First Home Loan: $300,000 Income Cap Proposed for First Home Buyers

First Home Buyers: 5% Deposit Income Cap Could Rise to $300,000

Another very happy first time home buyer

Could more first home buyers soon qualify for a 5% deposit home loan?

A proposed change to the Kāinga Ora First Home Loan could make it easier for more New Zealanders to buy their first home.

National has announced a proposal to increase the First Home Loan income cap to $300,000 for all applicants if re-elected.

That could be a significant change for first home buyers who earn a good income but are struggling to save a traditional 20% deposit.

How does the First Home Loan work?

The Kāinga Ora First Home Loan is designed to help eligible first home buyers purchase a property with a minimum 5% deposit, rather than the larger deposit many lenders normally require.

For example, a 5% deposit on a $600,000 home is $30,000.

Your deposit may potentially include savings and eligible KiwiSaver first-home withdrawal, subject to meeting the relevant requirements.

What could change?

Currently, the First Home Loan income limits are much lower than the proposed $300,000 cap.

National's proposal would increase the income cap to $300,000 and apply it to all applicants, potentially opening the scheme to more first home buyers, including higher-income households that currently fall outside the income limits.

But there is an important catch

The proposed $300,000 income cap doesn't mean you automatically qualify for a mortgage.

You would still need to meet the eligibility requirements and the lending criteria of a participating bank or lender. Your income, expenses, debts, deposit and ability to afford the repayments would all be considered.

And until any policy change actually takes effect, the current First Home Loan income limits still apply.

Thinking about buying your first home in Christchurch?

If you're a first home buyer with a 5% deposit – or you're working towards one – it's worth understanding what you may be able to borrow before you start looking at properties.

At Mortgage Group, I help Christchurch first home buyers understand their deposit options, borrowing capacity and which lenders may be suitable for their circumstances.

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If you are in this situation or know of someone that is, then that's where I come in. As a registered financial adviser, I can assist you for free. "Simple, fast, approved" All you need to do is contact me today.