Getting onto the property ladder with a low deposit can be challenging, but it’s not impossible. For first home buyers in New Zealand, it’s helpful to know there are options available for low deposit home loans. If you’re considering buying now with a smaller deposit rather than waiting until you’ve saved up enough and potentially facing higher property prices, here are 3 options to consider to get you into the property market sooner.
1. First Home Loan
The First Home Loan (formerly known as the Welcome Home Loan) allows you to buy your first home with just a 5% deposit. Supported by Kāinga Ora – Homes and Communities, this option is ideal if you can afford the mortgage repayments but haven’t yet saved enough for a larger deposit.
How it works:
To apply for a First Home Loan, choose a participating lender and complete a loan application form. Each lender has its own credit criteria you’ll need to meet along with the First Home Loan eligibility criteria.
To be eligible for a First Home Loan, you must:
- Be a New Zealand citizen, permanent resident, or a resident visa holder who is "ordinarily resident in New Zealand"
- Be a first home buyer, or a previous homeowner in a similar financial position to a first home buyer
- Have a before tax income from the last 12 months of:
- $95,000 or less for an individual buyer without dependants; or
- $150,000 or less for an individual buyer with one or more dependants; or
- $150,000 or less (combined) for two or more buyers, regardless of the number of dependants
In addition, you must:
- Have a minimum 5% deposit that can be made up of your own savings, KiwiSaver first-home withdrawals, and cash gifts from family)
- Be buying a home for you to live in as your primary place of residence
- Not own any other property or land, this does not include ownership of Māori land
- Be buying a property of less than 1 hectare
- Pay a 0.5% Lender’s Mortgage Insurance premium and loan application fee
- (if applied by the lender)
2. Shared Home Ownership
Shared home ownership is another option that allows you to partner with a housing provider, such as the Housing Foundation, to buy a home with a reduced deposit and more manageable mortgage repayments.
How it works:
Together with a housing provider – such as Housing Foundation - you buy a majority share of a home (usually more than 60%) while the housing provider owns the remaining portion.
Both you and the housing provider are listed on the property title as owners. Over time, as you can afford it, you buy back more of the housing provider’s share in your home until you own it in entirety. This option is ideal for first home buyers with a lower deposit who need support managing their mortgage repayments.
To be eligible for a shared ownership Programme, you'll need to:
- Be a New Zealand Citizen or Permanent Resident
- Be a first home buyer
- Have at least one member of the household in full time employment
- Have a household income that is between $85,000 and $110,000 per year, before tax
- Have manageable or no debt
- Have a deposit (you can use your savings and KiwiSaver for this)
3. Kāinga Whenua Loan
The Kāinga Whenua loan scheme is a unique option for Māori, designed to help whānau achieve home ownership on papakāinga (ancestral Māori land). Unlike other home loans, a Kāinga Whenua loan is secured against the house only, not the land.
How it works:
If you have the right to live on Māori land (e.g., through a licence to occupy), you can apply for a Kāinga Whenua loan. For loans up to $200,000, no deposit is required while for any loans over this amount, you’ll need a 5% deposit. This scheme supports building, buying, renovating, or relocating a house on Māori land.
You must meet both lenders and eligibility criteria and a small Lenders' Mortgage Insurance fee usually applies, which can be added to the loan.
Ready to get started?
If you’re considering buying your first home but aren’t sure where to begin, get in touch with the team at Mortgage Express. Our team of advisers can help you explore low deposit home loan options that may be available to you and guide you on your journey to home ownership. Contact us today to get started.
