Buying your first home is one of the biggest financial decisions you’ll make. This guide answers the questions first home buyers ask us most: why buy, how much deposit you need, how much you can borrow and what banks look at when they assess your application. When you’re ready for the next step, our other guides take you from pre-approval through to settlement.
Start with your “why”
Most first home buyers tell us they want a place that is truly theirs. Many also find their rent is not much less than mortgage repayments would be, and they’d rather build their own equity. Other common reasons are security, a safety net for retirement, school zones, a job move or living closer to family.
Knowing your main reason matters, because saving a deposit takes discipline. Renting leaves more money for travel, a new car or other investments, and sometimes a better suburb. A clear “why” keeps you on track.
Think about your plans for the next five years too. Are you planning a family, a move, or an investment property later? The more we understand about your goals, the better we can structure your loan around them. To work out what you want in a home, see start with your priorities in our How to Buy guide.
How much deposit do you need?
Most banks look for a 20% deposit for a home you’ll live in. Banks can still lend a limited share of their loans to buyers with less, although you’ll usually pay a higher interest rate. If you’re eligible and can show you can afford the repayments, the Kāinga Ora First Home Loan lets you borrow up to 95%. New builds are also exempt from these limits. So there are still options if your deposit is less than 20%.
Where your deposit can come from:
- Savings: for a standard low-deposit loan, most lenders want at least 5% of the price from your own savings, not all of it gifted. This requirement is often waived if you qualify for the First Home Loan.
- KiwiSaver: after at least three years as a member, you may be able to withdraw most of your balance, leaving $1,000 in your account. See how to withdraw your KiwiSaver.
- Gifts from family: banks usually need a signed gift letter confirming the money is unconditional, interest-free and doesn’t have to be repaid.
- Family guarantee: some lenders let a family member’s property stand in for part of your deposit. They guarantee only that portion, and it can usually be released once it’s paid down or your own equity reaches 20%. Everyone involved should get independent legal advice first.
- Kāinga Ora First Home Loan: eligible buyers may need as little as 5% deposit through selected banks. Income caps and lender criteria apply.
- Other sources: selling assets such as a car or other property, or an inheritance.
The First Home Grant closed in May 2024 and is no longer available.
How much can you borrow?
Banks test your borrowing in two ways:
- Serviceability: after your living costs and other debts, can your income cover repayments at the bank’s test rate? The test rate is set above actual rates, so you have a buffer if rates rise.
- Debt-to-income ratio (DTI): banks can only lend a limited share of owner-occupier loans above 6 times gross household income. Each lender applies this differently.
To work this out, banks look at all your income, your living costs, and your existing commitments, such as credit cards, car loans, buy now pay later and student loans.
Each lender calculates borrowing differently, so the amount can vary noticeably between banks. Your borrowing plus your deposit sets your property budget. We compare lenders for you and help you get pre-approval before you start going to open homes.
What banks look at when you apply
- Credit history: no missed payments or defaults, and not too many recent credit applications.
- Your savings: the more you’ve saved yourself, the stronger your application.
- Account conduct: unarranged overdrafts, dishonoured payments, heavy buy now pay later use or gambling can count against you.
- Employment and income: a steady job, ideally past any probation period. Self-employed borrowers usually need two years of financial statements, but some lenders will consider one year, or a recently purchased business with a good trading history. Talk to us for advice on your situation.
- The property: some lenders are stricter with small apartments, leasehold land or homes with weathertightness issues.
Small things in the months before you apply make a difference: pay bills on time, avoid new credit and keep your accounts tidy. Read the common reasons home loans are declined.
Talk to a lawyer early
Get independent legal advice before you sign anything, ideally before you apply for pre-approval. Your lawyer can help with:
- your ownership structure, such as joint names, tenants in common or a trust
- checking the title and the council LIM report
- reviewing the Sale and Purchase Agreement before you sign
- your KiwiSaver first-home withdrawal
- settlement, including transferring ownership and registering your mortgage
If you don’t have a lawyer yet, we’re happy to introduce you to an experienced property lawyer.
Your next steps
- Book a free chat to talk through your plans and finances.
- Get pre-approval so you know your budget. See our home loan application process.
- Find a home and make an offer. See how to buy a house in New Zealand.
- Settle and get the keys. See the settlement process.
Frequently asked questions
Can I buy my first home with a 5% deposit?
There are options available, including the Kāinga Ora First Home Loan, a bank’s standard low-deposit lending, a new build or a family guarantee. Whether you qualify depends on your income, savings and the lender’s criteria.
Does my credit card limit affect how much I can borrow?
Yes. Banks count the full limit, even if you pay the card off every month. Reducing or closing cards you don’t need can increase your borrowing capacity.
I'm self-employed. Can I still get a home loan?
Yes. Most lenders ask for 2 years of financial statements, but some will consider 1 year, or a recently purchased business with a good trading history. We’ll match you with lenders that suit how you earn.
Do I need to have found a house before I talk to you?
No. The earlier we talk, the more time you have to get your deposit and finances in shape before you start looking.
Do you charge a fee?
See our fees answer in the FAQs.
Ready to start?
Book a free chat and we’ll show you how much you could borrow and what deposit you’ll need.
