National are calling the 2022 Budget delivered by Grant Robertson recently as the band-aid budget. And while the budget had many talking points there is one big win for first home owners!

Via Kainga Ora and participating banks there was a product called “The First Home Loan”, which potentially to approved applicants allows you to purchase your first home with as little as 5% deposit, regardless of the moving goal posts of Reserve Bank LVR regulations.


With The First Home Loan there are some qualifying criteria you need to meet. In a nut-shell they are listed below:

  • Meet the price cap
  • Have an annual income of no more than $95,000 (before tax) for an individual buyer
  • Have an annual income of no more than $150,000 (before tax) for an individual buyer with one or more dependants
  • Have an annual income of no more than $150,000 (before tax) for two or more buyers regardless of the number of dependants
  • Minimum deposit of 5%
  • First home buyer
  • Live in the proposed home
  • The applicant must own one property
  • Must be a New Zealand citizen or permanent New Zealand resident or a resident holder who is ordinarily resident in New Zealand.

Now, I have put “meet the price cap” in bold. This was in the past quite a barrier with The First Home Loan. The maximum purchase price which allowed you to be eligible for The First Home Loan was $550,000 for existing dwellings and $650,000 for new builds. Now it does not take a rocket scientist to work out that in a rising house price environment this cap was out of sync. Finding a property over the last few years under this price cap was a very hard task. This meaning the product did not suit the market.


The good news is that in this latest budget the house cap has been removed. No limit now applies. 

This is great news for first home buyers. This means they are not at the mercy of the Reserve Bank tinkering with Loan to Value Ratio’s (LVR’s).

It could mean for as little as 5% saved you could stop renting and paying dead money to a landlord and instead be the proud owner of your OWN home.

There are important things to note, one in particular being this is still subject to the lenders (who participate in the First Home loan product) credit criteria, and assessment of your loan. 

The $150,000 annual income cap will certainly dictate how much you can borrow along with rising interest rates and what the banks are testing their loans at.

Another key benefit of the First Home Loan is that you can apply for a pre-approval. Quite often in this current environment the banks will assess a low deposit loan (less than 20%) only if you have a “live contract”. This meaning you have to put a offer on a property and have it accepted on the basis of a finance condition in place. Now, this can be a very time-consuming exercise, as it might not be approved at the bank, but you have no idea on the banks apetitite to approve your loan until you have a property under contract. With The First Home Loan you can obtain a pre-approval, thus allowing for you to house hunt with confidence, knowing you have the finance behind you to make that home yours.

Who do you know who is looking to purchase their first home?

Get in touch today with Matt Carr from Lendal Mortgages to help guide you through the sometimes-complicated process of home ownership in New Zealand!

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