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First Home Grant: Buying your first home

Buyers  |  5 July 2020  | By the settled.govt.nz team

Thinking of buying

Is the dream of home ownership within your grasp? It could be more possible than you think! You may be eligible for government support to buy your first home… including a First Home Grant.

What is a First Home Grant?

Have you been contributing to KiwiSaver? After just three years of contributions, you may be entitled to a First Home Grant, administered by Kāinga Ora. Grant values vary according to whether you’re purchasing an existing home (maximum $5,000 per eligible member or building) or purchasing a new home (maximum $10,000 per eligible member).  

Note: A ‘new home’ should be recently built and have had a code of compliance certificate for up to 12 months.

Am I eligible for a First Home Grant?

You may be able to apply for a First Home Grant if you, or anyone you may be buying a home with:

  • have been contributing the required minimum amount to KiwiSaver for at least three years
  • are aged 18 years or over
  • have not already received the First Home Grant or its predecessors, the KiwiSaver HomeStart Grant or KiwiSaver first-home deposit subsidy
  • have a household income (before tax) of up to $85,000 in the last 12 months (for sole purchaser), or up to $130,000 in the last 12 months (for two or more purchasers)
  • are buying an acceptable type of property or land arrangement
  • are buying a property with a purchase price within the designated house price cap for the region
  • have a deposit that is at least 5% of the purchase price, including the addition of the grant, KiwiSaver withdrawal amount, savings or family gifts supported by a gifting declaration.

See the Kāinga Ora website for the full criteria.

What’s involved in applying for a First Home Grant?

Think you meet the criteria? Great! If you’re actively house hunting we suggest applying for pre-approval. This is valid for six months and gives you peace of mind, knowing you can tap into that money when you find a property you want to buy.

We recommend setting up an online myIR account with Inland Revenue if you haven’t already. You can then easily download your certificate of earnings and KiwiSaver contribution statement, which will both be needed as supporting documentation in your application.

The application process for a First Home Grant requires:

  • proof of income (all purchasers and intended purchasers need to prove what you’ve earned in the last 12 months – most often a certificate of earnings from IRD will suffice, or a copy of your IR3 if you’re self-employed)
  • KiwiSaver contribution statement (if you’re self-employed you’ll need to request this directly from your KiwiSaver provider)
  • identification (i.e. copy of passport, birth certificate or drivers’ licence)
  • a signed and dated copy of an agreement for sale and purchase, and a fixed price building contract or a contract with a builder or developer for a property that is to be built
  • evidence that you have a deposit of at least 5% of the purchase price
  • a proposed settlement date or grant payment date at least four weeks away, or at least two weeks if you have been granted pre-approval.

 You can apply online on the Kāinga Ora website.

How long does it take to process an application?

It generally takes up to five working days to process an application, if you have provided the correct supporting documentation. However, seeking pre-approval for a grant is the best way to go – otherwise you’ll need to apply at least four weeks before your settlement date. This can put a spanner in the works when you’re trying to make a quick purchase. Kāinga Ora will pay the grant by the day of settlement but can’t accept retrospective applications. 

How is the First Home Grant paid?

The grant money is paid directly to your solicitor. For new builds and properties purchased off the plans, the money can be paid in advance and held in trust and be released for settlement date.

Can I get pre-approval for a First Home Grant?

Yes, you can – in fact this is advisable. Your pre-approved grant is valid for six months, which gives you time to find a suitable property. It also means you know one way or the other whether you can count on this money for your big purchase.

How does the First Home Grant process differ from the KiwiSaver withdrawal process?

KiwiSaver first-home withdrawal means you can take out most of the money you, your employer and the Government contributed to KiwiSaver after at least three years in the scheme to purchase your first home – as long as you leave at least $1,000 in your account. You’ll need to apply to your KiwiSaver provider to do this.

The First Home Grant requires a separate application process and provides a grant amount on top of your KiwiSaver withdrawal as long as you meet the eligibility requirements.

Can the First Home Grant be used to purchase land I’m intending to build on?

It is possible to use the First Home Grant if you are planning to buy land, but in order to receive the grant you will need to:

  • provide a signed and dated copy of an agreement for sale and purchase for the land
  • provide a fixed price building contract with a builder or developer for a yet to be built property
  • provide a fixed price contract for rehoming and habitation, if relocating an older home on the land
  • ensure the total property and land cost is within the designated house price cap for the region
  • live in the property for at least six months from the date the code compliance certificate is been issued
  • possess funding for the construction of the property, if applicable
  • be ready to build on the land
  • submit your application at least four weeks before the settlement date for the land purchase.
What other assistance is available in New Zealand for first time home buyers?

We have plenty of suggestions on our website on how first home buyers can fund their first home. For instance:

  • If you have contributed to KiwiSaver for at least three years you may be able to withdraw some of your savings from your KiwiSaver account
  • The First Home Loan is also designed to help first home buyers who have saved less than the required deposit. If you’re eligible you might be able to get a home loan with a 5% finance deposit rather than the 20% required by most lenders. How much you can borrow depends on your lender, where you live in New Zealand and what you can afford. 
  • If you’re Māori and have a right to occupy multiple-owned Maori land and are looking to achieve home ownership you may be eligible for a Kāinga Whenua loan to build, buy or relocate a home onto your ancestral land. For further information on this scheme, go to www.kaingaora.govt.nz.

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