Cracking the first home code
Buying your first home doesn’t have to be confusing. Brooke Reynolds from Rapson Loans and Finance says there are more loan options available than most people realise. With the right advice, you can find a solution that fits your budget, deposit size, and property goals.
If you're a first-home buyer, you might be surprised by how many loan options are actually available to you. It’s not just one-size-fits-all.
Here are three main types of loans to consider, along with how each one works:
1. First Home Loan (via Kāinga Ora)
Some banks offer First Home Loans in partnership with Kāinga Ora. The bank handles the initial assessment using its own lending policies, and then Kāinga Ora gives final approval for both the loan and the property you're looking to buy.
It’s important to note that just because Kāinga Ora gives the green light doesn’t mean the terms, such as how much you can borrow or the interest rate, will be the same across all banks. These can vary depending on the lender.
The minimum deposit is five percent, and the deposit can come from personal savings, a gift, or proceeds from selling an asset. Not that you’ll need to meet Kāinga Ora’s eligibility criteria, which can be found at kaingaora.govt.nz
2. 10% Deposit Home Loans
These are widely available through all major banks. While banks may pause pre-approvals based on application volumes, you can still proceed by making an offer on a property. Once your offer is accepted, the application becomes a live deal and can be assessed. Some lenders still offer pre-approvals for auction purchases. The minimum deposit is 10 percent, and at least five percent must be from genuine savings (e.g. KiwiSaver, cash savings, investment funds, or sale of an asset).
The remaining five percent can come from a gift or a deed of debt from family. Bank rates vary between lenders, however the rate will be higher than a 20 percent deposit loan. Some banks may offer a $5,000 cash-back for first-home buyers.
3. 5% Deposit Loan (Non–Kāinga Ora)
There’s at least one bank offering five percent deposit loans for borrowers who don’t meet Kāinga Ora’s criteria. This loan requires genuine savings for the full five percent deposit. Pre-approvals are not offered, but live deals (including auction purchases) will be assessed. Availability is subject to bank capacity – some may pause new applications from customers not already with the bank.
Important to note for all loan types
A professional property valuation is required for all three loan types. Make sure your offer includes enough time for both the assessment and valuation. These loans are not available on interest-only terms – you’ll need to make principal and interest repayments from the start. Navigating your first home loan can feel overwhelming, but a trusted mortgage adviser can guide you through the process. Ideally, choose one with access to all lenders, as borrowing limits and interest rates vary significantly between banks.
