The First Home Grant Scheme is No More. What are the Other Options for First-Home Buyers?

As of 22 May 2024, the government announced the termination of the First Home Grant scheme, which provided up to $5,000 for individuals to put towards the purchase of an existing or older home or up to $10,000 towards the purchase of a brand new home.

Housing Minister Chris Bishop explained that ending the grant would save the Government $245 million over four years. Of this amount, $140 million will be allocated to help fund social housing. Last year, 12,000 people received the First Home Grant, and since June 2017, the Ministry of Housing and Urban Development reported that 87,000 grants had been distributed.

What was the First Home Grant?

The First Home Grant provided eligible first-time home buyers with financial assistance: up to $5,000 per individual for purchasing an existing or older home, or up to $10,000 for purchasing a brand new home. Administered by Kāinga Ora, the grant had specific eligibility criteria. Couples needed a combined income of less than $150,000, while single buyers needed to earn below $95,000. Additionally, applicants had to have contributed to KiwiSaver for at least three years. There was also a house price cap that varied by region. The lowest cap was in areas like Ashburton, set at $400,000 for existing houses and $650,000 for new builds.

What Other Help is out there for First-Home Buyers?

While this grant is being axed, there are still several options available to assist with the purchase of a first home:

KiwiSaver First-Home Withdrawal

First-time buyers who have been contributing to KiwiSaver for at least three years can withdraw their KiwiSaver savings to put towards the purchase of their first home. This can include contributions made by the individual, their employer, and the government, but a minimum balance of $1,000 must remain in the account. You must also intend to live in the property and the money cannot be used to buy an investment property.

Kāinga Ora First Home Loan

The First Home Loan scheme, backed by Kāinga Ora, allows eligible buyers to purchase a home with a deposit as low as 5%. This loan is offered by selected banks and lenders. To qualify, applicants must meet certain income and house price caps, similar to those that were in place for the First Home Grant. There are other eligibility rules to meet such as residency status and bank lending criteria.

Family Assistance

There are different ways that first-home buyers can get financial help from parents or family members to boost their deposits and avoid paying a low equity premium. Many banks have their own versions of this model. We recently wrote an article about one of these methods, Co-borrowing here.

Shared Ownership Schemes

In areas where house prices are high, the Shared Ownership Scheme helps buyers by purchasing a share of the home. The buyer then pays rent on the Housing New Zealand share while owning the rest of the property. Over time, the buyer can purchase additional shares until they own the home outright.

Bank and Lender Programs

Banks and financial institutions offer their own first-home buyer programs, which can include special home loan rates, cash contributions towards home purchases, and tailored financial advice. At Rapson, we have access to over 50 lenders and work exclusively for our clients, so get in touch with us to find out which of these deals might suit your particular circumstances.

At Rapson Loans and Finance, we assist first-home buyers to consider all available options. We are committed to providing the right solution to suit you and your situation. changes, please don’t hesitate to contact us.

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