If you have been meticulously saving your money and counting on the government’s free $10,000 top-up to help buy your house, we need to deliver some hard truth: The Kāinga Ora First Home Grant no longer exists.
In a major policy shift, the New Zealand Government officially discontinued the First Home Grant scheme on May 22, 2024, redirecting those funds into social housing. For years, this grant was the ultimate lifeline for first-home buyers, and its sudden cancellation left thousands of Kiwis feeling like the property ladder had been pulled up just out of reach.
🛑 Reality Check for 2026: If you see websites or mortgage brokers still telling you how to apply for the “First Home Grant” or “HomeStart Grant”, they are providing dangerously outdated information. The program is permanently closed to new applicants.
But do not panic. The Kiwi Dream is not dead. While the free cash grant is gone, the government and banks have left the most powerful tools untouched. You can still buy a house with just a 5% deposit through the Kāinga Ora First Home Loan scheme, and you can still withdraw your entire KiwiSaver balance to fund it.
In this updated guide, we will break down exactly how to pivot your strategy, how to qualify for the 5% deposit loan, and how to combine it with smart budgeting to cover those hidden purchasing costs.
What is the Kāinga Ora First Home Loan in 2026?
The Kāinga Ora First Home Loan is a government-backed initiative that allows first-home buyers to purchase a property with only a 5% deposit, instead of the standard 20% required by most major banks. Because Kāinga Ora underwrites (insures) the loan, the bank takes on less risk and is willing to lend to you with a much smaller deposit.
While the free $10,000 grant is gone, this 5% deposit rule is the true game-changer. It shaves years off your saving timeline, allowing you to get on the property ladder before house prices rise further.
First Home Loan Income Caps (Who Qualifies?)
To be eligible for the 5% First Home Loan, your total household income before tax in the last 12 months must be less than:
- $95,000 for a single buyer without dependents.
- $150,000 for a single buyer with one or more dependents.
- $150,000 for two or more buyers partnering up.
Are There House Price Caps for the First Home Loan?
No. One of the best changes made to the scheme is the complete removal of house price caps. Previously, you could only use government help if the house was under a certain price (e.g., $650,000 in some regions), which made it nearly impossible to buy in major cities like Auckland or Wellington. Today, as long as you meet the income requirements and the bank approves your ability to repay the mortgage, there is no limit on the purchase price of the property.
Can I Still Use My KiwiSaver for a House Deposit?
Yes, absolutely. The cancellation of the First Home Grant did not affect your right to withdraw your KiwiSaver funds. If you have been contributing to KiwiSaver for at least three years, you can withdraw almost your entire balance to put towards your first home deposit.
⚠️ The $1,000 Rule: You cannot empty the account entirely. By law, you must leave a minimum balance of $1,000 in your KiwiSaver account after the withdrawal. Also, remember that this money must be paid directly to your conveyancing lawyer, not into your personal bank account.
The 5% Deposit Math: How Much Do You Actually Need?
Let’s look at a realistic scenario. If you are aiming to buy a modest starter home or a townhouse, relying on the First Home Loan drastically reduces your upfront cash requirement. However, do not forget to add your hidden purchasing costs like lawyer fees and LIM reports to this total.
| Property Price | Standard 20% Deposit (Without Scheme) | 5% First Home Loan Deposit |
|---|---|---|
| $600,000 | $120,000 | $30,000 |
| $800,000 | $160,000 | $40,000 |
💡 Pro Lenders Mortgage Insurance (LMI) Tip: When you buy with less than a 20% deposit, banks usually charge a Low Equity Premium (LEP) or LMI fee. With a Kāinga Ora First Home Loan, this fee is capped at a flat 1% of the loan amount, which can easily be added to your mortgage balance.
Final Verdict: Pivot Your Strategy, Don’t Give Up
The cancellation of the Kāinga Ora First Home Grant was a heavy blow to many Kiwis, but it does not mean your homeownership journey is over. In reality, the $10,000 grant was just a drop in the bucket compared to the massive advantage of buying a home with only a 5% deposit through the First Home Loan.
Your Next Steps for 2026: First, log into your KiwiSaver portal to see your exact available balance. Second, gather your last three months of payslips and bank statements. Finally, contact a registered mortgage broker (their service is usually free) to get a pre-approval under the 5% First Home Loan scheme.
Remember, getting the keys is just the beginning. Make sure you are fully prepared for the journey by reading our ultimate guide to the hidden costs of buying property in NZ to avoid any nasty surprises on settlement day.
Frequently Asked Questions
Will the government bring back the First Home Grant?
As of 2026, there are no official plans to reinstate the First Home Grant. The government has permanently redirected those funds into building social housing. First-home buyers should focus entirely on the First Home Loan (5% deposit) and KiwiSaver withdrawals.
Do I have to pay back the First Home Loan?
Yes. Unlike the old “grant” (which was free money), a First Home Loan is a standard mortgage provided by a participating bank (like Westpac or Kiwibank). Kāinga Ora simply insures the loan so the bank accepts a 5% deposit. You must repay the bank with interest over 25 to 30 years.
Can I use KiwiSaver to buy land and build a house?
Yes. You can withdraw your KiwiSaver to purchase a section of land to build a house on, provided it is your first home and you intend to live in it (it cannot be an investment property).
Can I buy a house with a partner if they already owned a home?
Yes, but the rules are strict. If your partner previously owned a home but their financial situation is now similar to a first-home buyer (e.g., they lost the house in a divorce and have limited assets), they can apply to Kāinga Ora as a “Previous Home Owner” to unlock their KiwiSaver again.
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