Buying First Home with 5% Deposit?

What is the First Home Loan?

Typically, banks require a 20% deposit, making homeownership challenging for many first-home buyers. The First Home Loan removes this barrier by allowing approved applicants to secure a mortgage with only a 5% deposit. These loans are available through selected banks and lenders, with Kāinga Ora underwriting them to reduce the lender’s risk.

If saving even a 5% deposit is difficult, you may be able to use your KiwiSaver first-home withdrawal or receive a gifted deposit from family to help meet the requirement.

Who Can Apply?

To be eligible for a First Home Loan, you must:
✅ Be a New Zealand citizen, permanent resident, or resident visa holder living in New Zealand.
✅ Be a first-home buyer or in a similar financial position to one.
✅ Have an annual income of:

• $95,000 or less (for individuals with no dependents).

• $150,000 or less (combined, for couples or individuals with dependents).
  ✅ Have a minimum 5% deposit, which can come from savings, KiwiSaver, or a family gift.
  ✅ Be purchasing a property to live in, not as an investment.

How to Get Started

1️⃣ Check Your Eligibility – Ensure you meet the above criteria.
2️⃣ Choose a Lender – The First Home Loan is available through selected banks and lenders.
3️⃣ Secure Your Deposit – Whether from savings, KiwiSaver, or a family gift, ensure you have at least 5%.
4️⃣ Apply for Pre-Approval – Your lender will assess your application, including any additional lending criteria.

💡 Pro Tip: Obtaining a pre-approval will give you a clear idea of your budget before you start house hunting!

Frequently Asked Questions

What if my application is declined by one lender?
Each lender has different criteria, so it’s worth approaching multiple lenders to explore your options.

Can I use my KiwiSaver for the deposit?
Yes! If you’ve contributed to KiwiSaver for at least three years, you may be eligible to withdraw funds for your deposit.

What is the 0.5% fee associated with the First Home Loan?
This is a Lender’s Mortgage Insurance (LMI) premium, which covers the lender’s risk. It can often be added to your loan amount.

Can I use the First Home Loan to build a new home?
Yes, some lenders allow the loan to be used for new builds. Check with your lender to confirm their requirements.

Get Expert Advice

Navigating your first home purchase can be complex, but you don’t have to do it alone. At Smartmortgages.co.nz, we specialise in helping first-home buyers secure the right mortgage solution. Contact us today to discuss your options and take the first step towards homeownership!