Help for First Time Home Buyers in New Zealand


First home buyers grant

In New Zealand there are two ways in which first time home buyers can receive help when purchasing a home. The first is a government grant which is linked to KiwiSaver. The second is the Welcome Home loan, which helps people with modest incomes, who are outside standard lending criteria, to get a home loan with little or no deposit. Housing New Zealand provides lenders mortgage insurance to participating banks, building societies and other lending institutions.

The KiwiSaver home buyers grant

First-home buyers aged over 18 who have had a KiwiSaver account for three years, can qualify for the Home Buyers grant. For one or two buyers the maximum income cap is a combined yearly income of $100,000 or less (before tax) or $140,000 or less (before tax) for three or more buyers. The value of the grant is currently $3000.00 but this will increase to $4000.00 in 2011, $5000.00 in 2012 and $10000 in the following years. To be eligible, applicants must have contributed at least 2% of their income to a KiwiSaver scheme for the last three years. They must live in the house for at least six months and not own any other property. There are also certain regional maximum purchase price caps. The caps are $400,000 for Auckland City, North Shore City, Rodney District, Wellington City and Queenstown Lakes District and $300,000 for all other areas.

Due to eligibility conditions, only 300 KiwiSaver members are expected to take advantage of the offer. In addition, many people signed up to KiwiSaver after July 2007, and will be able to get the grant only after their personal KiwiSaver is three years old. The expectation is that 1000 per year will be applying from 2011. People who invested in KiwiSaver from the start will be able to spend their own savings (which would otherwise be locked up until retirement) as well as take the $3000 grant towards a first home. Applicants must apply through their KiwiSaver provider or to Housing New Zealand for pre-approval through their website. Both the first home deposit subsidy and first home withdrawal can be used to buy land to build a house on, or buy an apartment that is being built.

The Welcome Home loan

Welcome Home Loans are for people who do not have a deposit or who only have a small deposit. It is a Government supported initiative to make access to home ownership finance easier for New Zealanders with modest incomes. It is to help people who can afford to repay a home loan but have trouble saving for a deposit. The following income and purchase price caps apply:

Maximum income: For 1 or 2 borrowers, a maximum household yearly income of $85,000 (before tax) and for 3 or more borrowers, a maximum household yearly income of $120,000 (before tax).

Maximum purchase price: up to $200,000 can be borrowed with no deposit required. The maximum purchase price is either $280,000 or $350,000 depending on where you will be buying.

The Welcome Home Loan is for owner-occupied properties only, not for rental properties and borrowers must not own any other property. Borrowers may need to pay fees such as an application fee and a Lenders Mortgage Insurance premium fee, but in most cases these can be built into the home loan. Applicants need to either be a New Zealand citizen, or have permanent residency with a Indefinite Returning Residents Visa to be eligible.

How do I apply for a Welcome Home loan?

To apply for a Welcome Home Loan, you need to choose a participating lender and complete a loan application form. Each participating lender will apply its own credit criteria when making its assessment of your ability to borrow. Each participating lender will have its own interest rates and fees. One of those fees is to reimburse the lender for the Lenders Mortgage Insurance premium Housing New Zealand charges to insure each Welcome Home Loan. The amount of this fee is 1% of the loan amount, which can be added onto the loan. Contact the participating lender to discuss your personal situation.

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