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Why Saving a Deposit Is So Tough for First Home Buyers

You've probably seen statistics about how long it takes to save a deposit in Auckland, Wellington, Christchurch, or other major centres in New Zealand. For many, it's not just a year or two - it can be five years or more.

The typical lending market generally wants a 20% deposit before a bank will offer a mortgage. That's not just a guideline - it's a common requirement that protects both the bank and the borrower. The downside is obvious: if you can't save that 20%, you can't get in the door. But this is where Kāinga Ora steps in.

What Is the Kāinga Ora First Home Loan?

Instead of needing a full 20% deposit, the Kāinga Ora First Home Loan allows you to buy your first home with as little as a 5% cash deposit. That's significant - it means you can get into your first home much sooner than if you were trying to save the equivalent of a full 20% on your own.

The way this works is that selected lenders partner with Kāinga Ora, and Kāinga Ora acts as a partial guarantor for the loan. In simple terms, the government support gives the lender the confidence to offer a mortgage with a much lower deposit requirement than they otherwise would.

This doesn't mean Kāinga Ora gives you free money - it means they help reduce the risk to the bank, so you can borrow more sooner.

The Real-Life Impact: From Renting to Owning

Imagine this:

Laura and Sam are both in their late 20s. They've been renting in Auckland for a few years and feel ready to settle down. They've saved as much as they can, but they're still short of a 20% deposit - even with KiwiSaver and help from Sam's parents. That's when they hear about the Kāinga Ora First Home Loan.

With this scheme, they discover they only need 5% deposit to get a mortgage offer. Suddenly, the possibility of owning their first place doesn't feel like a distant dream - it feels achievable within months, not years.

Stories like this are increasingly common here in New Zealand, and it's not just about numbers - it's about timing and confidence. Getting into the market sooner can mean building equity earlier, which is often more powerful than waiting to save a larger deposit.

Who Qualifies — And What You Need To Know

Who Qualifies - And What You Need To Know

To be eligible for a Kāinga Ora First Home Loan, there are some key criteria that most first home buyers should be aware of:

You Must Be a First Home Buyer

This generally means you have never owned property in New Zealand before (or have not owned for a significant time that qualifies as a first-home situation).

Income Limits Apply

For many lenders participating in the Kāinga Ora scheme, income caps are set around:

• $95,000 or less annual income for a single applicant
• $150,000 or less combined income for a couple or joint applicants. The exact limits and criteria can vary slightly between lenders, so checking with a lending specialist first is wise.

Property Purpose and Ownership

You must intend for this to be your primary place of residence - investment properties don't qualify. You also typically must not own other property or land.

Deposit and Fees

You'll need at least 5% deposit (which can come from savings, KiwiSaver withdrawals, and sometimes family gifts), and there may be Lender's Mortgage Insurance (LMI) or other minor fees applied by the lender.

These criteria are in place to ensure the scheme supports people who genuinely need help getting into their first home. It's designed not just to make buying easier, but to do so responsibly.

Can You Use KiwiSaver With the Kāinga Ora First Home Loan?

Yes - and this makes the scheme even more powerful.

If you've been contributing to KiwiSaver for at least three years, you can usually withdraw most of your KiwiSaver balance (leaving a $1,000 minimum) to help with your deposit.

This means you could use your KiwiSaver funds plus your own savings - even gifts from family - to build that 5% cash deposit and meet the loan criteria.

Pairing KiwiSaver withdrawals with a Kāinga Ora First Home Loan is one of the most common and effective ways first home buyers bridge the deposit gap.

Other Kāinga Ora Home Ownership Options

While the First Home Loan is one of the most well-known ways Kāinga Ora assists first home buyers, there are a few other options that can help different groups:

Tenant Home Ownership Grant

If you're currently living in a Kāinga Ora rental property, you may be eligible for a Tenant Home Ownership grant, which can contribute up to 10% of the purchase price for selected properties (with a maximum cap). This is a grant - meaning it doesn't need to be paid back - but it's only available for buying certain Kāinga Ora homes.

First Home Partner (Shared Ownership)

This was another initiative where Kāinga Ora partnered with buyers via shared ownership, contributing part of the property's value in return for an equity share. At times this specific scheme has had limited availability or has been fully subscribed, so it's best to check current status with Kāinga Ora or your adviser.

These programs show that there are multiple pathways to homeownership, depending on your circumstances and eligibility.

Common Misunderstandings (Cleared Up)

Isn't this just a high-risk loan?

No. The Kāinga Ora First Home Loan isn't a high-risk product hanging on desperate terms. It's a government-backed tool that enables lenders to consider borrowers they otherwise might not under strict lending guidelines.

Will I pay higher interest rates?

In many cases, interest rates can be comparable to other low-deposit lending options. Some lenders might add a small premium due to the higher loan-to-value ratio, but that's not set by Kāinga Ora itself - it depends on the lender's pricing.

Do I still need to meet lending criteria?

Yes. You still need to meet normal responsible lending requirements - income assessment, living expense analysis, credit history checks, etc. Kāinga Ora helps with the deposit hurdle, not the entire assessment.

So, What Does This Mean For You?

So, What Does This Mean For You?

If you're dreaming of owning your first home in New Zealand and the idea of saving a 20% deposit feels distant, the Kāinga Ora First Home Loan could be a turning point.

Instead of waiting years, you might be able to enter the property market sooner and with confidence - especially when you combine:

• A lower (5%) cash deposit
• KiwiSaver withdrawal savings
• Family support or gifting if available

This doesn't remove the need for careful planning, but it lowers a significant barrier that stops many from ever starting.