Buying your first home in NZ: the steps, saving to settlement

Buying a first home in New Zealand follows a clear path: know what you can borrow, build a deposit (usually with a KiwiSaver withdrawal), check the schemes such as the Kāinga Ora First Home Loan with a 5% deposit, get pre-approval, make an offer with conditions, go unconditional and settle. Budget for costs beyond the deposit too: a lawyer, LIM and building inspection come to roughly $2,163 to $4,025 on the single-source ranges we found, before any valuation. This guide walks through each step and the tool on this site that helps. Banks decide; this is general information, not financial advice.

The path at a glance

Step 1: work out what you can borrow

Start with the bank's view, not the listings. A bank lends roughly the lowest of three limits:

• Serviceability: what your monthly surplus could repay at its test rate (6.85% to 7.10%, test rates confirmed July 2026), usually over 30 years.
• DTI: most owner-occupier lending must keep total debt at or below 6 times gross income (since 1 July 2024).
• Deposit (LVR): most owner-occupier lending needs 20% (settings since 1 December 2025), or 5% with a First Home Loan.

Example: two buyers on $65,000 each, spending $3,200 a month with a $400 a month car loan, have a surplus of $4,711.26 a month. At the average test rate of 6.94%, that supports about $712,448. Our guide to how much you can borrow explains each limit, and how much house you can afford looks at whether the bank's maximum fits your budget.

Steps 2 and 3: the deposit and the schemes

Deposit. For a $750,000 home, 20% is $150,000, 10% is $75,000 and 5% is $37,500. Most first home buyers combine savings with a KiwiSaver first-home withdrawal: after at least 3 years of membership you can usually take out all but $1,000, once, for a home you will live in. See saving a deposit for timelines and the KiwiSaver withdrawal guide for the rules.

Schemes. What is open, as at 10 November 2026:

• Kāinga Ora First Home Loan: a 5% deposit for eligible buyers, income caps of $95,000 (one buyer without dependants) or $150,000 (one buyer with dependants, or two or more buyers), a premium of 1.2% of the loan (1.00% at Kiwibank). Not offered by ANZ or BNZ. See our First Home Loan guide.
• Bank low-deposit loans: within each bank's 25% allowance, usually with a low equity premium. See low deposit loans.
• Closed: the First Home Grant (closed to new applications on 22 May 2024). Kiwibank says First Home Partner is fully subscribed.

National's promise to raise the First Home Loan income cap to $300,000 was an election promise; as at 10 November 2026 no government had formed, so it is not law.

Steps 4 and 5: tidy up, then get pre-approval

Tidy your finances a few months before you apply. Banks read your recent bank statements and compare your spending with their own benchmarks. Close debts you can, and lower credit card limits you do not use: the full limit counts towards your DTI ratio even with a zero balance. Each $100 a month of debt repayments takes about $15,000 off what you can borrow at the 6.94% average test rate. See credit cards and borrowing.

Pre-approval is a bank's conditional indication of how much it would lend, based on what you have shown it. It lets you house-hunt with a real number and bid with more confidence. It is not a final approval: the bank will still want to check the property, and its offer can change if your circumstances or its policy change. Our pre-approval guide covers what to bring and what conditions to expect. You can go to banks directly or through a mortgage adviser; we are neutral between banks.

Step 6: budget for the costs beyond the deposit

Do not put every dollar into the deposit. The ranges below are the ones we found; each comes from a single source, so treat them as rough.

Our buying costs checklist adds these up for your price, and the buying costs guide explains each one.

Step 7: find a home, check it, make an offer

Once you have a pre-approval and a budget, the search starts. For each home you are serious about, the usual checks are:

• LIM from the council: what it knows about the property and the land.
• Building inspection by an independent inspector.
• Valuation, if your bank wants one (likely above 80% LVR or for a private sale).
• Your lawyer's review of the title and the sale and purchase agreement.

Offers are commonly made on a sale and purchase agreement with conditions, such as finance, a satisfactory LIM and a building report, each with a date. If a condition is not met by its date, you may be able to withdraw under the agreement's terms; your lawyer will explain the exact wording. Some sales, such as auctions, usually leave no room for conditions, so the checks and finance must be in place before you bid. Ask your lawyer before you sign or bid.

New builds and off-the-plan purchases work differently, with progress payments or a long gap to settlement. See new build lending.

Common mistakes to avoid

• Sizing the loan at advertised rates. Banks test at 6.85% to 7.10% (test rates confirmed July 2026), not at the 5.06% average one-year rate (rates as at 10 November 2026).
• Forgetting card limits. The full limit counts towards DTI, even unused.
• Spending the whole deposit. Leave room for the lawyer, LIM, inspection and moving.
• Treating pre-approval as final. The bank still has to approve the property.
• Planning around promises. The $300,000 First Home Loan income cap is not law.

Step 8: unconditional, then settlement

When the conditions are satisfied, the agreement becomes unconditional: you are committed to buy. Before that point, make sure your bank has given full approval for this property, not just pre-approval.

Between unconditional and settlement:

• KiwiSaver: the withdrawal is paid to your lawyer or conveyancer against the agreement. Processing times are set by your provider, so apply early.
• The loan: you sign the loan documents and choose how to structure it. Fixing, floating and repayment frequency are choices we leave to our sister site and your bank.
• Insurance: the lender will require house insurance from settlement.
• Pre-settlement inspection: a final look at the property, if your agreement allows one.

On settlement day your lawyer pays the seller with your deposit, KiwiSaver and the bank's loan, the title transfers, and you get the keys.

Every bank and every purchase differs. Banks decide; this is general information, not financial advice.

Questions people ask

What is the first step to buying a house in NZ?

Work out what you can borrow. Banks lend roughly the lowest of three limits: serviceability at a test rate, 6 times your gross income (DTI) and what your deposit supports. Our calculator estimates all three.

How much deposit does a first home buyer need?

Usually 20% for standard lending. Eligible buyers can use a Kāinga Ora First Home Loan with 5%, and banks can lend with less than 20% within their speed limits, usually with a low equity premium.

Is pre-approval the same as a loan?

No. Pre-approval is a conditional indication. The bank still needs to approve the specific property, and its offer can change if your circumstances or its policy change.

When is the KiwiSaver money paid?

It is paid to your lawyer or conveyancer against a sale and purchase agreement, usually in time for settlement. Ask your provider how long it takes to process.