What is the First Home Grant NZ?
The First Home Grant was a government initiative providing up to $10,000 for eligible first-home buyers. Note: As of May 2024, the First Home Grant has been discontinued. However, buyers can still access the First Home Loan (requiring only a 5% deposit) and the KiwiSaver First Home Withdrawal to bridge the deposit gap.
Navigating the New Zealand property market requires a strategic understanding of the financial assistance available. While the landscape has shifted with the removal of the specific “First Home Grant” cash payment, the government-backed First Home Loan and the ability to withdraw KiwiSaver funds remain critical tools for Kiwis trying to step onto the property ladder. This guide clarifies the current regulations, income limits, and application processes for 2025.
Status Update: The End of the First Home Grant
For many years, the Kainga Ora First Home Grant was a staple of the Kiwi property journey, offering up to $5,000 for existing homes and up to $10,000 for new builds. It is crucial for all prospective buyers to understand that this specific grant scheme is no longer accepting new applications as of May 22, 2024.
The government’s focus has shifted toward underwriting loans rather than providing direct cash grants. If you have pre-approval for the grant issued before the cut-off date, it may still be honoured for a limited period, but new entrants to the market must now rely on the First Home Loan and their own KiwiSaver savings.
The Difference Between the Grant and the Loan
Confusion often arises between the Grant (free cash) and the Loan (mortgage assistance). While the free cash is gone, the assistance to get a mortgage with a low deposit remains active. The First Home Loan is designed to help those who can afford mortgage repayments but struggle to save the standard 20% deposit required by most banks.
The First Home Loan Explained
The First Home Loan is an initiative underwritten by Kainga Ora. It allows qualified buyers to purchase a home with a deposit of only 5%, rather than the standard 20%. This significantly lowers the barrier to entry for many New Zealanders.
Participating lenders (such as Westpac, Kiwibank, SBS Bank, and various credit unions) issue the loan, but Kainga Ora insures it. This insurance reduces the risk for the bank, allowing them to lend to you with a smaller deposit.
Key Eligibility Criteria
- Citizenship: You must be a New Zealand citizen, permanent resident, or a resident visa holder who is “ordinarily resident in New Zealand.”
- First Home Buyer: You must not currently own any land or property.
- Occupancy: You must intend to live in the home as your principal place of residence for at least 6 months.
- Deposit: You must have a minimum 5% deposit (this can come from KiwiSaver, savings, or a gift).
- Income Caps: You must earn under specific income thresholds (detailed below).
Income Limits for Individuals and Couples
To ensure the First Home Loan supports those who need it most, Kainga Ora enforces strict income caps. These caps are calculated based on your total income before tax (gross income) for the previous 12 months.
Current Income Thresholds (2025)
| Applicant Type | Annual Income Limit (Before Tax) |
|---|---|
| Individual Buyer (without dependents) | $95,000 |
| Individual Buyer (with dependents) | $150,000 |
| Two or more buyers (combined) | $150,000 |
Important Note on Income: Banks will verify this using your IRD Summary of Earnings. If you have recently received a pay rise that pushes you over the limit, you may technically be ineligible, even if your previous year’s earnings were lower. Conversely, if your income fluctuates (e.g., contractors), lenders will look at the average.
Regional House Price Caps vs. Market Reality
Historically, both the First Home Grant and the First Home Loan were subject to strict “House Price Caps.” For example, you could only buy a house in Auckland if it cost less than $875,000. These caps often made it impossible for buyers to find suitable properties in major cities.
Are there still House Price Caps?
No. House price caps have been removed for the First Home Loan. This is a significant policy change that opens up the entire market to first-home buyers, provided they can service the mortgage.
Previously, the caps were divided by region (e.g., Auckland vs. The Regions). Now, the constraint is no longer the government cap, but rather your borrowing capacity. While you can buy a house worth $1,000,000 with a First Home Loan, you must prove to the bank that you can afford the repayments on a $950,000 mortgage (assuming a 5% deposit) on an income capped at $150,000. In the current high-interest-rate environment, this is the new “soft cap” imposed by affordability rather than legislation.
KiwiSaver First Home Withdrawal
With the Grant gone, the KiwiSaver First Home Withdrawal is your most powerful asset. This allows you to withdraw almost all of your KiwiSaver savings to put towards your deposit.
Withdrawal Rules
- Eligibility: You must have been a KiwiSaver member for at least 3 years.
- Amount: You can withdraw your contributions, your employer’s contributions, and government tax credits.
- The $1,000 Rule: You must leave a minimum balance of $1,000 in your KiwiSaver account.
- Australian Super: If you have transferred funds from an Australian Superannuation scheme, these generally cannot be withdrawn for a first home purchase.
This withdrawal can be combined with the First Home Loan. For example, if you have $40,000 in KiwiSaver, that can cover the 5% deposit on an $800,000 home, provided your income allows you to service the rest of the debt.
How to Apply for the First Home Loan
Applying for the First Home Loan differs slightly from a standard mortgage application because it involves Kainga Ora underwriting. Follow this step-by-step process to streamline your application.
Step 1: Gather Documentation
Before approaching a lender, prepare the following:
- Proof of income (3 recent payslips).
- IRD Summary of Earnings for the last 12 months.
- KiwiSaver balance statement.
- Valid photo ID (Passport or Driver License).
- Bank statements for the last 3–6 months showing your spending habits.
Step 2: Choose a Participating Lender
Not all banks offer the First Home Loan. The major banks that participate include Westpac and Kiwibank, alongside smaller lenders like SBS Bank, The Co-operative Bank, and various Credit Unions. You cannot apply for this loan through ANZ, ASB, or BNZ (as of early 2025).
Step 3: Pre-Approval
Submit your application to the chosen lender. They will assess your income against the Kainga Ora caps and your ability to service the loan. If successful, you will receive a pre-approval letter. This gives you a budget to start house hunting.
Step 4: Making an Offer
Once you find a property, you can make an offer. Crucial: Ensure your lawyer includes a “finance condition” in the Sale and Purchase agreement. Even with pre-approval, the bank must approve the specific property to ensure it meets Kainga Ora’s lending standards (e.g., the house must be insured and habitable).
People Also Ask
Is the First Home Grant completely gone in 2025?
Yes, the First Home Grant was discontinued in May 2024. New applications are no longer accepted, but the First Home Loan (5% deposit scheme) is still available.
What is the income limit for a First Home Loan?
The income limit is $95,000 for individual buyers without dependents, and $150,000 for individual buyers with dependents or for two or more buyers combined.
Can I use my KiwiSaver for a deposit on a First Home Loan?
Yes, you can withdraw your KiwiSaver funds (leaving a minimum balance of $1,000) to make up the 5% deposit required for the First Home Loan.
Are there still house price caps for the First Home Loan?
No, house price caps were removed from the First Home Loan. You can buy a property at any price, provided you can service the mortgage and meet the income and deposit criteria.
Which banks offer the First Home Loan?
Participating lenders include Westpac, Kiwibank, SBS Bank, The Co-operative Bank, and several credit unions. ANZ, ASB, and BNZ do not currently offer this specific government-backed loan.
What happens if I earn slightly over the income cap?
The income caps are strict. If you earn over the limit in the previous 12 months, you are generally ineligible for the First Home Loan and will likely need a standard mortgage requiring a 20% deposit.
