Struggling With a Deposit? The Kāinga Ora First Home Loan Could Help You Buy Sooner

For many first-home buyers in New Zealand, the hardest part is not always the repayments.

It is the deposit.

You may have a steady income. You may be paying rent every week. You may feel ready to take the next step. But when someone says you need a 20% deposit, buying your first home can suddenly feel a long way off.

On an $800,000 home, a 20% deposit is $160,000.

For many buyers, that number alone is enough to make them feel like home ownership is still years away.

But there may be another option.

The Kāinga Ora First Home Loan is designed to help eligible first-home buyers purchase a home with a much smaller deposit. Instead of needing 20%, you may be able to buy with as little as 5% deposit. Kāinga Ora says the scheme lowers the required deposit to 5%, with loans issued by selected banks and lenders and underwritten by Kāinga Ora.

On an $800,000 home, that could mean a 5% deposit of $40,000 instead of $160,000.

That is a $120,000 difference.

For the right buyer, that difference could turn “one day” into “maybe now”.

What is the First Home Loan?

The First Home Loan is a government-supported home loan option for eligible buyers who may not have a full 20% deposit.

You still apply through a participating bank or lender, and you still need to show that you can afford the loan. The difference is that Kāinga Ora underwrites the loan, which can allow the lender to accept a 5% deposit when they usually may not be able to.

It is designed for people who may be financially ready to buy, but are struggling to save a large deposit.

This is important, because a lot of first-home buyers assume they are not ready simply because they do not have 20% saved. In reality, there may be other pathways worth looking at.

Why does the deposit make such a big difference?

A standard 20% deposit can be a major hurdle.

Here is a simple example:

For an $800,000 home:

• 20% deposit = $160,000
• 5% deposit = $40,000

That is not a small gap. For many buyers, saving the extra $120,000 could take years.

During that time, property prices, interest rates, lending rules and personal circumstances can all change. That does not mean rushing into a purchase is the right move. But it does mean it is worth
understanding your options before assuming you cannot buy.

The First Home Loan exists because some buyers can afford the repayments, but struggle to build a large deposit while also paying rent, bills, transport costs and everyday living expenses.

Who could the First Home Loan suit?

The First Home Loan may suit buyers who:

• Are trying to buy their first home
• Have a smaller deposit saved
• Have been contributing to KiwiSaver
• Have stable income
• Can afford the repayments
• Want to live in the property
• Do not currently own another home or land

It is not free money, and it is not guaranteed approval. You still need to meet Kāinga Ora’s criteria and the lender’s lending requirements. Kāinga Ora also makes it clear that banks and lenders make the final lending decision and will assess things like your ability to repay the loan, your existing debt and your credit history.

That means your income, expenses, credit cards, personal loans, car finance and spending habits can all affect whether the bank is comfortable lending to you.

What are the main eligibility rules?

There are a few key requirements.

To be eligible, Kāinga Ora says you need to be a New Zealand citizen, permanent resident, or resident visa holder who is ordinarily resident in New Zealand. You generally need to be a first-home buyer, although some previous homeowners may qualify if they are in a similar financial position to a first-home buyer.

There are also income caps. Current Kāinga Ora criteria state your before-tax income from the last 12 months must be:

• $95,000 or less for an individual buyer without dependants
• $150,000 or less for an individual buyer with one or more dependants
• $150,000 or less combined for two or more buyers

You also need a minimum deposit of at least 5% of the purchase price, the home must be your primary place of residence, and you must not own any other property or land, excluding ownership of Māori land. Kāinga Ora also notes the property must be less than one hectare.

Can you use KiwiSaver as part of your deposit?

Yes, in many cases.

If you have been contributing to KiwiSaver for at least three years, you may be able to withdraw your KiwiSaver savings to put towards your first home. The New Zealand Government confirms KiwiSaver savings can be used for the 5% deposit under the First Home Loan pathway.

Your deposit may also include savings, eligible first-home withdrawals and gifts. Kāinga Ora says the 5% minimum deposit can include savings, grants, first-home withdrawals and gifts.

This is where planning matters.

You may be closer than you think once you combine:

• Personal savings
• KiwiSaver withdrawal
• A gifted deposit from family
• Any other eligible funds

The key is understanding what can be used, what documentation the bank will need, and whether the overall loan still works based on your income and expenses.

What costs do you need to be aware of?

A smaller deposit can help you buy sooner, but it can also mean a larger loan.

That means your repayments may be higher than if you had a bigger deposit. You also need to allow for other buying costs, such as legal fees, valuations, building reports, moving costs and ongoing home ownership expenses.

Kāinga Ora also states that a 1.2% Lender’s Mortgage Insurance premium applies, which can be paid upfront or added to the loan.

This does not mean the First Home Loan is a bad option. It simply means you should understand the full picture before making a decision.

Buying with a 5% deposit can be powerful, but it needs to be structured properly.

The biggest mistake first-home buyers make

The biggest mistake we see is simple:

People assume they are not ready, so they never ask.

They hear “you need 20%” and stop there. They do not check whether they could qualify for a First Home Loan. They do not check whether their KiwiSaver could help. They do not check whether a lender would consider them. They do not map out what is possible over the next 3, 6 or 12 months.

Sometimes the answer will be, “not yet”.

But that is still valuable, because you can then build a clear plan.

You might need to reduce personal debt. You might need to tidy up spending. You might need to build a stronger savings record. You might need to adjust your property search. Or you might already be closer than you think.

Buying your first home starts with knowing your options

The First Home Loan is not for everyone, but for the right buyer, it can be a genuine game changer.

If the deposit has been the main thing holding you back, it is worth checking whether a 5% deposit pathway could work for you. You may still need to meet income caps, lender criteria, affordability checks and property requirements, but you do not have to figure it out alone.

At The Mortgage Hub, we help first-home buyers understand what they may be able to borrow, what deposit options are available, how KiwiSaver could fit into the picture, and what steps they need to take before making an offer.

Watch the video below as our Director and qualified financial adviser, Mils Muliaina, explains how the Kāinga Ora First Home Loan works, who it may suit, and why a 5% deposit could help more first-home buyers get into the market sooner.

If getting into your first home in 2026 is your goal, send us a message. Our advice is free, and we can help you map out your options from the start.