First Home Loans: What You Need to Know

However, not every bank offers First Home Loans, and you still need to meet the bank’s lending criteria as well as the special requirements for this scheme. Here is what you need to know. 1. The Three Main Criteria To qualify for a First Home Loan, you need to tick three main boxes. First, you must be a first home buyer or a previous homeowner who has not owned a home for a certain period and meets the income and asset limits. Second, you need to live in the home, these loans are not for investment properties. Third, your income must be under the caps, which depend on whether you are buying alone or with others. These caps are set to make sure the scheme helps those who need it most. 2. Not Every Bank Offers Them One thing many people do not realise is that not every bank does First Home Loans. These loans are underwritten by Kāinga Ora but are delivered through specific lenders only. So if you are keen to use this option, it is important to know which banks offer it and to get help choosing the one that is the best fit for you. 3. You Still Need to Meet the Bank’s Criteria Even though the scheme helps you buy with a smaller deposit, you still need to meet the bank’s usual lending criteria. That means the bank will check your income, expenses, debts, and credit history to make sure you can afford the repayments. You will need to show you can manage your money well and keep up with the loan long term. Common Myths: No Cap on the Loan Itself Some people think there is a cap on how much you can borrow with a First Home Loan, but that is not true. There is no set loan amount cap. The main limits relate to your income and how much deposit you have. So in some markets, this option can be really useful for getting you into a higher-priced home when you do not have the standard 20 percent deposit. How Much Deposit Do You Need? With a First Home Loan, you can buy a home with as little as 5 percent deposit. This makes it much more achievable for people who have good income and strong financial habits but have struggled to save a large lump sum while renting. Better Rates and Lower Costs First Home Loans often come with more competitive interest rates compared to standard low deposit lending. That is because the risk is partially backed by Kāinga Ora. This can mean lower repayments and a smoother path to home ownership. Is It Right for You? If you are keen to explore whether a First Home Loan could work for you, I can help you work through the criteria, and make sure your application is as strong as possible. Getting into your first home might be closer than you think!