Home ownership with a 5% deposit? Yes, now you can!

Jun 2, 2022

You can secure a mortgage with as little as 5% deposit, here’s the lowdown.

First home buyers now have an extra lending option off the back of last month’s budget, with the Government making significant changes to the First Home Loan scheme or the “5% deposit loan”.


What does this mean for first home buyers?

Under current bank policy, it’s very tough to get a mortgage if you have less than a 20% deposit, so the amended Government backed initiative called ‘First Home Loan’ will hopefully allow more first home buyers to get on the property ladder.

This is how it works

 You must be a first home buyer and have at least 5% of the purchase price for a deposit. So for a home that costs $900,000, you’ll need at least $45,000.

  • There’s no price limit on the property you can buy, however, there are income caps you must fall within depending on their circumstances (see below).
  • Depending on the lender, you’ll be offered the same interest rates as if you had a 20% deposit.
  • The Government (through Kāinga Ora) underwrites the entire mortgage, enabling the banks to lend outside their current policy and government regulations.
  • Because of this risk to the Government, the bank will charge you a small fee on the Government’s behalf (a 1% lender’s mortgage insurance based on the total loan value). You can either pay this upfront or opt to tack it onto your mortgage. 




How much can you borrow?

 Looking at the different income caps the government has set out, we’ve built these four profiles to represent what you could expect to borrow at the top of the income caps*.

Profile Approximate Borrowing Range
Individual with a $95k income $560k to $620k
Individual with a $150k income and one dependent $870k to $970k
Couple with a $150k total income $960k to $1.06m
Couple with a $150k income and two dependents $870k to $970k

*Assuming your expenses are within our calculated average, 3% KiwiSaver contributions, you will be paying property rates and property insurance, and no other fixed expenses (such as personal insurance, childcare, other personal lending etc)

 To calculate your approximate borrowing capacity, try out our new calculator here.

To see more about the income caps, our previous blog about the 2022 budget announcement discusses this here


Which lenders offer the First Home Loan mortgage option?

The banks offering this product include Westpac, SBS Bank, The Co-operative Bank, Kiwibank, NZCU, NBS, and NZHL. At Float, we can work with Westpac, SBS and The Co-operative Bank on your behalf.


  Can I apply for a First Home Loan through a financial adviser?

Yes, a Float financial adviser can help you with the mortgage approval process and provide guidance on your First Home Loan journey.


  Where to from here?

 If you’ve ever had the goal of homeownership and you meet the criteria, this could be your chance to get on the property ladder. The team at Float would love to hear from you.

You can start the process by filling in your Float profile here or dropping us a line at 0800 356 288 or at info@floatmortgages.co.nz









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Talk to the team today on: 0800 356 288

You can find us at: Level 1, 359 Onehunga Mall, Onehunga. Auckland