During Budget 2022 the Government announced some changes to the Kainga Ora First Home Loan Scheme (you may know this as the 5% deposit loan scheme) effective 1 June 2022. Why is this important? Because right now every single bank (with the exception of Westpac) has tough restrictions on lending to anyone without a 20% deposit, meaning many first home buyers in particular are locked out of the property market.

Summary of the changes.

Increases to the house cap for the First Home Loan Grant: The First Home Loan Grant is effectively free money the Government will give first home loan buyers (joint borrowers buying a new house, and in some cases buying land, can get up to $20k and up to $10k for an existing property. Here are the price caps for our Region:

Removal of the First Home Loan house price caps altogether: Some banks (such as Westpac, SBS, CO-OP etc) have partnered with Kainga Ora to offer low deposit loans (think loans for as low as 5% deposit here). Previously you only qualified for these loans if you met a regional house cap (eg $425k in Dunedin and $600k in Queenstown). This effectively meant that unless you were purchasing a dog kennel you didn’t qualify for this loan product. Well, the good news is that these caps are no more! In simple terms if you can afford to service it then you can borrow it…

With house price caps removed the market for first time buyers suddenly got a whole lot more realistic (and I have 4 clients who couldn’t get a loan two weeks ago who can now buy a house).

Here’s what you need to know:

• Clients only need a minimum 5% deposit

• Have an income of less than $95,000 for an individual borrower or $150,000 for an individual borrower with dependents

• Have an income of less than $150,000 for two or more borrowers

• Are a first home buyer or second-chance buyer

• Are a New Zealand Citizen, Permanent Resident or a Resident Visa holder who is 'ordinarily resident in New Zealand

• Have been in the same employment for 12 months or the same industry for two years.

I’ve tried to keep a slightly complicated process as simple as possible, so if you have any more questions and would like to know what these changes mean for you call into Harcourts and have a chat with Ken Cochrane from Mortgage Express. You may be in a position to shoot a bit higher for your next home.