First Home Buyer Grants Explained
Buying your first home is an exciting milestone, but it can also be a daunting process, especially when it comes to financing. Fortunately, there are several grants and schemes available to help first home buyers get their foot on the property ladder. Let’s dive into the details of these grants and how they can benefit you.
KiwiSaver First Home Withdrawal
One of the most significant advantages for first home buyers is the ability to withdraw funds from their KiwiSaver account. If you’ve been a KiwiSaver member for at least three years, you may be eligible to withdraw most of your savings to put towards your first home.
Here’s what you need to know:
- You can withdraw your contributions, your employer’s contributions, and any returns on investments.
- You must leave a minimum balance of $1,000 in your KiwiSaver account.
- This withdrawal can be used for the deposit or the settlement of your first home purchase.
To apply, you’ll need to contact your KiwiSaver provider directly. They’ll guide you through the process and required documentation.
First Home Grant
The First Home Grant, previously known as the HomeStart Grant, is a helping hand from the government for eligible first home buyers. This grant can provide up to $5,000 for individuals and up to $10,000 for couples to put towards an existing home. For new builds, these amounts double to $10,000 for individuals and $20,000 for couples.
Eligibility criteria include:
- You must have contributed to KiwiSaver for at least three years.
- Your income must be below $95,000 for a single buyer or $150,000 for two or more buyers.
- The property you’re purchasing must be within the regional house price caps set by Kāinga Ora.
It’s important to note that as of May 2024, the government has discontinued new applications for the First Home Grant. However, if you submitted your application before 1pm on 22 May 2024, it will still be processed.
First Home Loan
The First Home Loan, underwritten by Kāinga Ora, is designed to help first home buyers who can afford to make mortgage repayments but struggle to save a large deposit. With a First Home Loan, you may be able to purchase a home with just a 5% deposit, instead of the 20% typically required by most lenders.
Key points about the First Home Loan:
- You must have a minimum 5% of the purchase price as a deposit.
- Income caps apply: $95,000 for a single buyer or $150,000 for two or more buyers.
- The property must be within the regional house price caps.
- You’ll need to pay a 1% Lender’s Mortgage Insurance premium.
To apply, you’ll need to approach one of the participating lenders, such as Kiwibank, SBS Bank, or The Co-operative Bank.
Kāinga Whenua Loan Scheme
For those looking to build on multiple-owned Māori land, the Kāinga Whenua Loan Scheme offers a unique opportunity. This initiative, a partnership between Kāinga Ora and Kiwibank, helps Māori achieve home ownership on their ancestral land.
Key features include:
- Loans of up to $200,000 are available with no deposit required.
- For loans above $200,000, a 15% deposit is needed.
- The loan is secured against the house only, not the land.
- You must have a licence to occupy the land.
To be eligible, you need to meet both Kāinga Ora and Kiwibank’s criteria. It’s best to contact Kiwibank directly to discuss your options.
First Home Partner
While not a grant, the First Home Partner scheme is worth mentioning. This shared ownership initiative helps first home buyers who can service a mortgage on 85% of a property’s value but struggle with the full purchase price.
Under this scheme:
- Kāinga Ora contributes up to 25% of the purchase price.
- You need to provide a minimum 5% deposit.
- You buy out Kāinga Ora’s share over time, becoming the sole owner.
This scheme is particularly helpful for those in high-cost areas where saving a full deposit is challenging.
Tips for First Home Buyers
- Start saving early: Even with these grants, having additional savings will give you more options and financial security.
- Check your eligibility: Use the online tools provided by Kāinga Ora to check your eligibility for various grants and schemes.
- Get pre-approval: Before house hunting, get pre-approved for a mortgage to understand your budget.
- Seek professional advice: Consider talking to a mortgage broker who can guide you through the process and help you access the best deals.
- Don’t forget other costs: Remember to budget for additional expenses like lawyer fees, building inspections, and moving costs.
Final Thought
While the journey to homeownership can seem overwhelming, these grants and schemes can make a significant difference for first home buyers. By understanding your options and planning ahead, you can take advantage of the support available and make your dream of owning a home a reality.
Remember, the housing market and available grants can change, so it’s always best to check the most current information on the Kāinga Ora website or speak with a financial advisor before making any decisions. With the right preparation and support, you’ll be holding the keys to your first home before you know it.