Embarking on the journey to homeownership is exciting, and it’s crucial to navigate this path with the right advice. Securing a first home loan that aligns with your financial goals and home-buying aspirations is an important step. Let’s explore what you need to know about First Home Loans to ensure you’re well-prepared to make your move into homeownership.

What is a First Home Loan?

A First Home Loan is specifically designed to make purchasing your first home more accessible in New Zealand. With only a 5% deposit required, it’s a practical option compared to the standard 20% deposit. At Canterbury Home Loans, we collaborate directly with selected banks and lending institutions to facilitate these loans through Kāinga Ora – Homes and Communities.

Are You Eligible for a First Home Loan?

Considering a First Home Loan? Here are the criteria you need to meet:

• Age: You must be over 18 years old.
• Residency: You need to be a New Zealand citizen or a permanent resident.
• First-Time Buyer Status: You should be buying your first home or be in a financial position similar to that of a first-time buyer.

Income Requirements:

• An individual’s annual pre-tax income should not exceed $95,000.
• For couples or those with dependents, the combined income limit is $150,000.
• Deposit: You should have at least a 5% deposit of the purchase price.

For detailed eligibility requirements, please review Kāinga Ora’s Eligibility Criteria.

The Benefits of a First Home Loan:

Opting for a First Home Loan comes with several advantages designed to make the transition to homeownership more seamless and affordable:

• Lower Deposit Requirements: Begin your homeownership journey with as little as a 5% deposit.
• Potential Fee Waivers: Save on additional costs, putting more of your budget towards your new home.
• Ongoing Support: From application to closing, we provide guidance every step of the way.

Have questions or need guidance on how a First Home Loan might work for you? I’m Duane from Canterbury Home Loans. Contact us through our contact page or schedule a time to discuss your options by booking an appointment.

First Home Loan FAQ’s

• Is there a minimum income requirement?
  • There is no specific minimum income requirement for eligibility, but your total household income should ideally fall between $80,000 and $150,000 to meet the lending criteria of most banks or lenders.
• Do all banks and lenders have the same criteria for First Home Loans?
  • No, while Kāinga Ora sets the foundational criteria, individual banks and lenders can impose additional requirements. Working with an accredited adviser can help you navigate these differences and find the best lending solution.
• Is it better to use a bank or a broker for a First Home Loan?
  • Using a broker is generally advantageous as they can assess various lenders to find the most suitable options based on your financial situation and goals.
• Are there any fees associated with a First Home Loan?
  • Yes, there is a Lender’s Mortgage Insurance premium charged by Kāinga Ora, which is usually passed on to the borrower. This fee is 0.5% of the loan amount.
• What is the interest rates?
  • Interest rates are set by individual banks and lenders and can vary. Your mortgage adviser can assist in negotiating special rates on your behalf, ensuring you receive competitive terms.
• Can I build a house?
  • First Home Loans can be used to purchase newly built homes or homes bought off the plans (turn-key packages). However, they do not support progressive construction payments if you plan to build a house step-by-step.

Next Steps

Embarking on the journey to secure a First Home Loan is an exciting step towards homeownership. Here are the next steps you should consider:

1. Assess Your Financial Situation: Before proceeding, evaluate your financial health, including income, debts, and savings. This will help determine the loan amount you can comfortably afford.
2. Gather Necessary Documents: Prepare necessary documentation such as proof of income, residency, and your 5% deposit. Having these ready can streamline the application process.
3. Consult a Mortgage Adviser: Speaking with a professional can provide you with personalized advice and help you navigate the complexities of loan options and eligibility.

Purchasing your first home is a significant milestone, and while it comes with its challenges, the right preparation and support can make the process smoother and more manageable. At Canterbury Home Loans, we are dedicated to guiding you through every step of your First Home Loan application. We’re here to help you make informed decisions that align with your homeownership goals.