It’s a fact, more Kiwis are using the First Home Loans option to get into a home.

It’s been reported that in the past year there has been a big increase in people applying for the First Home Loans – the option for first home buyers backed by Kainga Ora.

This option has become more popular as first home buyers have seen an opportunity to buy while the market is down. It’s also a time where we have seen rents increasing.

This environment has made buying a really good alternative.

Those Kiwis looking to buy their first home have seen this (the First Home Loan) as an option that lets people buy now where otherwise they may have waited while they save a bigger deposit.

As a mortgage adviser for first home buyers I have seen this trend, but also now the statistics from Kainga Ora confirm this is happening throughout New Zealand.

As you can see on the graph above, the number of approvals has skyrocketed and the number of settlements has risen steadily too.

This is quite a large increase, especially when you consider many of the main banks do not even have access to the First Home Loans!

Many of the banks staff know very little about First Home Loans and never even mention this as an option that should be considered – it means many first home buyers don’t know that this option exists for them.

What Is This Option – First Home Loans?

First Home Loans was designed to help first home buyers that would love to get their own home and know they can afford the mortgage repayments but cannot save a big enough deposit.

This works for the banks that use it as the risk is taken onboard by Kāinga Ora who underwrites the loans offered by the banks and other lenders. This allows those banks to provide low deposit home loans to people that would otherwise sit outside their lending criteria.

First Home Loans are issued by the participating banks, lenders, building societies and credit unions and are underwritten by Kāinga Ora – Homes and Communities.

Some of these banks and lenders have special deals they can offer and some may also allow you to build a new home with the First Home Loan option.

Just 5% Deposit Required

First Home Loans allows you to buy your first home with as little as 5% deposit.

The deposit can be inclusive of your regular savings, your Kiwisaver withdrawal, the First Home Grants you may be entitled to and also any gifts.

Unlike many banks criteria there is no requirement to show that you have 5% genuine savings.

There are not many other options for first home buyers to get their own home with just 5% deposit so as an adviser it’s always an option that would be considered.

You Must Meet The Criteria First

To be eligible for the First Home Loan you must meet strict criteria, so it’s not for everyone.

The key requirements are:​​

You must be a New Zealand citizen, permanent resident or resident visa holder who is ordinarily resident in New Zealand.

• You must be a first home buyer or previous homeowner (second chance applicant) in a similar financial position to a first home buyer. That means you cannot own any other property or land, except this does not include ownership of Māori land/.​
• You must be purchasing a home for you to live in as your primary place of residence and it cannot be over 1 hectare.

​Your Deposit (minimum 5% deposit)

• You need to have a minimum deposit that is at least 5% of the purchase price of the home you are interested in buying (inclusive of all savings, grants, first-home withdrawals, and gifts)

Your Income

Income is not what you are earning now, but what you earned in the last 12-months.

• $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

​The House

Up until recently, the First Home Loan was only available for houses priced under strict regional price caps; however price caps have now been removed. 

That means it is now even easier to secure a loan for a new home with just a 5% deposit.​

Preparing The Loan Application

Providing you meet the criteria listed, then you still need to be approved by the bank or lender, plus Kāinga Ora ​for your home loan.

This means you must meet the lending requirements of a participating bank or lender for a home loan including having a good credit score, the ability to prove income and to afford your living costs, any existing financial commitments and the new home loan.

I can help put together a good application to give you the best chance of success, and that’s important as there are just a small number of banks that we can use.

​Kainga Ora also charge a 0.50% Lender’s Mortgage Insurance (LMI) premium and typically this is added to the loan.

Not All Banks Offer This Low Deposit Option

The main reasons that so few people know about the First Home Loans and how you can buy your home with as little as 5% deposit is that not all banks offer this option.

There are just four banks that offer this: Co-Operative Bank, Kiwibank, SBS Bank and Westpac.

These banks all have different criteria, and some offer special packages for first home buyers.

You want to know that you have a mortgage adviser that knows the different criteria and can ensure that you get the best package that is available, rather than just going with the easiest bank to get approved with.

Ask Me About First Home Loans

Thanks for reading, and now know a bit more about First Home Loans as an option.

This is an option designed to help Kiwis that would love to get their own home. It’s for people that know they can afford the mortgage repayments but cannot save a big enough deposit.

It’s an option that I often use to help people buy their first home and I would love to see if this is the best opportunity for you too.

Let’s see if this is what you need.