How much to save for my first home loan deposit
Figure out the first home deposit you’ll need, and how to reach that goal with the help of your KiwiSaver savings.
House deposit
With house prices in New Zealand on the rise, saving a deposit for a house in NZ has never been more challenging. But there are ways to make this process easier, including NZ government help for first-home buyers.
A place to call your own
While surviving on a shoestring budget in your renting years is a rite of passage for many Kiwis, the natural progression is to eventually step onto the property ladder with a property purchase. Homeownership is a big step to take, particularly given how much house prices have risen in recent years.
The first step on the road to becoming a homeowner is saving your deposit. How much deposit to buy a house in NZ? In most cases you’ll need to save at least 20% of the value of the real estate you plan to purchase, so the higher the price, the larger the deposit.
What is a house deposit?
A house deposit is a pool of savings, slowly built up over the years, that you use to put a down payment on a property purchase.
Banks are restricted on how much money they are allowed to lend to prospective home buyers. These restrictions – called LVRs (loan-to-value ratios) – make it difficult to gain pre-approval for a home loan if you have an insufficient deposit.
So, if you want to take out a home loan/mortgage, New Zealand rules state that you must bring a minimum house deposit to secure the loan.
How much do I need to save for a house deposit?
In most cases, you’ll need to have saved a house deposit that is at least 20% of the property’s purchase price to buy a house.
20% can feel like a tough task in this day and age, but that figure isn’t a blanket rule across all NZ home loans – with the help of KiwiSaver, there may be a glimmer of hope for first-home buyers who are struggling to reach their deposit goals.
Ways to achieve the minimum deposit
If you want to buy your first home, but don’t have the 20% deposit you need, there are a few strategies that can help you secure that first property.
Getting to 20% with the power of KiwiSaver
While KiwiSaver is usually associated with retirement savings, it can also help you get into your first home quicker, as you can withdraw most of your savings for the purchase of your first home. If you’re buying a first home with a partner, you can both withdraw funds from your KiwiSaver accounts.
Between employer contributions, voluntary contributions and government contributions – for every $1 you put into your KiwiSaver account; the Government puts in $0.50 (up to $521.43 a year) – you may be able to grow your first home deposit quicker in KiwiSaver than in a traditional savings account.
Eligibility criteria apply – amongst other things, you can only make a KiwiSaver first home withdrawal if you haven’t owned property before, if you have been a KiwiSaver member for at least three years, and if you will live in the home or on the land that you are buying (KiwiSaver first home withdrawal cannot be used to purchase an investment property).
First home loan
Saving a 20% house deposit for your first home can be a struggle. However, in some circumstances, the deposit required may be less than 20%.
Several home loan products requiring lower deposits do exist, such as a 'First Home Loan', which can require a minimum deposit that is lower than most traditional home loans. This may make getting into your first home a little easier.
You can apply for a low deposit First Home Loan from participating lenders, though not all banks and lenders offer this option. Kāinga Ora underwrites the loan, which means you won’t face the higher interest rates, home-buying hidden costs, extra upfront fees, or extra legal fees in home purchasing that low LVR loans can often incur.
First Home Loan eligibility criteria apply, which are set by the government, including an income cap and a regional house price cap. See the Kāinga Ora website for details.
As part of the mortgage application, you'll need to meet the specific lending criteria of the participating lender you choose, which can take in everything from your credit history to the credit cards you hold, to the number of dependents you have.
As with all major monetary decisions, it’s wise to seek advice from a professional adviser. Your mortgage broker or Adviser can help you apply.
First Home Grant
You may also be eligible for the First Home Grant (previously called the KiwiSaver HomeStart grant).
This gives first-home buyers a grant of up to $5,000 for individuals and up to $10,000 for couples to put towards the purchase of an existing or older home. It’s even more generous for a new home, with up to $10,000 for individuals and $20,000 for couples contributing to a new build.
