🔑 What the First Home Loan Is
The biggest barrier to buying a first home is usually the deposit. Saving 20% of a house price while paying rent can take years. The Kainga Ora First Home Loan exists to bridge that gap, letting eligible first home buyers get in with a much smaller deposit than banks normally require. For many Kiwis it is the difference between buying now and buying years from now, so it is well worth understanding how it works and whether you qualify.
A 5% Deposit, Not 20%
Normally banks want around a 20% deposit to lend without restrictions. The First Home Loan reduces that to as little as 5%. Kainga Ora provides an underwrite to the lender, effectively standing behind part of the risk, which lets the lender say yes to a deposit that would usually be too small.
You Apply Through a Lender
You do not apply to Kainga Ora directly. Instead you apply through one of the participating lenders, which include some banks and other approved lenders like building societies and credit unions. They assess your application against both their own criteria and the First Home Loan rules.
📋 Who Qualifies
The Main Conditions
The First Home Loan has eligibility rules designed to target first home buyers on modest to middle incomes. The key conditions are about who you are, what you earn, and how you will use the home.
- First home buyer: You are buying your first home, or you are a previous owner now in a similar financial position to a first home buyer.
- Income limits: Your income must be under the scheme's caps, which are higher for two or more borrowers than for a single buyer.
- Live in it: You must intend to live in the home, not rent it out. It is for owner-occupiers.
- Residency: You need to be a New Zealand citizen, permanent resident, or hold a residence class visa.
Income Limits Are Central
The income caps are the feature that decides eligibility for many people. There is one limit for a single buyer and a higher combined limit for two or more buyers. If your income is above the cap, you do not qualify for the First Home Loan, even if everything else fits.
| Buyers | Income limit |
|---|---|
| One borrower | A single-person cap on your income |
| Two or more borrowers | A higher combined cap |
Because the exact figures are set by Kainga Ora and can change, check the current income limits when you apply rather than relying on an old number.
🏠 How It Works in Practice
You Still Have to Afford It
A smaller deposit does not change the fact that you must be able to repay the loan. The lender will assess your income, expenses and existing debts to make sure the repayments are affordable, often testing them at a higher interest rate than today's to be safe. The First Home Loan opens the door on the deposit, but the affordability test still applies.
Combining With KiwiSaver
The First Home Loan and a KiwiSaver first-home withdrawal are different things that work well together. The First Home Loan lets you borrow with a small deposit, while a KiwiSaver withdrawal can provide that deposit from your own savings. Used together, your KiwiSaver could supply much of the 5% and your other costs.
| Tool | What it does |
|---|---|
| First Home Loan | Lets you borrow with a 5% deposit, underwritten by Kainga Ora |
| KiwiSaver first-home withdrawal | Provides deposit money from your own savings after 3 years |
Weigh the Trade-Offs
Buying with a small deposit means a larger mortgage and, often, a low-equity premium on top. That can be a smart trade to get in sooner, but it is a real cost. Compare buying now with a small deposit against saving longer for a larger one, and choose what fits your situation.
Use our Mortgage Calculator to see repayments on a low-deposit loan, and the KiwiSaver First-Home Withdrawal guide for your deposit.
✅ Common Mistakes and What to Do
Mistake 1: Applying to Kainga Ora Directly
The trap: Trying to get the loan from Kainga Ora itself.
Why it costs: You apply through participating lenders, not Kainga Ora. Knowing this saves time and gets you to the right place faster.
Mistake 2: Assuming the Grant Still Exists
The trap: Budgeting for a First Home Grant on top of the loan.
Why it costs: The grant has been discontinued, so counting on it leaves a hole in your plan. Build your budget around the loan and your own savings.
Mistake 3: Forgetting the Affordability Test
The trap: Thinking a 5% deposit means automatic approval.
Why it costs: Lenders still test that you can afford the larger loan, often at a higher stress-test rate. A small deposit gets you to the table, but the repayments must stack up.
Mistake 4: Ignoring the Cost of a Bigger Loan
The trap: Focusing only on getting in, not the ongoing cost.
Why it costs: A smaller deposit means a larger mortgage, higher repayments and possibly a low-equity premium. Make sure the long-term cost is manageable, not just the entry.
A Simple Action Plan
Where to Go Next
Use the Mortgage Calculator for repayments, the KiwiSaver First-Home Withdrawal guide for your deposit, and the LVR Restrictions guide for deposit rules.
Final word: The Kainga Ora First Home Loan can let eligible first home buyers purchase with a 5% deposit, applied for through a participating lender, with income limits and an affordability test still in play. The separate grant is gone, but combining the loan with a KiwiSaver withdrawal is a powerful way in. Weigh the cost of a larger mortgage against getting in sooner, and check the current rules. This is general information, not personalised lending advice, so talk to a mortgage adviser or participating lender.
🎯 Test Your Knowledge
Quiz on the Kainga Ora First Home Loan (20 Questions)
If you've found a bug, or would like to contact us, or learn more about James Graham and Calculate.co.nz.
Calculate.co.nz is partnered with Interest.co.nz for New Zealand's highest quality calculators and financial analysis.
Calculate.co.nz is the sister site of CalculatorHub.com, the world's largest calculator website by tool count.
All calculators and tools are provided for educational and indicative purposes only and do not constitute financial advice.
Calculate.co.nz is proudly part of the Realtor.co.nz group, New Zealand's leading property transaction literacy platform, helping Kiwis understand the home buying and selling process from start to finish. Whether you're a first home buyer navigating your first property purchase, an investor evaluating your next acquisition, or a homeowner planning to sell, Realtor.co.nz provides clear, independent, and trustworthy guidance on every step of the New Zealand property transaction journey.
Calculate.co.nz is also partnered with Health Based Building and Premium Homes to promote informed choices that lead to better long-term outcomes for Kiwi households.
Calculate.co.nz is hosted in Auckland by SiteHost New Zealand.
All content on this website, including calculators, tools, source code, and design, is protected under the Copyright Act 1994 (New Zealand). No part of this site may be reproduced, copied, distributed, stored, or used in any form without prior written permission from the owner.
About & trust: Why Calculate is NZ's most comprehensive · By the Numbers · How we compare · Editorial standards · How we keep data current · NZ finance glossary · Research & data · Financial literacy NZ · About · Privacy policy · Terms of use
Reviewed and maintained. Last reviewed 2026-08-10 and checked on a twice-monthly cycle against IRD, RBNZ and Stats NZ. How we keep data current.
© 2026 Calculate.co.nz. All rights reserved. Building free NZ calculators since 2011.