Kainga Ora Explained | Briana McDonagh

Minimum deposit required

No higher rates

No interest rate penalty for your smaller deposit

1.2%

One-off fee on the loan amount

What is the Kāinga Ora First Home Loan?

The First Home Loan is a government-backed scheme that allows eligible first home buyers to purchase with as little as a 5% deposit. Kāinga Ora (formerly Housing New Zealand) underwrites the loan — meaning they act as a guarantor for the lender. This reduces the lender's risk, allowing them to lend to buyers who would not otherwise qualify under standard lending rules.

The biggest benefit is that you do not pay a higher interest rate because of your smaller deposit. Normally when you borrow with less than 20% deposit, lenders charge a higher rate to compensate for the added risk. With the First Home Loan, your interest rate is comparable to what someone with a 20% deposit would pay. The loan is issued and managed by participating lenders, not by Kāinga Ora directly.

Key features

5% deposit

You only need 5% of the purchase price as a deposit. This can come from savings, KiwiSaver, gifted money from family, or a combination. There is no property price cap — you can use the scheme to buy a home at any price, as long as you meet all other criteria.

No higher rates

Standard low-deposit lending typically results in a higher interest rate added on top of the normal rate, because the lender takes on more risk when your deposit is smaller. The Kāinga Ora First Home Loan removes this — so there is no higher interest rate applied due to having less than a 20% deposit.

1.2% LMI fee

Kāinga Ora charges a Lender's Mortgage Insurance fee of 1.2% of the loan amount. This is a one-off fee that can be paid at settlement or added to your loan and repaid over time. For example, on a $500,000 loan this would be $6,000. This fee covers Kāinga Ora's cost of underwriting the loan.

Owner-occupied only

You must intend to live in the property as your primary residence. The scheme is not available for investment properties.

Not all lenders

Only selected banks and lenders participate in the First Home Loan scheme — not every bank offers it. A mortgage adviser can tell you which lenders are participating and compare their rates and criteria for you.

Income caps

Your gross (before-tax) income from the last 12 months must be within the following limits. These are based on what you earned over the previous year — not your current salary. You can check your income for the last 12 months on the IRD website by logging into myIR. Income caps may change — always confirm current figures before applying.

Situation	Income cap (gross, last 12 months)
Single buyer, no dependants	$95,000 or less
Single buyer with one or more dependants	$150,000 or less
Two or more buyers (combined)	$150,000 or less

Employment criteria

Same job for 1 year

You need to have been in your current job for at least 12 months. If you have changed jobs recently, you may still qualify if you have been in the same industry or profession for at least 24 months.

Same industry for 2 years

If you have not been in your current role for 12 months, 24 months in the same industry or profession can satisfy the employment requirement. This also applies if you have been studying to enter a particular industry — the time studying can count toward the two years.

New job under 90 days

If you have recently started a new role, you will need to show that your employment contract does not include a 90-day trial clause. If you are still within your first 90 days, some lenders may require the trial period to have passed before approving your application.

Self-employed

Self-employed applicants can potentially qualify, though the assessment is more complex. Lenders will look at your history in the same industry and your income documentation. Get in touch and I can advise on how to best present a self-employed application.

Asset requirements

Vehicles

You can own one vehicle per person on the application. This is not counted as an asset that needs to be sold.

Other assets over $5,000

Any other assets worth more than $5,000 — such as a boat, caravan, motorbike, or similar — will generally need to be sold and the proceeds put toward your deposit. Lenders assess this as part of the application.

Deposit holdback

You are generally expected to put almost all of your available deposit toward the purchase. You can hold back up to $5,000 for purchase costs such as legal fees and valuations. If you need to hold back more, you will need to provide quotes for specific items.

Previously owned property?

You may still qualify under the second chance provision.

If you have owned property before but no longer do, you may qualify as a second chance buyer — provided you are in a similar financial position to a first home buyer. Key requirements include: you must not currently own any property or land, you must meet asset cap requirements, and you must not have previously used your KiwiSaver to purchase a property. Kāinga Ora assesses second chance eligibility on a case-by-case basis. Get in touch and I can help you understand whether this applies to your situation.

💡

The First Home Grant is no longer available. The Kāinga Ora First Home Grant — which provided up to $10,000 toward a deposit — was discontinued in May 2024. It is no longer available to new applicants. The First Home Loan scheme is still active and available.

Do you qualify?

Answer a few quick questions to get a rough sense of whether the Kāinga Ora First Home Loan could be an option for you. This is a guide only — get in touch for a proper assessment.

Are you a New Zealand citizen, permanent resident, or a resident visa holder living in New Zealand?

You must be ordinarily resident in NZ — meaning you live here and pay tax here.

Are you a first home buyer, or have you previously owned a home but no longer do?

Previous owners may still qualify under the second chance provision if they meet certain asset criteria.

What was your gross (before-tax) income over the last 12 months?

You can check this on the IRD website by logging into myIR. Use your income from the past 12 months — not your current salary if it has recently changed.

How does your employment situation look?

Kāinga Ora requires either 12 months in your current job, or 24 months in the same industry or profession.

Do you have at least 5% of the purchase price available as a deposit?

This can include savings, KiwiSaver, gifted money from family, or a combination. For example, 5% of a $600,000 property is $30,000.

Do you own any significant assets other than a vehicle?

This includes things like a boat, caravan, motorbike, or other assets worth more than $5,000. One vehicle per person is allowed and does not count.

Do you plan to live in the property as your primary home?

The First Home Loan is only available for properties you will live in. It cannot be used for investment properties or properties you plan to rent out.

Think you might qualify? Get in touch and I can check your eligibility, compare participating lenders, and help you work out whether the First Home Loan is the right pathway for your situation.

Get in touch →

This guide is for general information purposes only and does not constitute financial advice. Kāinga Ora eligibility criteria, income caps, and scheme details may change at any time. The quiz results are indicative only and are not a formal assessment. For advice tailored to your situation, get in touch with Briana McDonagh.

Kāinga Ora First Home Loan explained