First Home Buyer’s Guide: How to Get a Mortgage in New Zealand
Dec 18, 2024
Buying your first home is a major milestone — and often, the hardest part is understanding how to actually get a mortgage approved.
From saving your deposit to navigating lender rules, this guide breaks down exactly what first-home buyers in New Zealand need to know to go from “thinking about it” to holding the keys.
Why This Guide Matters
The first-home process in NZ can be overwhelming. Deposit requirements, income checks, bank rules, and government support schemes all interact — and they’ve changed a lot in recent years. This guide explains how to prepare, what lenders look for, and the smartest way to approach your first mortgage.
Saving for a Deposit: What You Really Need
The traditional benchmark for a home loan in New Zealand is a 20% deposit, but first-home buyers have more flexibility than they might realise.
Standard deposit: 20% (LVR 80%) — the gold standard that unlocks the best rates and avoids low-equity fees.
Low-deposit paths: Eligible first-home buyers may be approved with 10% or even 5% deposits under certain schemes or strong credit conditions.
First Home Loan (Kāinga Ora): Government-backed loans allow a 5% deposit for qualifying buyers.
Bank flexibility: Some lenders accept 10% deposits for first-home buyers with stable income or strong repayment history.
Alternative lenders: Non-bank and specialist lenders may offer 10–15% deposit products, though usually at higher interest rates.
KiwiSaver withdrawals: After three years of contributions, you can withdraw funds to use toward your deposit.
Preparing Your Financial Profile
Banks and lenders look beyond your deposit — they assess your entire financial picture to decide how much you can safely borrow.
Key factors include:
Income stability: Consistent employment or verified self-employment income.
Debt-to-income ratio: From July 2024, banks must limit high debt-to-income loans under new Reserve Bank rules.
Credit history: A clean record, no missed payments, and minimal high-interest debt.
Living expenses: Banks “stress-test” your repayments using higher assumed rates to ensure affordability if rates rise.
Loan-to-value and serviceability caps: These macro-prudential limits control how much low-deposit lending a bank can do in any period.
Choosing the Right Loan Type & Structure
Your loan structure can affect how much you pay and how much flexibility you have.
Fixed-rate loans: Lock in your rate for 1–5 years; ideal for budgeting stability.
Variable (floating) loans: Move with market rates; allow faster repayment or lump-sum payments.
Split loans: Combine fixed and variable portions for balance and flexibility.
Principal & Interest: The standard for first-home buyers — repayments reduce both interest and loan balance.
Interest-Only: Rare for first-home buyers; typically short-term and used for cash-flow management or bridging.
When comparing options, check for break fees, repayment flexibility, and whether you can make extra contributions without penalty.
Already have a mortgage and want to understand when and why to refinance?
Government Assistance & Grants
New Zealand offers several forms of help to make getting on the property ladder easier:
First Home Loan (Kāinga Ora): Allows approved buyers to purchase with a 5% deposit.
KiwiSaver Withdrawal: Eligible members can use their savings to boost their deposit (after at least three years of contributions).
Kāinga Whenua Loan: Available for Māori individuals or trusts to buy, build, or relocate a home on Māori land.
Note: The First Home Grant was phased out in 2024, but many banks continue to offer special packages for first-time buyers.
To qualify, you must be a NZ citizen or permanent resident, meet lender and Kāinga Ora income caps, and not already own property.
How to Compare Lenders & Use a Mortgage Broker
Finding the right lender isn’t just about chasing the lowest rate — it’s about structure, flexibility, and service.
Compare total cost: Include application fees, account fees, and low-equity margins.
Check repayment features: Look for offset or redraw options if flexibility matters.
Consider smaller lenders: They may offer better support for first-home buyers or accept smaller deposits.
Use a mortgage broker: Brokers can access a wide range of lenders and negotiate on your behalf — saving you time and improving approval odds.
Get multiple quotes: Compare offers side-by-side to ensure you’re not overpaying in the long term.
Understanding the Application Process
A first-home mortgage application generally follows these stages:
Initial consultation: Discuss your goals and finances with a broker or lender.
Application & pre-approval: Submit documentation for income, ID, and deposit; receive a conditional lending amount.
Property search: Find your home and make a conditional offer (“subject to finance”).
Valuation & final approval: Lender verifies the property value and finalises loan conditions.
Legal & settlement: Your lawyer handles title transfer and mortgage registration.
Most applications move from pre-approval to settlement in 4–8 weeks, depending on property type and complexity.
Read our mortgage document checklist to understand what documents you need to prepare.
Common Mistakes First-Home Buyers Make
Avoiding these pitfalls can save you thousands and weeks of stress:
Leaving it too late to talk to a mortgage adviser.
Focusing only on the lowest advertised interest rate.
Underestimating upfront costs (legal, LIM, building inspection, insurance, moving).
Misunderstanding KiwiSaver or withdrawal eligibility.
Approaching only one bank instead of comparing options.
Overstretching your budget without leaving room for rate rises or emergencies.
Tips for a Smooth First-Home Journey
Start early — track expenses and pay down consumer debt.
Automate savings toward your deposit.
Keep your employment and income stable through the process.
Use gifted funds only with proper documentation.
Maintain a cash buffer for unexpected costs.
Review interest rates annually and refinance if a better structure becomes available.
Stay in touch with your broker or lender for ongoing advice.
Key Takeaways
Getting your first mortgage in New Zealand is entirely achievable — but it takes planning, documentation, and good advice. Save strategically, prepare your finances, understand your eligibility, and compare lenders before committing. Working with an experienced mortgage adviser can dramatically increase your approval odds and help you secure the right structure for your goals.
Talk to a New Zealand Mortgages adviser to check your readiness and begin your pre-approval today.
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