating lender you choose.
The criteria are listed below along with an easy guide to check at a glance if you are eligible to apply.
Income cap - You can have a maximum yearly income of up to $85,000 (before tax) for 1 person. Or a combined maximum yearly income of $130,000 (before tax) for 2 or more people.
Minimum deposit - You will need a minimum 5% of the purchase price of the house you are wishing to buy.
House price cap - The price of the house you are buying with a First Home Loan must be less than the regional house price cap.
First home buyer - Or a previous home owner, in a similar financial position to a typical first home buyer.
To be eligible for a First Home Loan your household income for the last 12 months must have been $85,000 or less (before tax) if you are the sole borrower. If you are teaming up with one or more borrowers to buy a house, then you can have a combined household income up to $130,000 (before tax) in the last 12 months.
Key bank lending criteria
In addition to meeting the governments criteria for a First Home loan, you will also need to meet the lending criteria of your bank or credit union before your loan can be made.
Participating lenders may have slightly different lending criteria but they will include your financial ability to repay the loan, your level of debt, your credit history and the way you’ve conducted your bank accounts in the past.
You must live in the home you are buying. A First Home Loan cannot be used to buy an investment or rental property.
You cannot own any other property.
You will need to pay a Lender’s Mortgage Insurance (LMI) premium of 1% of the loan account. The lender may also apply a loan application fee. In most cases these fees can be built into the home loan. Talk to your participating lender to see what applies.
You are a New Zealand citizen or permanent New Zealand resident or a resident visa holder who is ordinarily resident in New Zealand.
While an age restriction is not part of the standard eligibility criteria for a First Home Loan, in general participating lenders will require applicants to be a minimum of 18 years of age.
Own Your Own Home
for 5% Deposit
What you need to know about First Home Loan
First Home Loan (previously Welcome Home Loan) makes it easier for you to get into your first home. It can be a struggle to find the deposit with most lenders currently requiring a 20% deposit, with the First Home Loan you only need a 5% deposit – this means getting in to your first home is so much easier.
First Home Loans are issued by banks and other lenders and underwritten by Housing New Zealand. This allows the lender to provide loans that would otherwise sit outside the lending standards.
How to apply?
To apply for a First Home Loan, you need to pass all eligibility criteria set out on the "Are you eligible?" section of this page. Then you will need to choose a participating lender and complete their loan application form.
Keep in mind that although the government sets First Home Loan eligibility criteria, each lender has their own credit criteria that must be met.
At Harveys Papakura, we have a resident Loans Expert and Mortgage Broker Tania O'Leary from Kiwibank she can assist you with any type of housing loan.
Harveys Papakura Resident Mortgage Broker
Do you have a preferred banking/credit union partner? See full list by clicking here.
You can either apply for a First Home Loan pre-approval or a final approval.
Pre-Approval - Applying for a pre-approval will allow you to confirm that you fit the eligibility criteria and the lender’s lending criteria. The lender will be able to advise you the amount that they are prepared to lend you. You can then look for a suitable property in that house price range. Once you have found a property, you return to the lender to gain a final loan approval.
Final Approval - if you have already found a property that you wish to purchase with a First Home Loan, you could apply for a final approval. In this circumstance, the lender will assess that both your circumstances, and the property fit the loan requirements.
Help with your Deposit
There is help available if you are having trouble saving your deposit:
Your deposit can be gifted by a relative
You can also use two features provided by KiwiSaver:
If you are a member of KiwiSaver and have been contributing regularly for at least three years, you may be eligible for a First Home Grant and a KiwiSaver first-home withdrawal.
First Home Grant: The First Home Grant was introduced on 1 October 2019, replacing the KiwiSaver HomeStart Grant and before that, the KiwiSaver first-home deposit subsidy. Like those two products, the First Home Grant provides eligible first-home buyers with a grant of up to $5,000 for individuals and up to $10,000 for couples to put towards the purchase of an existing home.
In addition, the First Home Grant also provides eligible first-home buyers with up to $10,000 for individuals and up to $20,000 for couples to help with the costs of purchasing a brand new home
First-home withdrawal: Changes to the KiwiSaver first-home withdrawal were also introduced on 1 April 2015 that means eligible members can withdraw their KiwiSaver contributions (including tax credits). However at least $1,000 must remain in their KiwiSaver account.
Not yet a member of KiwiSaver? Go to www.kiwisaver.govt.nz(external link) to find out about joining.
Frequently Asked Questions on the First Home Loan
If I am turned down by a lender, will I get turned down by another lender?
What is the difference between a ‘vendor’ deposit and a ‘financial’ deposit?
The financial deposit is the amount that you need to contribute towards the purchase of the property. Most lenders require at least a 20% deposit. With First Home Loan, you need a 5% deposit. A vendor deposit is if the seller of the property requests an amount to secure the property prior to settlement. This normally sits with the real estate agent until settlement date. You cannot use a First Home Grant grant to pay a vendor deposit.
Is First Home Loan mortgage insurance?
No. First Home Loan is a form of ‘Lenders Mortgage Insurance’ which insures lenders against loss if a loan repayment goes into default. ‘Mortgage Insurance’ is a different type of insurance, that protects borrowers in the event that their circumstances changes, and the loan repayment goes into default.
What will a First Home Loan cost me?
Each participating lender will have their own interest rates and fees. One of those fees is to reimburse the lender for the Lenders Mortgage Insurance premium Housing New Zealand charges to insure each First Home Loan. The amount of this fee is 1% of the loan amount. This amount can be added onto the loan.
Do all First Home Loan lenders have identical requirements for the First Home Loan?
Not necessarily. Housing New Zealand sets the minimum criteria that participating lenders must met, but lenders are able to apply slightly different credit criteria, provided that they meet Housing New Zealand's as a minimum.
What happens if my circumstances change after I receive the loan?
If your circumstances change after you take out the loan you should speak to your lender about your changed circumstances. They will work with you to help you to continue to re-pay the loan.
Information found on this page has been taken from the Housing New Zealand website.