The Kāinga Ora First Home Loan, explained plainly.

What the scheme actually is

The First Home Loan is administered by Kāinga Ora, the Crown's housing agency. Kāinga Ora doesn't lend you the money. Instead, it guarantees a portion of your loan to a participating bank. With that guarantee in place, the bank is willing to lend up to 95% of the purchase price (a 5% deposit) at the same interest rate it would offer a 20%-deposit buyer.

Most major banks participate in the scheme: ANZ, ASB, Westpac, Kiwibank, SBS, Cooperative Bank, Heartland, NBS, Unity. BNZ historically has not. Each bank has its own assessment overlay on top of the Kāinga Ora rules. The official scheme details sit at Kāinga Ora First Home Loan.

Eligibility, in plain terms

• You must be a first-home buyer. Either never owned before, or assessed by Kāinga Ora as being in the same financial position as a first-home buyer (the "second-chance" route, typically after divorce or business failure).
• You must intend to live in the property. Owner-occupier only, not an investment.
• You must meet the income caps. As at 2026, around $95,000 for a single applicant and $150,000 for two or more applicants combined. These are gross figures, before tax. The caps are reviewed periodically; always confirm the current number on Kāinga Ora's website.
• The property must meet the regional house-price cap. Caps vary by region. Auckland, Wellington and Queenstown have higher caps; smaller centres are lower. The cap applies to the purchase price, not the rateable value.
• You must have a 5% deposit. Sources include KiwiSaver First Home Withdrawal, savings, family gifts and the discontinued First Home Grant if banked before mid-2024.

The maths against a normal 90% LVR loan

For a $700,000 purchase with a $35,000 deposit (5%):

• Normal high-LVR loan: $665,000 borrowed at the carded rate plus a low-equity margin of ~1.0%. On a 30-year term, the LEM adds roughly $6,000 per year of interest in the first few years.
• First Home Loan: $665,000 borrowed at the carded rate with no LEM, but a one-off LMI premium of around 1% (~$6,650) added to the loan at settlement.

The First Home Loan pays its LMI premium back inside the first 12 months. From year two onwards it is consistently cheaper than the standard high-LVR loan. Over a typical mortgage life it saves the borrower roughly $30,000 to $60,000 of interest, depending on rate path and balance.

Trap one: applying before you know which bank participates

Not every bank participates and not every participating bank approves every application. Banks apply their own income, expense and credit overlays on top of the scheme rules. We routinely see first-home buyers go to "their bank" thinking the scheme is universal, get declined, and arrive at us frustrated. The fix is to start with the participating banks whose servicing tests are friendliest for your income mix, not the bank you happen to bank with.

Trap two: combining First Home Loan with too-tight cashflow

A 95% loan is more debt than an 80% loan. Servicing tests still apply and they bite harder at high LVR because the loan is bigger. Buyers occasionally qualify for First Home Loan on deposit but fail servicing because their cashflow won't support the larger loan. The First Home Loan does not waive servicing tests. The mistake is treating the deposit constraint as the only constraint.

Trap three: the regional cap and the right property

The house-price cap is a hard line. A $810,000 property in a region with a $750,000 cap doesn't qualify, even if your finances are perfect. Some buyers spend weeks shopping outside the cap, lock into a sale and purchase agreement, and only then discover the scheme is off the table. The cap should be the first filter on the property search, not the last.

How we run the application

For a First Home Loan application, we map four things in the first conversation: gross household income against the cap, target purchase region against the regional house-price cap, deposit composition (KiwiSaver + savings + gifts), and the bank shortlist for participation and servicing fit. Then we structure the application against the best-fit participating bank, with KiwiSaver and any family-gifted deposit cleanly documented, and we get conditional approval before any property hunting starts.

The whole exercise is roughly two conversations and some paperwork. The scheme works. The mistakes are almost always procedural, not financial.