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First Home Grant and First Home Partner - how are they different? (Kainga Ora)

Kainga Ora has some great options available to help New Zealanders into their first home. We wanted to break this down for you, to provide some clarity to you on what each loan is and the eligibility.


First Home Grant


Kainga Ora offers a grant for up to $10,000 for those eligible.


To be eligible for their First Home Grant, you must:

  • be over 18

  • have earned less than the income caps in the last 12 months

  • not currently own any property or land, this does not include ownership of Māori land

  • have been contributing at least the minimum amount to KiwiSaver (or complying fund or exempt employer scheme) for 3 years or more

  • purchase a property that is within the regional house price caps

  • agree to live in your new house for at least 6 months.

You must also make sure the house or land you want to buy meets the property requirements.


Other eligability criteria includes:

  • Income caps – Limited to $95K per annum for an individual or $150K for a couple. If your pay has recently increased, it is still possible to qualify provided the previous 12 months to date are under these caps.

  • Regional price caps – Maximum spend applies: https://kaingaora.govt.nz/home-ownership/first-home-grant/house-price-caps/ For the Auckland region for example, it is $875K for both an existing dwelling and for a new build.

  • You cannot own any other property. This applies to KiwiSaver withdrawals also.

  • You must live in the home you are buying. This applies to KiwiSaver withdrawals also.

The above can change so please check this link : https://kaingaora.govt.nz/home-ownership/first-home-grant/


You can apply either before you find a property or after you have had an offer accepted, but we strongly recommend you apply for pre-approval. It takes the guess work out and helps speed up the process.


Apply here if you have read the details on the Kainga Ora website and think you are eligible


First Home Partner

First Home Partner is a shared ownership scheme to help aspiring first-home buyers. If your deposit and home loan aren’t quite enough to buy a home that meets your needs, you may be eligible to purchase a home together with Kainga Ora.


How it works

Kainga Ora will own a share in the home equivalent to the percentage they contributed towards the purchase price. The first home buyer will be the majority owner. The majority owner and Kainga Ora are both on the Title as tenants in common. The majority owner/s then purchases back the Kainga Ora share within 15 years.


Kainga Ora will contribute a maximum of 25% or $200,000.00, whichever is lowest, towards the purchase of a brand-new build. A shared ownership agreement is signed between the majority owner/s and Kainga Ora. The majority owner/s must live in the home for a minimum of 3 years from the date of settlement. Kainga Ora must approve any home improvements, renovations, or sale of any part of the home before it can be undertaken.


The majority owner/s are responsible for costs associated with home ownership e.g., rates and insurance. The majority owner/s pay all purchase costs e.g., legal fees and bank fees. The First Home Partner can be used alongside the Kainga Ora First Home Grant [if you are eligible] as well as the possibility of using your Kiwisaver First home withdrawal.

Kainga Ora will meet with the majority owner/s annually to review progress on purchasing back the Kainga Ora share of the property. It is important to note that the Kainga Ora share value will be calculated on market value of the property at the time of the majority owner/s buy out the Kainga Ora share. This means that if the market has risen, the amount required to purchase the Kainga Ora share will increase.


If you decide to sell the home before the Kainga Ora share has been purchased, Kainga Ora must agree to this, and the sale proceeds will be split according to the percentage of ownership. For example, if you purchased a home for $600,000 and Kainga Ora contributed 10% of the purchase price ($60,000) they would have a 10% share in ownership. If then the home was sold for $800,000 the Kainga Ora share would now be worth $80,000.


Eligibility

To see if you could be eligible for the First Home Partner grant. You must answer yes to the following.

  1. Are you 18 or over?

  2. Are you a first home buyer?

  3. Do you intend to live in the home?

  4. Are you a New Zealand citizen, permanent resident or resident visa holder? (If no you may still be eligible if you are in a relationship and applying with someone who meets the citizenship requirements).

  5. Is your total household income $130,000 or less before tax for the last 12 months?

You will need to save a minimum deposit of 5% and be approved for lending by a participating bank.


If you meet the above criteria, you may be eligible and can begin an application for the First Home Partner!


The Process

The first step is to apply online at Kainga Ora. You will need to provide:

  1. certified copies of your ID’s

  2. a summary of your income for the last 12 months from IRD

  3. bank statements for the last 3 months

  4. any current deposits you have, and

  5. a signed copy of the Kainga Ora statutory declaration.

If your application is successful, you will have pre-approval for 6 months. You must sign a commitment agreement with Kainga Ora before you can make an offer on any home.

Once you have pre-approval from Kainga Ora it’s time to talk to the bank and get pre-approval for lending. There is a list of participating banks on the Kainga website.


Once pre-approved by the bank you can begin looking at homes and make an offer. It is important that any offer made is a conditional offer which includes first home partner conditions, Solicitor’s approval, and a finance condition.


Kainga Ora will need to see a copy of the Sale and Purchase agreement before it is signed to check it meets their requirements. If approved, Kainga Ora will sign as a co-purchaser.

The next step is signing a Shared Ownership Agreement. This is a very important part of the process as the agreement lays out the obligations and responsibilities for both parties under the shared ownership relationship. Kainga Ora provides the shared ownership agreement once the agreement for sale and purchase has been signed by both parties. A copy of the shared ownership agreement signed by you must be provided to Kainga Ora at least 10 working days before settlement.

Once everything is signed it is countdown to settlement! We will help you through this process and ensure everything goes smoothly.


Read the details on the Kainga Ora website : https://kaingaora.govt.nz/home-ownership/first-home-partner/


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© 2023 by Jess Pronk Mortgages. 

JESSICA PRONK NEE BARLOW GIVES FINANCIAL ADVICE THROUGH HER COMPANY JESSICA PRONK

FINANCIAL SERVICES LIMITED TRADING AS THE MORTGAGE SUPPLY CO

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