Navigate the NZ property market as a first home buyer. Learn about deposits, grants, KiwiSaver withdrawals, and getting mortgage-ready.
Buying your first home in New Zealand is a significant milestone. With property prices, interest rates, and various government assistance programs to consider, the process can feel overwhelming. This guide breaks down everything you need to know.
Understanding the Costs
Before diving into the home buying process, it's essential to understand all the costs involved:
Upfront Costs
- Deposit: Typically 10-20% of the purchase price
- Legal fees: $1,500-$3,000 for conveyancing
- Building inspection: $400-$800
- LIM report: $200-$400
- Loan application fees: $0-$500
Ongoing Costs
- Mortgage repayments
- Rates: Council property taxes
- Insurance: House and contents
- Maintenance: Budget 1-2% of home value annually
First Home Grant
The First Home Grant provides financial assistance for eligible first home buyers:
| Existing Home | New Build | |---------------|-----------| | $5,000 per person | $10,000 per person | | Max $10,000 couple | Max $20,000 couple |
Eligibility Requirements
To qualify for the First Home Grant, you must:
- Have contributed to KiwiSaver for at least 3 years
- Be purchasing a home within regional price caps
- Plan to live in the property for at least 6 months
- Meet the income requirements
Important: Price caps and income limits vary by region. Check the Kainga Ora website for current limits.
Using Your KiwiSaver
Your KiwiSaver can be a powerful tool for your first home purchase:
What You Can Withdraw
- Your own contributions
- Employer contributions
- Investment returns
- Not the government contributions ($1,000 kick-start for accounts opened before 2015)
Withdrawal Requirements
You must:
- Have been a KiwiSaver member for 3+ years
- Leave at least $1,000 in your account
- Be purchasing your first home (or be in a similar financial position)
Getting Mortgage-Ready
Banks assess several factors when considering your mortgage application:
1. Deposit Size
- 20%+ deposit: Best rates, no low equity premium
- 10-20% deposit: May incur low equity margin (0.25-0.75%)
- 5-10% deposit: Difficult without First Home Loan scheme
2. Income and Employment
- Stable employment history (2+ years preferred)
- Consistent income
- Self-employed? Need 2 years of financial statements
3. Debt and Expenses
Banks calculate your Debt-to-Income (DTI) ratio:
- Total debt / Annual income = DTI ratio
- Most banks cap this at 5-6x your income
4. Credit History
- Check your credit score before applying
- Clear any defaults or missed payments
- Reduce unnecessary credit limits
The First Home Loan Scheme
If you have a smaller deposit, the First Home Loan scheme might help:
- Requires only 5% deposit
- Underwritten by Kainga Ora
- Available through participating banks
- Subject to income and price caps
Steps to Buying Your First Home
- Get pre-approval: Know your budget before house hunting
- Find a home: Search online and attend open homes
- Make an offer: Work with a lawyer or conveyancer
- Due diligence: Building inspection, LIM, title check
- Go unconditional: Commit to the purchase
- Settlement: Complete the purchase and get your keys!
Calculate Your Buying Power
Use our free calculators to understand your position:
- First Home Buyer Calculator - Check grant eligibility and savings needed
- Mortgage Calculator - Calculate your repayments
- Borrowing Power Calculator - See how much you can borrow
Tips for First Home Buyers
- Start saving early - Every dollar counts toward your deposit
- Max out your KiwiSaver - Get the full government contribution
- Build your credit - Pay bills on time, reduce debt
- Get pre-approval - Know your budget before you shop
- Be patient - Don't rush into the wrong property
- Budget conservatively - Interest rates can go up
Common Mistakes to Avoid
- Borrowing the maximum you qualify for
- Ignoring hidden costs (legal fees, moving, repairs)
- Skipping the building inspection
- Not getting pre-approval before house hunting
- Forgetting about rate rises in your budget
This guide is for educational purposes only. Property purchases involve significant financial decisions - consider seeking professional advice from a mortgage adviser and lawyer.