Saving for a 20% home deposit can feel like a stretch, especially when rent and everyday costs keep climbing. The Kāinga Ora First Home Loan is a government-backed scheme designed to help eligible New Zealand buyers purchase their first home with as little as a 5% deposit. That means for a $600,000 property, you could need just $30,000 – rather than the $120,000 a standard 20% deposit would require.
Whether you’re a single buyer or purchasing with a partner, this guide explains how the First Home Loan works, who qualifies, what it costs, and how the team at OneStop Financial Solutions can help you through the application process.
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What Is the Kāinga Ora First Home Loan?
The Kāinga Ora First Home Loan is a standard home loan issued by selected banks and non-bank lenders. The key difference is that Kāinga Ora (formerly Housing New Zealand) underwrites the loan. This government backing reduces risk for the lender, which in turn allows them to accept a deposit as low as 5% instead of the usual 20%.
It’s important to understand that Kāinga Ora does not lend money directly. Your loan is held and managed by your chosen participating lender. Your day-to-day mortgage experience (repayments, interest rates, account management) is handled entirely by that lender. Kāinga Ora’s role is behind the scenes, guaranteeing up to 15% of the loan so the lender can offer you that lower deposit entry point.
Who Is Eligible for a First Home Loan?
To qualify for a Kāinga Ora First Home Loan, you need to meet a set of eligibility criteria. You will also need to satisfy the individual lending requirements of your chosen participating lender.
Residency
You must be a New Zealand citizen, permanent resident, or a resident visa holder who is ordinarily resident in New Zealand.
Buyer Status
You need to be a first home buyer, or a previous home owner who is in a financial position similar to a first home buyer. If you’ve owned property before but no longer hold any property or land, you may still qualify.
Income Caps
Your gross (before tax) income from the last 12 months must be:
- $95,000 or less for a single buyer without dependants
- $150,000 or less for a single buyer with one or more dependants
- $150,000 or less (combined) for two or more buyers, regardless of dependants
These income caps are based on your earnings over the previous 12 months, not your current salary. If your income has changed recently, it’s worth discussing your situation with a mortgage broker to understand how this applies to your application.
Deposit
You need a minimum deposit of at least 5% of the purchase price. This can include personal savings KiwiSaver first-home withdrawals, and gifts from family members. If your deposit includes a gift, your lender will typically require a signed gift letter confirming the money does not need to be repaid.
Property Requirements
The property you purchase must be:
- Your primary place of residence (you must live in it)
- Less than 1 hectare in size
- Free from extensive deferred maintenance (lenders generally allow up to $5,000–$10,000 in outstanding repairs)
You cannot use a First Home Loan to buy an investment property or a property you intend to rent out. If your circumstances change later and you want to rent the property, you would need to refinance out of the First Home Loan scheme first.
House price caps were removed from the First Home Loan in 2022, so there is no longer a maximum property value. However, your chosen lender will still assess whether the property and loan amount are within your borrowing capacity based on your income, expenses, and the debt-to-income (DTI) ratio rules that now apply across New Zealand.
New Builds
Some participating lenders allow you to build a new home using a First Home Loan, though this is limited to 100% complete “turn-key” builds. A turn-key build means you pay a small deposit at the start, there are no progress payments during construction, and your lending is drawn down only when the build is complete and has passed its code of compliance.
How Much Does a First Home Loan Cost?
There are two main costs to be aware of beyond your standard mortgage interest and fees.
Lender’s Mortgage Insurance (LMI) Premium
Kāinga Ora charges a 1.2% Lender’s Mortgage Insurance premium on the loan amount. This is a one-off fee that can be paid upfront or added to your loan and repaid over the lifetime of the mortgage. For example, on a $570,000 loan (a $600,000 home with a 5% deposit), the LMI premium would be approximately $6,840.
This premium changed in July 2025, increasing from the previous rate of 0.5%. While the cost is higher than before, the First Home Loan can still compare favourably to standard low-deposit lending, where banks typically charge ongoing low-equity margins of 0.25% to 1% every year until you reach 20% equity. By contrast, the Kāinga Ora LMI premium is a one-off charge.
Interest Rates and Fees
Because Kāinga Ora underwrites the risk, participating lenders can often offer you their standard interest rates rather than adding a low-equity premium on top. This means you could access the same rates as someone with a 20% deposit, which can save you thousands over the life of your loan.
Each lender sets their own interest rates and application fees. Your mortgage broker can compare these across lenders to find the most competitive option for your situation.
