Kāinga Ora First Home Loan: Eligibility, Income Caps, and How to Apply

The First Home Grant is gone — cancelled in May 2024 with no replacement. But there is still one meaningful piece of government support available to first-time buyers: the Kāinga Ora First Home Loan. It lets you buy a property with just a 5% deposit instead of the 20% most banks require. That difference — getting in with $42,500 instead of $170,000 on an $850,000 purchase — changes who can actually buy.

Here is exactly how it works, who qualifies, and what the catch is.

What the First Home Loan Actually Does

The First Home Loan is not a government mortgage. The government does not lend you money directly. Instead, Kāinga Ora underwrites the risk for participating retail banks, which allows those banks to lend to you with only a 5% deposit without breaching Reserve Bank of New Zealand (RBNZ) lending restrictions.

Under normal RBNZ rules, banks can only issue up to 25% of their new lending to borrowers with less than a 20% deposit. The First Home Loan is exempt from that speed limit, which means the bank can lend to you without it counting against their low-deposit allocation.

The trade-off: you pay a 1.2% Lender's Mortgage Insurance (LMI) premium. On a $807,500 loan (95% of an $850,000 purchase), that is $9,690. You can pay it upfront or roll it into the loan — most buyers roll it in, which means paying interest on it over the life of the mortgage.

Who Qualifies: The Income Caps

The eligibility rules are tight and based on gross pre-tax income earned over the 12 months before your application.

These caps were not indexed for inflation when they were set, which creates a mathematical problem for many Auckland buyers: a couple earning $145,000 combined qualifies, but under the RBNZ's Debt-to-Income (DTI) rules introduced in July 2024, their maximum borrowing is capped at 6× their income — $870,000. That puts a lot of Auckland properties just out of reach even with the 5% deposit route.

If you earn slightly above the cap, there is no graduated phase-out. You either qualify or you do not.

Deposit Rules: What Counts as 5%

Your 5% deposit must be genuine savings or KiwiSaver. The rules are strict:

• Cash savings from a bank account: yes
• KiwiSaver first home withdrawal: yes
• A gift from family: yes, but only if it is non-repayable and accompanied by a statutory declaration confirming it does not need to be paid back
• A vendor incentive or seller-financed portion: no
• A loan from a family member: no

For most first-time buyers, KiwiSaver is the engine that generates the deposit. If you have contributed for at least three years, you can withdraw your full balance minus $1,000 and use it as your deposit. Many buyers combine their KiwiSaver withdrawal with the First Home Loan — using their accumulated savings to hit the 5% threshold and then borrowing the remaining 95% from a participating bank.

There are no property price caps. As of 2022, the regional house price limits were removed from the scheme entirely. You can use the First Home Loan on any property, provided your income qualifies and the bank agrees you can service the debt.

Which Banks Participate

The First Home Loan is not available at every bank. As of early 2026, participating lenders include:

• Westpac
• Kiwibank
• The Co-operative Bank
• SBS Bank
• Unity Money (formerly NZCU Baywide)
• Nelson Building Society (NBS)
• NZHL
• ASB (joined February 2026)

The major banks ANZ and BNZ are not on the list. If you bank with one of them, you will need to open an account with a participating lender to apply. Kiwibank is the most common choice because it is a New Zealand-owned bank and often competitive on rates.

Each participating lender applies its own lending criteria on top of the Kāinga Ora requirements. You still need to pass the bank's standard income verification, credit check, and serviceability assessment. The First Home Loan gets you through the door with 5% down — it does not guarantee approval.

How the DTI Limit Interacts with the First Home Loan

Here is the critical point that catches many buyers off guard: the First Home Loan is exempt from RBNZ's DTI restrictions. This matters enormously.

The DTI limit says banks can only allow 20% of their new owner-occupier lending to go to borrowers with a DTI above 6×. That means if you earn $100,000 and have $20,000 in other debt (student loans, car finance, credit card limits — banks count the credit card limit, not just the balance), your maximum new mortgage before hitting the DTI ceiling is $580,000.

For many buyers, that ceiling is the binding constraint, not the deposit. But because the First Home Loan is DTI-exempt, buyers with moderate incomes and existing debt loads can sometimes borrow more through the First Home Loan route than they could through a standard loan at the same bank.

New builds are also DTI-exempt, which is why the government's policy effectively steers first-time buyers toward building new or using the First Home Loan — both pathways bypass the 6× income ceiling.

The Process: What to Expect

1. Check your eligibility. Calculate your gross income for the past 12 months. If you are within the caps, proceed.

2. Sort your deposit. Request a KiwiSaver withdrawal estimate from your provider. Add any savings. Confirm you can reach 5% of the purchase price.

3. Get pre-approval from a participating bank. Approach one or more participating lenders. They will stress-test your income at a higher interest rate to confirm you can service the debt. Pre-approval is typically valid for 60 to 90 days.

4. Find a property and make an offer. The Agreement for Sale and Purchase should include a finance condition. Once the bank confirms unconditional approval, you waive the finance condition.

5. Initiate your KiwiSaver withdrawal. Allow at least 15 working days — do not leave this until settlement week. Your KiwiSaver provider needs certified ID, a copy of the sale and purchase agreement, and a solicitor's letter of undertaking.

6. Settlement. Your solicitor coordinates the drawdown of mortgage funds and the transfer of your KiwiSaver. The property title transfers digitally via Landonline.

What the First Home Loan Does Not Cover

The First Home Loan helps you get in with less deposit. It does not reduce your due diligence costs. You still need to budget for:

• LIM report from the council: $300–$400
• Building inspection: $400–$700
• Solicitor fees: $1,500–$3,000
• Registered valuation (often required by the bank for low-deposit loans): $700–$1,200

These costs are not financeable — you pay them from your own cash reserves. Plan for at least $3,000–$5,000 in transaction costs on top of your 5% deposit.

If you are buying at auction, all of these costs must be paid before you bid, with no guarantee you win the property.

The New Zealand First-Time Home Buyer Guide walks through the complete process — deposit strategy, KiwiSaver mechanics, due diligence checklists, and what to check before going unconditional. It covers every step from pre-approval to settlement day, including the specifics of how to time your KiwiSaver withdrawal so you are not scrambling in the week before settlement.

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