How to Buy Your First Home in New Zealand

A practical guide to buying your first home in New Zealand

This guide is for New Zealanders looking to buy their first owner-occupied home. Whether you are a couple saving in KiwiSaver, a single buyer weighing up how far your deposit will stretch, or a family ready to stop renting, this article walks through the full process: from understanding what banks assess through to collecting the keys on settlement day.

Buying a first home can feel overwhelming, particularly when the rules around lending, deposits, and government support seem to shift every few years. Everyone has an opinion, from your well-meaning aunty to Sharon at the front desk. Much of it is outdated or wrong.

The good news: with careful planning and the right professional support, home ownership is achievable for more people than you might expect. As with most developed housing markets, New Zealand offers a range of tools to help first home buyers bridge the deposit gap, and knowing how to use them properly makes a real difference.

What This Guide Covers

1. Preparation: borrowing power, deposits, KiwiSaver withdrawal, and the First Home Loan
2. Your team: mortgage adviser, solicitor, valuer, and inspectors
3. Government support: KiwiSaver, contribution rate changes, and what is no longer available
4. The true costs: upfront, ongoing, and what to stress-test
5. Buying: house hunting, making an offer, negotiation tactics, and settlement

“Am I Ready for My First Home?”

Being ready is not about having all the answers. It is about attitude. It is perfectly normal to feel nervous, to have a long list of questions, or to be uncertain about parts of the process. If you are genuinely committed to owning your first home, the rest can be worked through with the right help.

We have helped people achieve things they never thought possible, and the common thread was a real desire to make it happen.

So, are you ready?

1. Preparation: Borrowing Power and Pre-Approval

How Banks Assess You

The first stage of buying a home requires an honest review of your finances. Lenders will examine your income, expenses, existing debts, and overall financial behaviour. Under the Responsible Lending Code, New Zealand lenders are required to ask detailed questions about your financial position before providing credit. This mirrors the approach in Australia, the UK, and Canada, where responsible lending obligations have become the norm.

Become Wealth tip: Banks treat unspent overdraft limits and credit card limits as existing debt, even if the balance is zero. A $10,000 credit card you never use can reduce your borrowing power by as much as $30,000 to $50,000, depending on the lender. If you do not use them, close them before applying.

DTIs and LVRs: What They Mean in Practice

Two sets of rules govern how much you can borrow and how much deposit you need.

Debt-to-income (DTI) restrictions limit most owner-occupier borrowing to around six times gross annual income. A household earning $120,000 would typically be able to borrow up to approximately $720,000, subject to other lending criteria. However, banks also apply a “stress test” interest rate, usually several percentage points above the current rate, to confirm you can service the loan if rates rise. In practice, this stress test often reduces your effective borrowing power below the headline DTI multiple.

Loan-to-value ratio (LVR) restrictions govern the minimum deposit. The standard requirement is 20% of the purchase price. However, the Reserve Bank allows banks to allocate a portion of their new lending to owner-occupiers with deposits below 20%, and first home buyers are the primary beneficiaries of this flexibility. At the time of writing, up to 25% of a bank’s new owner-occupier lending can go to borrowers with less than a 20% deposit.

Become Wealth view: Just because a bank will lend you a certain amount does not mean you should borrow it. We regularly see pre-approvals at the upper end of affordability. Buying at 90–95% of your maximum leaves almost no buffer for rate increases, unexpected expenses, or a period of reduced income. Buying at 75–80% of your maximum can be a more responsible approach to risk management.

What to Fix Before You Apply

If you are finding it difficult to get pre-approved, it may be time to take a closer look at your financial position. Key areas to address:

• Financial awareness: Understand your income, expenses, and debts in detail.
• Reduce unnecessary spending: Cancel subscriptions you do not use. Walk or cycle to work where practical. Cut back on takeaways and dining out, although do not get too caught up in the “stop buying lattes” line of thinking.
• Pay down debts: Prioritise clearing existing debts, including credit cards and buy now, pay later balances.
• Close unused credit: Unused overdrafts and credit cards reduce borrowing power even at a zero balance.
• Boost your income: Explore additional income through side work or career advancement.

Before applying, ensure you understand your stability of employment, the affordability of repayments at current and potentially higher interest rates, and the importance of maintaining a clean credit history.

