Shay Waraker
With a Loan Market adviser on your side, you can:
1. Understand your exact borrowing power under current Debt-to-Income (DTI) rules.
2. Get a shortlist of loan products from a wide range of banks and lenders that are right for your goals.
3. Ensure your loan application is “lender-ready” to give you the best chance of approval.
4. Receive expert advice on everything from KiwiSaver withdrawals to multi-generational guarantees.
While many lenders generally look for a 20% deposit, there are several established pathways for first-home buyers to enter the market with a smaller deposit.
By working with a Loan Market adviser, you can explore whether you qualify for low-deposit lending through specific bank products or government-supported schemes that could get you into your home much sooner than you thought.
The First Home Loan scheme (supported by Kāinga Ora) allows eligible buyers to purchase a home with as little as a 5% deposit. This is a significant advantage for those who can comfortably service a mortgage but haven’t yet saved a full 20% deposit.
Eligibility is largely based on your annual before-tax income. Currently, the caps are generally $95,000 for a single buyer and $150,000 for a single buyer with dependants or multiple buyers. Because there are no longer specific house price caps for this scheme, you have the flexibility to choose a home that fits your lifestyle, provided you meet the lender’s internal affordability criteria.
It is also important to note that a 1.2% lender’s insurance fee usually applies to these loans. The good news is that this can often be added to your total loan amount, meaning it doesn’t necessarily need to be paid upfront in cash.
If you have been a member of KiwiSaver for at least three years, you may be able to withdraw your savings to help fund your first home. This typically includes your own contributions, employer contributions, and Government member tax credits, though you are required to leave a minimum balance of $1,000 in your account after the withdrawal.
Your Loan Market adviser will help coordinate the withdrawal process with your solicitor to ensure the funds are ready exactly when you need them. This timing is crucial, as the funds can be used for either your initial deposit when the contract goes unconditional or for the final settlement on the day you move in.
If you don’t meet the criteria for a government-backed loan, there are other common ways to secure your first home.
One popular option is a Limited Guarantor Loan, also known as an equity guarantee, which allows a family member to assist by providing additional security using their own home.
Alternatively, many buyers use funds gifted by family members to reach their deposit goal. This can be a strategic way to avoid certain low-equity fees and secure a more competitive interest rate.
We can advise you on how to document these gifts correctly to satisfy bank requirements.
Previous home ownership doesn’t necessarily lock you out of first-home benefits. If you are re-entering the market after a separation or financial setback, you may qualify as a “previous home owner”, often referred to as a Second Chance buyer.
If your financial position is deemed similar to that of a first-home buyer by Kāinga Ora, you can often still access your KiwiSaver and the 5% First Home Loan scheme. We can help you navigate this application process to see if you qualify for a fresh start.
Your borrowing power is determined by a combination of your deposit and your ability to service a mortgage, often guided by Debt-to-Income (DTI) ratios. Lenders look at your total debt relative to your gross annual income, and for most existing homes, this ratio is typically capped at 6 times your income.
However, there can be more flexibility if you are building a new home, as these are often exempt from standard DTI limits. Lenders will also consider your “uncommitted income” (your regular expenses and existing debts) to ensure you can comfortably manage repayments even if interest rates change in the future.
To get an idea of how much you might potentially be able to borrow, try our borrowing power calculator.
To buy with total confidence, you need a formal pre-approval. This tells real estate agents you are a serious buyer and allows you to make offers or bid at auctions with peace of mind.
Your Loan Market adviser will handle the heavy lifting of the application process, ensuring you have a clear budget and a plan in place before you start viewing properties.
For complete confidence to start buying, speak to your local Loan Market adviser to arrange a formal pre-approval.
Let us know what your goals are and we will connect you with a Loan Market adviser directly.
Find out how much you may be able to borrow to purchase property.
Understand how much money you have coming in compared to what you spend using this calculator to help you identify where you could save.
Understand the amount you will need to pay your lender before you apply for a home loan and ensure you can comfortably meet your repayments.