Participating Lenders
Not all banks and lenders participate in the Kāinga Ora First Home Loan scheme. The current participating lenders are:
- ASB (joined February 2026)
- Westpac
- Kiwibank
- The Co-operative Bank
- SBS Bank
- Unity Money
- Nelson Building Society (NBS)
- NZHL
Each lender has their own credit criteria, interest rates, and lending policies on top of the Kāinga Ora eligibility requirements. This means you could be declined by one lender but approved by another, so it pays to explore your options. Working with a mortgage broker gives you access to multiple participating lenders through a single application process.
How to Apply for a Kāinga Ora First Home Loan
The application process follows a similar path to a standard mortgage, with a few additional steps.
- Check your eligibility. Use the Kāinga Ora First Home Decision Tool or talk to our team to confirm you meet the income caps and other criteria.
- Gather your deposit. Calculate 5% of your target property price and identify your deposit sources — savings, KiwiSaver withdrawal, or family gifts.
- Choose a participating lender. Or better yet, let a mortgage broker compare lenders on your behalf to find the right fit.
- Apply for pre-approval. Your lender will assess your financial position and confirm how much they are prepared to lend. Pre-approval gives you confidence to house hunt within your budget.
- Find your property. Search for a home that meets the scheme’s requirements and sits within your pre-approved range.
- Get final approval. Once you’ve found a property and have a signed sale and purchase agreement, return to your lender for final loan sign-off.
Boosting Your Deposit with KiwiSaver
If you’ve been contributing to KiwiSaver for at least three years, you may be eligible to make a first-home withdrawal. This allows you to withdraw most of your KiwiSaver balance (you must leave at least $1,000 in your account) and put it towards your house deposit.
Combining a KiwiSaver withdrawal with personal savings and a family gift can help you reach that 5% deposit threshold more quickly. Your lawyer can coordinate the KiwiSaver withdrawal process alongside your loan settlement.
Note: The Kāinga Ora First Home Grant was discontinued in May 2024 and is no longer available for new applicants. However, the KiwiSaver first-home withdrawal remains available and is a separate process.
Why Work with a Mortgage Broker?
Navigating the First Home Loan scheme can feel complex, with different eligibility rules, lender criteria, and costs to weigh up. A mortgage broker simplifies this process by doing the comparison work for you.
At OneStop Financial Solutions, our brokers can:
- Confirm whether the Kāinga Ora First Home Loan is the right option for your situation
- Compare participating lenders to find the best rates and terms
- Help you understand how the LMI premium compares to standard low-equity lending costs
- Coordinate your KiwiSaver withdrawal and deposit strategy
- Guide you through the full application process from pre-approval to settlement
If you don’t meet the First Home Loan criteria, we also work with non-banks and can explore alternative pathways to get you into your first home.
Frequently Asked Questions
What is the difference between the First Home Loan and the First Home Grant?
The First Home Loan is a mortgage product that allows you to buy with a 5% deposit. The First Home Grant was a separate cash contribution from the government towards your deposit, which was discontinued in May 2024. The First Home Loan scheme is still very much available.
Can I be declined by one lender and approved by another?
Yes. Kāinga Ora sets the minimum eligibility criteria, but each participating lender applies their own credit assessment on top. Different lenders weigh things like employment type, credit history, and expenses differently, so it’s worth applying to more than one if needed.
What happens if I want to rent out my property later?
You cannot rent out a property purchased under the First Home Loan scheme. If your circumstances change and you wish to rent the property, you would need to refinance to a standard home loan first.
Is there still a house price cap for First Home Loans?
No. House price caps were removed from the First Home Loan in 2022. You can purchase a property at any price, provided you meet the income caps and your lender is satisfied you can service the loan.
Ready to Explore Your Options?
Buying your first home is one of the biggest financial decisions you’ll make, and the Kāinga Ora First Home Loan can make it more achievable. If you’re ready to find out whether you qualify, or you’d like to compare your options across participating lenders, get in touch with the team at OneStop Financial Solutions. We’re here to help you take that step with confidence.
Use our mortgage repayment calculator to get an idea of what your repayments could look like, and book a call with one of our experienced mortgage brokers today.
Disclaimer: This article is for informational purposes only and does not constitute personalised financial advice. Eligibility criteria, lender policies, and government schemes may change without notice. For advice tailored to your circumstances, contact our qualified financial adviser and mortgage broker. OneStop Financial Solutions Ltd holds FSP702911.