How Much Deposit Do You Need?

The standard deposit is 20% of the purchase price. For a $700,000 property, this means $140,000. Your deposit can come from personal savings, investments, KiwiSaver Scheme withdrawals, and gifts from family.

If you qualify for a Kāinga Ora First Home Loan, you may be able to purchase with as little as 5% deposit. More on this below.

KiwiSaver First Home Withdrawal

If you have been a KiwiSaver Scheme member for at least three years, you can withdraw most of your balance to put towards a first home deposit. You must leave a minimum of $1,000 in the account, and the property must be one you intend to live in. There is no cap on the withdrawal amount beyond the $1,000 minimum balance requirement.

The withdrawal includes your own contributions, your employer’s contributions, and accumulated investment returns. It cannot be used for an investment property.

Timing is critical. Apply to your KiwiSaver Scheme provider (not IRD or Kāinga Ora) at least four to six weeks before your settlement date. Providers typically quote 10 to 20 business days for processing, but delays can and do occur. The funds are paid directly to your solicitor’s trust account, not to you personally. If you leave this too late, you risk delaying settlement and potentially losing the property.

If you have owned property before but no longer do, you may still qualify for a “second chance” withdrawal. Kāinga Ora can assess whether you are in a similar financial position to a first home buyer.

Note: The First Home Grant was discontinued in May 2024 and is no longer available. The KiwiSaver first home withdrawal and the First Home Loan are separate programmes and remain fully available.

The First Home Loan

The Kāinga Ora First Home Loan allows eligible first home buyers to purchase with a deposit of just 5%. Kāinga Ora underwrites the loan, which means participating banks can accept a lower deposit than they would normally require. A lender’s mortgage insurance premium of 1.2% of the loan amount applies and can usually be added to the loan itself.

To qualify (at the time of writing), you must be a New Zealand citizen or permanent resident, have a before-tax income of $95,000 or less (single buyer without dependants) or $150,000 or less (two or more buyers), and intend to live in the property. Income thresholds and lender eligibility criteria can change, so confirm current requirements before applying.

Participating lenders include Westpac, Kiwibank, SBS Bank, Co-operative Bank, ASB, NZHL, and Unity. Interest rates, fees, and credit criteria vary between lenders, so it is worth comparing options or working with a mortgage adviser who can do this for you.

You can use your KiwiSaver first home withdrawal as your 5% deposit for a First Home Loan. This is one of the most common ways first home buyers enter the market.

Help from Family

Family assistance, sometimes called the “Bank of Mum and Dad,” plays a growing role in first home purchases. Options include outright gifts, interest-free loans, and guarantees against a parent’s property.

If you go down this route, all parties should take independent legal advice. Expectations need to be documented: what happens if you separate from a partner? What if your parents need the money back? A properly drafted agreement avoids family disputes and protects everyone involved.

What Is Mortgage Pre-Approval?

A mortgage pre-approval is a formal indication from a lender confirming it is prepared, in principle, to lend you a specific amount. It serves three purposes:

1. It sets your budget so you can focus on homes you can realistically afford.
2. It strengthens your offer. Sellers and agents take pre-approved buyers more seriously.
3. It speeds up the process once you find a property, since the lender has already assessed your finances.

A pre-approval is typically valid for several months and can usually be extended, provided your financial position has not changed materially. To obtain one, you will generally need: pay slips or proof of income (three to six months), bank statements (three months), tax returns for the last two years if self-employed, a statement of assets including your KiwiSaver Scheme balance, and a statement of liabilities including credit cards, student loans, and buy now, pay later balances.

Buying Alone or With a Partner?

Buying with a partner increases borrowing power and shortens the deposit-saving timeline, often making market entry possible years sooner. However, both parties are jointly liable for the full mortgage, and a clear co-ownership agreement is essential. Learn more about the financial implications of separation in our article on KiwiSaver and relationship property.

Buying alone offers independence and simplicity, but your options will be constrained by a single income. There is no right answer; it depends on your circumstances.

2. Build Your Team of Experts

Buying a property is likely the biggest financial decision you will make. Surround yourself with the right professionals and you will save time, money, and stress.

