Saving 20 percent of a house price is a long road, and for plenty of would-be first-home owners it is the main thing standing between them and a settled home of their own. The First Home Loan exists to shorten that road. It is a government-supported scheme that lets approved lenders accept a much smaller deposit than usual, which can bring forward the day you stop renting by years. This guide explains who is eligible, the caps that apply, and how it sits alongside the First Home Grant and your KiwiSaver.
What the First Home Loan is
The First Home Loan is a scheme facilitated through Kāinga Ora, the government's housing agency, and offered by a panel of participating lenders. Its headline feature is the low deposit: where a standard loan often wants 20 percent, the First Home Loan can let eligible buyers in with as little as 5 percent. The government underwrites part of the risk, which is what makes lenders comfortable lending at that level outside their usual low-deposit limits. It is a real mortgage from a real lender, not free money, so you still borrow and repay as normal. The benefit is simply getting through the deposit barrier sooner, which for many families is the whole game. The reason a scheme like this exists comes back to those LVR restrictions. Banks can only do a limited share of their lending to people with small deposits, so even a buyer who could comfortably afford the repayments can be turned away simply for being short on the deposit. By taking on part of the risk, the government effectively gives participating lenders room to say yes to these buyers outside their normal low-deposit cap. So the First Home Loan is less about subsidising you and more about unlocking a door that the deposit rules would otherwise keep shut, which is exactly the door that stands between a lot of renting families and a home of their own.
Who is eligible
The scheme is aimed at first-home buyers, though, as with other schemes, some previous owners in a comparable financial position may also qualify under Kāinga Ora's assessment. You generally need to be a New Zealand citizen or permanent resident, intend to live in the home yourself rather than rent it out, and meet the income and deposit criteria. You also need to satisfy the lender's normal credit checks, because the scheme widens who can get a low deposit, it does not remove the need to show you can service the loan. Because the precise rules and thresholds are set by Kāinga Ora and can be updated, treat the criteria here as general guidance and confirm the current ones before you rely on them.
Income and house-price caps
Two caps shape who can use the First Home Loan. The first is an income cap, with limits for a single buyer and higher limits for two or more buyers, so the scheme is targeted at first-home buyers on ordinary incomes rather than high earners. The second is a house-price cap, which varies by region to reflect that a home in a higher-priced city costs more than the same home in a smaller centre. Both caps are reviewed and adjusted over time. If your income or the price of the home you want sits above the relevant cap, the First Home Loan may not be available, which is one reason to check the numbers early rather than build a whole plan around it. The regional house-price caps are particularly worth checking against the actual suburbs you are considering, because they can rule in some areas and rule out others within the same city. A cap set for a region might comfortably cover an outer suburb or a smaller town while sitting below the price of a home closer to the centre, which can quietly shape where you end up looking. That is not necessarily a bad thing, since it can point first-home buyers toward up-and-coming areas where a family can settle affordably, but it does mean you want to know the current cap for your region before you fall for a particular street. Caps are reviewed over time, so confirm the number that applies when you are actually buying.
First Home Loan versus First Home Grant
These two are easy to confuse because both run through Kāinga Ora and both help first-home buyers, but they do different jobs. The First Home Loan helps you borrow with a smaller deposit. The First Home Grant, where it is available, is money paid toward your purchase based on your KiwiSaver contributions, subject to its own eligibility and caps. They are not mutually exclusive, so some buyers use the loan to clear the deposit hurdle and the grant to boost the deposit itself, alongside a KiwiSaver first-home withdrawal. Working out which of the three you qualify for, and stacking them, is exactly the kind of planning a mortgage adviser does best. A simple way to keep them straight is to think of them as solving three different problems. The KiwiSaver first-home withdrawal answers where does the deposit come from, by releasing money you have already saved. The First Home Grant, where available, answers can I top up that deposit, by adding government money based on your contributions. And the First Home Loan answers will a lender accept a small deposit at all, by widening who can borrow above the usual threshold. Used together, they can take a buyer from feeling locked out of the market to holding a realistic plan, which is why it is worth mapping all three early rather than assuming you only qualify for one.
How to find out if it is right for you
The First Home Loan is applied for through a participating lender, not directly from Kāinga Ora, so the practical first step is a conversation with a lender or a mortgage adviser who works with the scheme. They can check your income against the cap, the home's price against the regional cap, and whether your deposit and credit profile fit, then tell you honestly whether this is your fastest route into a home. For a family weighing up whether ownership is even realistic yet, that clarity is worth a lot. Maifang can match you with a mortgage adviser for free, with no obligation, so you can find out where you stand and start picturing the suburb you would settle in.
In plain English: The First Home Loan lets eligible first-home buyers borrow with as little as a 5 percent deposit, subject to income and regional house-price caps; it is separate from the First Home Grant and you can sometimes use both plus your KiwiSaver. You apply through a participating lender, so check the current caps first. We can match you with a mortgage adviser for free.
General information, not personalised real-estate, legal or financial advice. Confirm your situation with a licensed adviser. Read the full disclaimer →