First Home Loans

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The First Home Loan is a great scheme for those with less than 20% deposit, who may not normally qualify for a loan with less than 20% deposit due to the bank’s rules.
The scheme is run through several lenders in NZ – with some of the big ones being Westpac / KiwiBank / Cooperative Bank / SBS / Unity / Nelson Building Society.
With this, you still go through the normal loan process, but there is an additional layer to the process which is the checks and sign-offs by Kainga Ora as well. In essence, it is a form of a government guarantee on your lending so banks can lend to you.

As always, there are some criteria to be eligible for this scheme:
• Be a NZ citizen, permanent resident, or a resident visa holder who is ordinarily resident in NZ.
• Be a first-home buyer or a previous first-home buyer who is in a similar financial position to a first-home buyer.
• Income caps in the last 12 months you must have earned less than $95,000 if you are single and $150,000 for a couple, or $150,000 or less if you are an individual buyer with one or more dependents.

You must also meet the following:
• 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)
• Be purchasing 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 purchasing a property of less than 1 hectare
• Pay a 1% Lender’s Mortgage Insurance premium and loan application fee
(if applied by the lender)

One of the great things, and key differences between eligibility for the First Home Loan and the First Home Grant is that you don’t have to meet the house price caps, which can sometimes be a little restrictive.

If you don’t have a 20% deposit, and meet the eligibility criteria, it is worth discussing with your broker or bank. Sometimes if you qualify with the bank anyway, you might not use the First Home Loan scheme, as you may get better terms, at a lower cost from the bank.