Kāinga Ora First Home Loan,
explained.

A First Home Loan is supported by Kāinga Ora and offered through participating lenders. It can allow eligible buyers to purchase a home with a deposit as low as 5%, rather than the 20% often used as a standard benchmark.

The loan is provided by the lender, not directly by Kāinga Ora. You must meet both the scheme’s requirements and the lender’s affordability, credit and lending criteria.

Access to special interest rates: With an eligible First Home Loan, participating banks generally offer their special home loan interest rates — the same rates typically available to borrowers with a 20% deposit — even though your deposit may be as low as 5%. The actual rate and any conditions depend on the lender and your application.

Income limits are assessed against your gross income over the relevant 12-month period and depend on your household circumstances. The figures below are from the original guide and should be confirmed against the current scheme rules before relying on them.

If you're purchasing with someone else, how your application is assessed may depend on the circumstances and the scheme’s rules.

Participating lenders assess how reliable and sustainable your income is. The documents they request may depend on whether you're employed, self-employed, contracting or have recently changed jobs.

The original guide refers to working in the same industry for two years, or the same role for one year, and notes that relevant study may count towards industry experience. These should not be treated as universal First Home Loan rules without checking with the lender.

Asset limits can apply to additional items outside your main everyday vehicle, such as a second car, jet ski, boat or caravan. Extra assets with a combined value over $5,000 may affect your eligibility, depending on the applicable criteria and lender assessment.

It is worth mentioning these items to your adviser early, even if they do not seem particularly valuable. A lender will also consider your existing debts, expenses, credit history and ability to afford repayments.

A First Home Loan may reduce the deposit you need to get started, but it does not remove the need to show where your deposit comes from or that you can afford the mortgage.

Depending on your eligibility, your deposit may include personal savings and funds available through a KiwiSaver first-home withdrawal. Other savings and assets should be discussed with your adviser so they can check how they affect your application.

Because a First Home Loan can be approved with a deposit as low as 5%, there is usually a Lenders Mortgage Insurance (LMI) premium. This helps protect the lender if the borrower cannot repay the mortgage; it is not insurance that covers your repayments or protects you personally.

The premium can be added to your home loan, rather than paid separately upfront, subject to the lender’s requirements. This means you borrow slightly more and will generally pay interest on the added premium over time.

The premium and how it is charged depend on the scheme and lender. Your adviser can explain the cost and show you how it affects your total loan and repayments before you proceed.