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10% Deposit For First Time Home Buyers

There seems to be a bit of uncertainty around this subject so I thought I'd clear the air and explain exactly what first time home buyers are entitled to...

Welcome Home Loan....

Finding the deposit for your first home can be a struggle, with most lenders currently requiring a minimum 20% deposit. But with a Welcome Home Loan you only need a 10% deposit which means getting into your first home is that much easier.

Welcome Home Loans are issued by selected banks and other lenders, and underwritten by Housing New Zealand. This allows the lender to provide loans that would otherwise sit outside their lending standards.

Am I eligible....

Below is a quick guide with the minimum criteria you need to meet to be eligible to apply for the welcome home loan.

Income cap

You can have a maximum yearly income of up to $85,000 (before tax) for 1 person. Or a combined maximum yearly income of $130,000 (before tax) for 2 or more people.

Minimum deposit

You will need a minimum 10% of the purchase price of the house you are wishing to buy.

House price cap

The price of the house you are buying with a Welcome Home Loan must be less than the regional house price cap, in Canterbury the cap is $550K for new homes or $500K for existing homes.

New Zealand citizen

You are a New Zealand citizen or permanent New Zealand resident.

Other criteria

You must live in the home you are buying. A Welcome Home Loan cannot be used to buy an investment or rental property.

You cannot own any other property.

You will need to pay a Lender’s Mortgage Insurance (LMI) premium of 1% of the loan account. The lender may also apply a loan application fee. In most cases these fees can be built into the home loan. Talk to your participating lender to see what applies.

You are a New Zealand citizen or permanent New Zealand resident (holding a ‘Permanent Resident Visa’).

Case study below

Ben and Toni

Have a look at how Ben and Toni bought their first home in Christchurch using a Welcome Loan and KiwiSaver.

Ben and Toni have had an offer to buy their first home accepted as long as they meet the conditions set out in the sale and purchase agreement. The property they’re interested in is a $400,000 existing home in Hoon Hay, Christchurch. They have not been able to save a deposit, but have been KiwiSaver members since it started in July 2007.

In the last 12 months, they have earned a combined income of $100,000.

Both Ben and Toni have applications for the KiwiSaver HomeStart grant pre-approved and are eligible for $5,000 each to help with the purchase of their first home. They are also both eligible to withdraw their KiwiSaver contributions (including tax credits). However at least $1,000 must remain in their KiwiSaver account. Together they can withdraw $35,000.

Banks have advised they will need a deposit of between 15% and 20% of the purchase price ($61,500 – $82,000), which they don’t currently have. After looking through the Welcome Home Loan website, they saw it may be possible to get a loan with only a 10% deposit so applied to a Welcome Home Loan lender and was able to show that with all of the KiwiSaver HomeStart grant and first-home withdrawal, they had $45,000 to put towards the purchase. As this worked out to a deposit of 11.25% and because they met the other lending criteria, they were approved for a Welcome Home Loan of $355,000.

House purchase price$400,000

Deposit amount$45,000 ($35,000 + $5,000 + $5,000)

Deposit available11.25%

Welcome Home Loan$355,000 (88.75% LVR)

So if you are in this situation or know of someone that is then that's where I come in, as a Registered Financial Adviser I can assist you for free, all you need to do is contact me....



Martin Eagle