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How to get your first home with a 5% deposit

First home with 5% deposit? You need to read this!

If you're a first-time home buyer in New Zealand, you may be eligible for the ‘First Home Loan’ scheme, a government initiative that aims to help make home ownership more accessible. In this article, we'll take a closer look at what the First Home Loan is, how it works, and who is eligible to apply (at the time of writing this article).

What is the First Home Loan? 

The First Home Loan is a government-backed initiative that aims to make it easier for first-time home buyers to get onto the property ladder. The scheme provides eligible borrowers with a loan to help them buy their first home, with a deposit of as little as 5% of the purchase price. 

The loan is provided by a participating lender, such as a bank or credit union, and is backed by the government. This means that the lender is taking on less risk by providing the loan, as the government is providing a guarantee to cover any losses in the event that the borrower defaults on the loan. 

How does the First Home Loan scheme work? 

To be eligible for the First Home Loan scheme, you must meet certain criteria. You must be a New Zealand citizen or resident, be at least 18 years old, and have a deposit of at least 5% of the purchase price. You must also have a good credit history and be able to afford the mortgage repayments, taking into account your income, expenses, and other debts. 

Once you've met the eligibility criteria, you can apply for a First Home Loan through a participating lender. The lender will assess your application and determine whether you meet their lending criteria. If your application is approved, the lender will provide you with a loan to purchase your first home, with a deposit of as little as 5%. 

The loan is provided on similar terms to a regular home loan, with a fixed or floating interest rate and a term of up to 30 years.  


Who is eligible for First Home Loan? 

To be eligible for First Home Loan, you must meet certain criteria. In addition to being a New Zealand citizen or resident, and having a deposit of at least 5%, you must also: 

  • Be a first-time home buyer, or a previous home owner who no longer owns a property and is in a similar financial position to a first home buyer. 

  • Have a pre-tax income (over the past 12-months): 

  • $95,000 or less for a single borrower without dependents; 

  • $150,000 or less for a single borrower with one or more dependents; 

  • $150,000 or less for two or more borrowers (regardless of number of dependents). 

  • Purchasing a property to live in as primary place of residence. 


In addition to these criteria, there may be other requirements specific to the lender or the type of loan you are applying for. It's a good idea to speak with a mortgage broker (also known as a mortgage adviser) to discuss your options and find the best home loan product for your needs. 


The contents of this article are for information-only and may express the opinion of the writer. This article is not be taken as personalised financial advice, as everyone’s situation is different. Please always seek advice from a financial adviser before making any decisions with your personal and/or business finances. Please note that this blog is relevant to the time it was published, and may not be relevant to the market in the future.


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