Saving for a deposit on a first home
The first step in saving for a house deposit is to set a savings goal. These days, with jumps in house prices throughout the country, there can be opportunities to borrow with a deposit of just 10% or even 5%. So if buying a house worth $600,000 you would need to save a 10% deposit of $60,000 or even just $30,000 at a 5% deposit.
The lower the deposit, however, the more risk it brings to both borrowers and lenders. Loans that are for more than 80% of a property’s value tend to have higher charges – as there is more risk for the lender. These charges can vary a lot. Some banks charge for lenders mortgage insurance while others increase the interest rate to cover the risk.
Traditionally lenders have required a minimum deposit for a home loan of at least 20% of the house price in order to reduce the risk. So that house worth $600,000 would require a deposit of at least $120,000.
Keep in mind that the bigger your deposit, the less you’ll pay in interest over the long term.
Tools to help you save your first-home deposit
Once you’ve worked out how much to save for a house, use this budget planner to work out a budget. It might mean cutting down on non-essentials for a while but the satisfaction of moving into your first home will be worth it!
Not sure how to calculate mortgage repayments? Use our mortgage tool to see what repayments with different loan settings will be like.
If there’s a difference between what mortgage repayments would be and what you’re currently paying in rent, it’s a good idea to start putting that amount into regular savings. It will give you (and your lender) an idea of how well your household budget will be able to cope. Use this savings calculator to see how quickly those savings can add up!
Government help for your deposit: Kāinga Ora
Even with just a 5% deposit, you may be able to borrow enough to buy a first home under the government’s First Home Loan Scheme.
If you’re in KiwiSaver and have been contributing to a scheme for at least three years, you may be eligible for a KiwiSaver First Home Grant. This means that the government could give you up to $5,000 towards an older, existing home, or up to $10,000 towards a newly built home or land to build a new home on. If borrowing with someone else, you can combine those first home buyer grants, which means up to $20,000 if both of you have been contributing to KiwiSaver for five years. There are other eligibility criteria to meet, as well as regional house price caps.
After you've been in KiwiSaver for three years, you may also be able to withdraw almost all of the money in your account to help buy a first home. This is called a KiwiSaver savings withdrawal.
Find out more about First Home Loans, the KiwiSaver First Home Grant and the KiwiSaver savings withdrawal on the Kāinga Ora website.