The Mortgage Adviser

The New Zealand lending market is complex and the rules change regularly, as do mortgage interest rates. A good mortgage adviser (also called a mortgage broker) will be by your side throughout the entire process, helping you navigate the regulatory and banking environment.

A mortgage adviser assesses different lenders and identifies where you are best placed to obtain a mortgage. They are often able to negotiate a more competitive interest rate and potentially a cashback offer on your behalf. In most cases, using a mortgage adviser costs you nothing; the lender pays their fee.

If you are ready to start the conversation, our first home buyer mortgage page explains how the process works and what to expect. Or, if you prefer to talk to someone directly, book a complimentary first home consultation.

The Solicitor

Your lawyer (solicitor) or conveyancer handles the legal side of the transaction. Their role includes:

• Sale and Purchase Agreement: reviewing it before you sign, ensuring it contains standard terms and the deal is documented correctly.
• Conditions: assisting with conditions around building reports, LIM reports, finance, and other matters.
• KiwiSaver withdrawal: helping facilitate the release of your KiwiSaver Scheme investment towards settlement.
• Title search: conducting a title search and advising on easements, covenants, consent notices, and other encumbrances.
• LIM report: helping you order and review a Land Information Memorandum, including building permits, code of compliance, and utility supply.
• Settlement: ensuring everything is processed correctly so you receive the keys only when all funds have transferred and the title is in your name.

The Valuer

Most banks now require a registered valuation before confirming a mortgage. Even if they did not, spending $600 to $1,000 for the peace of mind of knowing you are not overpaying on a transaction worth several hundred thousand dollars is a sound investment.

Building Inspector and Other Professionals

Depending on the property, other professionals may need to be involved. Building inspectors, engineers, and in some cases asbestos or meth-testing specialists can help you avoid purchasing a problem home.

New Zealand has a mixed reputation for housing quality, and the potential issues extend well beyond the leaky building saga. Meth contamination, weather-tightness issues, and non-consented work are all hazards a professional inspection can identify. These reports might seem costly upfront, but in the context of a transaction worth hundreds of thousands of dollars, the cost of getting things wrong is far higher.

3. KiwiSaver and Other Assistance

KiwiSaver Scheme membership is one of the most powerful tools available to New Zealand first home buyers, providing a disciplined savings vehicle combined with employer and government contributions. The eligibility rules and withdrawal process are covered in detail in the KiwiSaver First Home Withdrawal section above.

A few recent changes to the KiwiSaver Scheme environment are worth noting:

• Higher default contributions: from 3% to 3.5% for both employees and employers in April 2026, with a further increase to 4% in April 2028. If you are several years away from purchasing, your balance will build faster without any action on your part.
• Reduced government contribution: now 25 cents for every dollar you contribute, up to approximately $261 per year. Members earning $180,000 or more no longer receive the government contribution.
• Younger members: from April 2026, employed 16- and 17-year-olds will qualify for employer contributions for the first time.

4. Count the True Costs of Home Ownership

Upfront Costs

The purchase price is only the beginning. Upfront costs typically include a property valuation, a building inspection or engineer’s report, a LIM report, your solicitor’s fees, and moving costs. Together, these can easily add up to $5,000 to $10,000 or more.

Ongoing Costs

Ongoing costs include council rates, house insurance (which the lender will require), and regular maintenance. All lenders factor rates and insurance into their assessment of your borrowing power, so it pays to research these costs early. Regional council websites provide rates assessments and basic property data such as land and dwelling size, two factors your insurer will use when quoting house insurance.

Maintenance: The Cost Most Buyers Underestimate

What happens when a tap leaks, a hot water cylinder fails, or a fence blows over in a storm? Set aside a regular sum for unexpected repairs and maintenance. Treat it as a non-negotiable line item, not an afterthought.

Stress-Test Your Budget

When you apply for a mortgage, the bank will test your cash flow against a higher servicing rate. You should do the same. If mortgage rates rise meaningfully from where they are when you purchase, will you still be able to meet your repayments without cutting into essentials?

Become Wealth view: A household with a $600,000 mortgage at 5.5% pays roughly $3,700 per month. At 7.5%, the same mortgage costs approximately $4,400 per month. If an extra $700 per month would create genuine hardship, consider purchasing at a lower price point and giving yourself breathing room.

