First home buyers
Buy your first home with a 5% deposit. Who qualifies, the income caps, what it costs, which lenders offer it, and how I’d go about applying.
By Yatin Kainth, Financial Adviser (FSP1007497). Last reviewed
The Kāinga Ora First Home Loan lets eligible first home buyers buy with a 5% deposit instead of 20%. A participating bank lends the money and Kāinga Ora underwrites it.
Figures per Kāinga Ora, checked 3 October 2026.
Most banks want 20% down on an existing home, and the Reserve Bank limits how much they can lend below that. The First Home Loan is underwritten by Kāinga Ora, which insures the lender against loss on the low-deposit part. That is why a participating bank can accept a 5% deposit.
You don’t deal with Kāinga Ora directly. You apply to a participating lender (or through an adviser like me), the lender makes the credit decision, and you repay the lender at its own rates. Kāinga Ora sets the minimum criteria, and lenders can add their own. So you still have to pass the bank’s affordability checks. The scheme fixes the deposit problem. It doesn’t change how much the bank thinks you can afford to repay. If you’re not sure where you sit, how much can I borrow explains how banks work that out.
| Requirement | What it means |
|---|---|
| Income, single buyer with no dependants | Under $95,000 before tax over the last 12 months |
| Income, single buyer with dependants | Under $150,000 before tax over the last 12 months |
| Income, two or more buyers | Under $150,000 combined before tax over the last 12 months |
| Deposit | At least 5% of the purchase price. KiwiSaver first home withdrawals can go towards it |
| Residency and age | Over 18, and a NZ citizen, permanent resident or resident visa holder |
| Ownership history | A first home buyer, or a previous homeowner in a similar financial position to one. You can’t currently own or have an interest in land, even land with no house on it |
| Use of the property | You’re buying it to live in as your primary residence |
| Lender criteria | You also have to meet the participating lender’s own lending requirements |
The income test looks at what you actually earned over the last 12 months, not your salary today. I’ve seen buyers miss out because a pay rise or bonus landed just before they applied. If you’re close to a cap, talk to me before you apply so we can look at the dates and what the lender counts as income.
Kāinga Ora has no minimum income, but the bank will want to see you can comfortably cover the repayments, your living costs and any other debts.
No. Kāinga Ora removed the house price caps on the First Home Loan in Budget 2022, so the limit is whatever the bank will lend on your income and deposit. The regional price caps you still find on older websites belonged to the First Home Grant, which has closed.
Kāinga Ora charges the lender a lender’s mortgage insurance premium of 1.2% of the loan amount, and you may be required to reimburse the lender for it. Ask your lender whether you can add it to the loan or pay it in cash. The interest rate is set by the bank, and the bank’s own fees apply too.
Here’s how that looks on a $600,000 home, assuming the premium is paid on top of the loan:
| First Home Loan | Standard low-deposit bank loan | |
|---|---|---|
| Deposit | $30,000 (5%) | Usually $60,000 (10%) or more |
| Loan | $570,000 | $540,000 |
| Premium | $6,840 (1.2% of the loan) | Low equity fee or none, depending on the bank |
| Interest rate | Set by the lender | Often a low equity margin until you reach 20% equity |
Which one works out cheaper depends on the bank’s low equity pricing and how fast you’ll get to 20% equity. For most people I talk to, though, the bigger thing is time. Needing half the deposit can get you into a home a year or two sooner. Try the deposit calculator to see what 5% and 10% look like at your price range.
The deposit isn’t your only upfront cost. Budget for legal fees, a building report, a registered valuation and house insurance as well.
Only some lenders take part, and the list changes. Kāinga Ora’s First Home Loan brochure lists ASB, Westpac, Kiwibank, The Co-operative Bank, SBS Bank, Unity, Nelson Building Society and NZHL. The brochure is undated, so check the current panel on the Kāinga Ora First Home Loan page before you apply, or ask me. I’ve covered the ASB 5% deposit home loan separately.
The lenders don’t all treat these loans the same way. Rates, how they assess income and how strict they are about property condition can all differ. That’s one of the main reasons to compare before you commit. Some lenders may also let you use the loan to buy vacant land and build, but check each lender’s criteria.
It’s the property condition rule on First Home Loans. A buyer who has just put in a 5% deposit usually can’t absorb a big repair bill in the first year, so lenders look hard at the condition of the house.
In practice, the lender reads the listing, your sale and purchase agreement and the valuation. If any of them suggests repair work, expect to be asked for a building report, and possibly repair quotes and proof the work is done after settlement. The exact limits and timeframes are set by Kāinga Ora and the lender, so ask the lender for the current figures rather than rely on a number from a website.
I always tell clients to expect a building report and to put a building report condition in their offer. I go through the triggers in more detail in the Kāinga Ora maintenance clause. Doer-uppers that need major work are unlikely to qualify.
Yes. Most of my First Home Loan clients use KiwiSaver for some or all of their 5%. Inland Revenue says you need to have been in KiwiSaver for at least three years, and you must leave $1,000 in your account. The withdrawal takes time and your lawyer has to be involved, so start early. See using KiwiSaver for your first home for the steps.
For the wider picture, start with my first home buyers page. If 5% isn’t the right fit for you, there are other low deposit home loans at 10%.
Yes, through the Kāinga Ora First Home Loan, if you’re under the income caps, you’ll live in the home and you pass the lender’s affordability checks. Outside the scheme, most banks need at least 10% and usually 20% for an existing home.
Under $95,000 before tax over the last 12 months for a single buyer with no dependants. Under $150,000 for a single buyer with dependants, or combined for two or more buyers.
Kāinga Ora charges the lender a lender’s mortgage insurance premium of 1.2% of the loan, which you may be required to reimburse. On a $570,000 loan that’s $6,840. The bank’s own interest rates and fees also apply.
No. House price caps on the First Home Loan were removed in Budget 2022. How much you can spend depends on your deposit and what the lender will lend you.
Yes. If you’ve been in KiwiSaver for at least three years, you can usually withdraw your savings towards your first home, leaving $1,000 in the account.
Possibly. Kāinga Ora says previous homeowners may still be able to apply, and the lender does an extra assessment of your financial position. You can’t currently own or have an interest in any land.
Not always, but often. If the listing, your agreement or the valuation suggests repair work, the lender will ask for one, and the lender will tell you what repair limits apply.
The scheme is for owner-occupiers, so you need to live in the home. If your plans change, talk to your lender before you move out or rent it.