First Home Buyers – Kāinga Ora First Home Partner vs First Home Loan vs First Home Grant

First Home Buyers – Kāinga Ora First Home Partner vs First Home Loan vs First Home Grant

You may have heard of the First Home Partner, First Home Loan and First Home Grant by Kāinga Ora, but what do they all mean?

First home buyers now have several government products to consider when purchasing. Figuring out what options you are eligible for, and which is best for your situation can be confusing and stressful when you need to make quick decisions to get into a property of your own. Depending on your circumstances, you may be eligible for one or more of Kāinga Ora’s products, which could provide you with significant assistance to get into your first home.

Kāinga Ora First Home Partner

The latest scheme introduced by Kāinga Ora is the First Home Partner.

The Partner scheme may be relevant for you if your deposit and home loan aren’t enough to get you into a property that suits your needs. Particularly where you are unable to get pre-approved for enough bank lending due to difficulty servicing a big mortgage e.g. with rising interest rates.

The Partner scheme is a co-ownership model, where Kāinga Ora will help you purchase a brand new home and “bridge the gap” in equity that you need. With you contributing a minimum 5% cash deposit, Kāinga Ora will contribute an agreed amount towards purchasing the home (up to a maximum of 25% of the value of the property, or $200,000) in return for an equivalent share in ownership. You then purchase this share back over time until you are the sole homeowner – noting that you must live in the property yourself for 3 years.

As a co-owner, Kāinga Ora will need to approve the terms of your agreement to purchase a property and you’ll need to sign a shared ownership agreement with Kāinga Ora to govern the co-ownership arrangement. These processes can be time consuming making it very important to apply early.

For the purposes of your bank lending – not all banks participate in the scheme. As of the date of this article, the participating banks for the purposes of the First Home Partner scheme are Westpac, BNZ and SBS banks.

Entering into the Partner scheme with Kāinga Ora is a significant legal commitment. We recommend you talk to your lawyer early in the process if you are considering your eligibility.

Kāinga Ora First Home Loan

The First Home Loan may be relevant where you can afford to make regular repayments on a home loan but are having trouble saving for a deposit.

Most banks will require a 20% deposit for your lending. Under the Home Loan scheme, you only need a 5% deposit and your home loan will be underwritten with your bank by Kāinga Ora.

As of the date of this article, the participating banks for the purposes of the First Home Loan scheme are Westpac, Kiwibank, The Cooperative Bank and SBS and selected building societies and credit unions.

This option may be preferable where you are able to service a larger loan and therefore can outright own the home yourself, rather than being in a shared ownership model with Kāinga Ora. We note that the First Home Loan and First Home Partner schemes cannot be used together.

Kāinga Ora First Home Grant

The First Home Grant is generally the most well-known of Kainga Ora’s schemes.

Provided you have been paying into KiwiSaver for at least 3 years, and you meet the income requirements and are purchasing a property within the regional house-cap price, you may be eligible for a grant of up to $5,000 for an existing home or up to $10,000 for a newly built home.

Importantly, you may be eligible for the First Home Grant in addition to a First Home Loan or First Home Partner. If you think you may be eligible for both, we recommend applying for each separately.

These three schemes are all designed to help first home buyers into their own home, whether you need a loan, grant or partnership assistance. If you think you may be eligible for any of these schemes and would like to discuss which one may suit you best, our property team at Taylor Shaw are happy to help you navigate this process.