5. House Hunting and the Buying Process

With your finances and pre-approval sorted, the exciting phase begins. If you are buying with someone, agree on your priorities before you start looking. Spend some time learning about the different types of property, familiarise yourself with real estate terminology, and understand the potential issues to watch for.

Check listings online, attend open homes, and let a few real estate agents know what you are looking for. If they are competent, they will contact you when suitable properties come onto the market.

Do Your Homework

Once you have narrowed your search, find out as much as you can about the property and its neighbourhood before making an offer. Review the LIM report, check flood and natural hazard overlays on your local council’s website, and talk to neighbours if you can. Drive past the property at different times of day and on different days of the week.

Make an Offer

You can buy a home by auction, negotiation, deadline sale, or tender in New Zealand.

A conditional offer means conditions must be satisfied before you commit: confirming finance, obtaining a satisfactory building report, or reviewing a LIM, for example. Conditions always have a timeframe and must be completed by the specified date. An unconditional offer means you are committed to buying the property as it stands. Do not make an unconditional offer without completing all your due diligence.

Making and signing an offer can create a legally binding contract once accepted. Always have your solicitor review the Sale and Purchase Agreement before you sign.

Using Conditions to Your Advantage

Conditions are not just administrative checkboxes. They are negotiating tools.

If your building report reveals issues, such as a roof nearing end of life, non-consented work, or deferred maintenance, you can return to the vendor and negotiate a price reduction or request the work be completed before settlement. Many first home buyers accept building report findings at face value and proceed without negotiation. A well-documented report gives you leverage. Use it.

Similarly, if your solicitor identifies title issues (such as an unregistered easement or a consent notice requiring specific maintenance), these can form the basis of further negotiation or give you grounds to withdraw.

Become Wealth view: We regularly see first home buyers waive conditions under competitive pressure. This is one of the riskiest decisions in the process. An unconditional offer on a property with hidden defects can cost tens of thousands of dollars and years of stress. Conditions exist to protect you. Use them.

Pre-Settlement Tasks

The final stretch involves confirming your mortgage, arranging insurance, and completing several administrative tasks before settlement day.

KiwiSaver withdrawal: submit your withdrawal application at least four to six weeks before settlement, as explained in the KiwiSaver section above. This is the single most common source of settlement delays for first home buyers.

Confirm loan structure: your mortgage adviser will help you structure the loan to suit your goals. Once the structure is agreed, the bank prepares loan documents and sends them to your solicitor.

Arrange house insurance: you will need full house insurance in place before settlement. The lender will require proof of cover and will be listed as an interested party on the policy. Without insurance, the lender will not release the funds.

Final inspection: arrange a final walk-through via the real estate agent. Confirm all inclusions listed in the Sale and Purchase Agreement are still in place and no damage has occurred since you signed.

Transfer remaining funds: ensure any remaining deposit or settlement funds are transferred to your solicitor’s trust account as directed.

Settlement Day

On settlement day, most of the work is handled behind the scenes by your solicitor and the bank. Once funds have settled and the title has transferred, you will receive the keys.

Practical tasks to tackle around settlement:

• Set up power, gas, internet, and water accounts at the new address.
• Update your address with NZTA, IRD, your bank, and your employer.
• Redirect mail from your old address via NZ Post.
• Take meter readings on arrival to avoid disputes over the first bill.
• Keep your solicitor’s settlement statement and all purchase documents in a safe place.

Related:

• The secrets of mortgage cashback
• How to prepare for a home auction
• How to increase your home value

The Bottom Line: Buying a First Home Is Not a Pipedream

Buying a home can feel like navigating a maze with no map. But armed with the right knowledge, a clear plan, and a team of professionals in your corner, the process becomes manageable.

For first home buyers in New Zealand, the tools available are considerable: KiwiSaver withdrawals, the First Home Loan, a mortgage market with genuine competition among lenders, and advisers who do this every day. The barriers are real, but they are not insurmountable.

Home ownership is an ongoing commitment. It requires financial discipline, a willingness to adapt, and a healthy reserve for the unexpected. But it remains one of the most important financial foundations you can build.

Here at Become Wealth, we help people buy their first home every day. If you would like to talk through your situation with a mortgage adviser, book a free first home consultation.