You can apply for a low deposit First Home Loan from participating lenders, though not all banks and lenders offer this option. Kāinga Ora underwrites the loan, which means you won’t face higher interest rates or extra upfront fees. Before you can get a First Home Loan you need to meet criteria set by the government, including an income cap and a regional house price cap. See the Kāinga Ora website for details.
As part of the mortgage application, you'll need to meet the specific lending criteria of the participating lender you choose, which can take in everything from your credit history to the credit cards you hold, to the number of dependents you have.
As with all major monetary decisions, it’s wise to seek advice from a professional adviser. Your mortgage broker or Adviser can help you apply.
What other costs do I need to budget for?
While the deposit and home loan repayments may be your biggest and most obvious property purchase expenses, there are several other costs to be aware of and plan for. These include:
- Interest rates: You can face higher interest rates at any time in response to reserve bank cash rate increases.
- Fees: A range of fees may be incurred, from loan application fees to legal and conveyancing fees.
- Insurance: Lenders mortgage insurance (LMI) can apply to low-LVR loans, while you should also insure your new home and contents.
- Miscellaneous expenses: Builder’s reports, moving costs, repair and renovation costs, furnishings and decor.
- Ongoing costs: Council rates, strata fees, utility bills, general maintenance and upkeep.
Useful tools, documents and forms
Already have an AMP KiwiSaver account? The following tools and resources offer easy ways for our members to better understand and grow their retirement savings.
KiwiSaver first home withdrawal application
If you’re ready to make your first home withdrawal, download and complete the form below. Send it to kiwisaver@amp.co.nz and we’ll do the rest!
DOWNLOAD FORM
Review your income and expenses
It’s wise to regularly review not just your KiwiSaver situation, but your general financial health. Our easy-to-use budget worksheet can give you a clear idea of how much money is going out, and how much is going in.
BUDGET WORKSHEET
Check your financial fitness
Another, even simpler tool to check your financial health, our free Financial Fitness Check takes just five minutes, and can make the tricky task of managing your money far simpler.
FINANCIAL FITNESS CHECK
KiwiSaver fund quiz tool
As an AMP KiwiSaver Scheme member, you have total control over how your retirement savings are invested. You can mix and match up to seven different funds, and our Fund Quiz tool can help you to identify which funds are right for you.
KIWISAVER FUND QUIZ
Learn more about KiwiSaver and first homes
At the beginning of your KiwiSaver journey? Your first home deposit is just one way in which KiwiSaver can help you to build a brighter future for yourself.
How to save for a house deposit faster
With the help of some smart saving strategies, you can get into your own home sooner, and create some good financial habits along the way. Check out our guide to building your deposit faster.
Use KiwiSaver for your first home
Are you eligible to use your KiwiSaver savings to buy your first home? How exactly do you withdraw the funds from your KiwiSaver account? This guide walks you through all you need to know.
First home and retirement calculator
How much money do you need to save for your first home, or for retirement? What level of contributions, and over how much time, do you need to reach that goal? Our calculator gives you clarity on your savings targets and how to achieve them.
FAQs
How much deposit do I need to buy a house in New Zealand?
If you’re saving for a house deposit in NZ, you should be aiming for 20% of the purchase price of your preferred property. If you’re looking at properties worth $600,000, for example, you should aim for a deposit of $120,000.
That said, as mentioned above there are ways and means to secure a loan if you haven’t yet saved a deposit of 20%, including Kāinga Ora’s First Home Loan scheme, the First Home Grant, and withdrawing from your KiwiSaver.
Can you get a mortgage with a 10% deposit?
If you meet the First Home Loan eligibility criteria, you may gain access to this Kāinga Ora scheme, which offers low-LVR loans.
Is 100k enough for a house deposit in NZ?
Working on the 20% deposit minimum, a $100,000 deposit will allow you to secure a loan with a maximum value of $500,000, which, depending on your property preferences and the region you’re shopping in, could be more than enough for you to purchase your first home.
This article doesn't provide financial advice on your investment choices. Any information we provide is general only and current at the time. You should consider seeking advice when considering whether an investment is appropriate for your objectives, financial situation or needs.