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First Home Grants – What Do You Get & Who Is Eligible?
20 May, 2022 | Wade Hansen
Kainga Ora First Home Grants are grants of money provided by the New Zealand Government to assist eligible first home buyers with extra funds towards the deposit for their first home. The eligibility criteria was changed in the May 2022 budget – details below reflect those changes.
First Home Grant money comes directly from the NZ Government (Kainga Ora) and NOT from your KiwiSaver provider and therefore not from your KiwiSaver account. First Home Grants are given in addition to any KiwiSaver First Home Withdrawals.
Home Start Grant Eligibility
In order to be eligible for the First Home grant, you will need to:
- have been contributing the minimum income contributions for at least three full years to a KiwiSaver Scheme, complying fund or exempt employer scheme
- Have not previously owned any property (although there are exceptions – see later in the article). If your spouse or defacto partner owns property you are unlikely to qualify.
- Earn under certain income caps – a salary limit of
- $95,000 for a single buyer with no dependents,
- $150,00 for a single person with at least one dependent, and
- $150,000 for couples
- Live in the property as your principal place of residence (it cannot be used as a rental) for at least six months from settlement date for existing properties, or when code of compliance is issued for new builds.
- Have a minimum of 5% deposit. (The 5% deposit can include funds withdrawn from your personal KiwiSaver, the Home Start Grant money, savings or a gift from family, but cannot include a loan from family members or a guarantee)
- Purchase property under the price caps (see more info further below)
- If buying with other people you must be buying an equal share
- If buying privately, you must provide evidence that you bought the property at market value.
In addition, first home buyers must intend to purchase a property in their personal name(s), rather than that of a family trust or other shared fund.
You can learn more about specific eligibility criteria including KiwiSaver contributions here – https://kaingaora.govt.nz/home-ownership/first-home-grant/check-you-are-eligible-for-first-home-grant/
Exceptions – Previous Home Owners
If you have previously owned property, but do not own property now, you may still be eligible for a First Home Grant.
You will need to be deemed by Kainga Ora as being in the same financial position as a first home buyer. The measurement Kainga Ora currently uses to assess this is that you must not have realisable assets (cash/savings or things that could be sold for cash) worth more than 20% of the housing cap price for the area you are buying in.
For example, if you were buying in Auckland, your realisable assets would need to be less than 20% of $875,000, i.e. less than $175,000.
You can only apply for this once, so if you have previously accessed the First Home Grant (or its predecessor the HomeStart Grant) you will not be eligible to access it a second time regardless of your financial circumstances.
To find out if you qualify, simply fill in the extra section on realisable assets in the standard First Home Grant Application Form.
Regional price caps for First Home grant purchases
To be eligible for a First Home Grant you will need to purchase a property below the regional caps set on purchase prices, which vary by region to reflect property values.
When buying land only, the cost of the land added together with the cost to build the house must be lower than the property cap for that region.
There are more than 50 regional areas with assigned house price caps (see the full list at the end of this article)
Below is example of the range of house price caps:
Auckland – $875,00 for both existing properties and new builds
Hamilton Urban Area – $650,00 (existing properties) and $725,00 (new builds)
South Waikato District – $400,000 (existing properties) and $500,000 (new builds)
Taupō District – – $575,000 for both existing properties and new builds
How much money are you eligible for?
How much money you receive is affected by how many years you have been contributing to KiwiSaver and whether you are buying a new build or an existing house.
As the Government wants to incentivise the building of additional homes, the grant is larger if your first home is going to be a “new build” (compared to buying an existing house).
Purchasing an existing property
For the purchase of an existing home, the new grant offers a minimum of $3000, and up to a maximum of $5,000 to individuals and $10,000 to couples.
Purchasing a new build or land + build
In the case of building or purchasing a brand new home, this doubles to a minimum of $6000, and a maximum of up to $10,000 for individuals and $20,000 for couples.
Bank Deposit vs Purchase/Real Estate Agent Deposit
Most properties require a 10% deposit to be paid directly to the person selling the property via the real estate agent on the date the sale goes unconditional (or on Auction day). This is known as the purchase or real estate agent deposit (and is different from the “deposit” required by a bank). A KiwiSaver First Home Grant cannot be used to pay this deposit as the funds will not be received until settlement day. You will need to organise alternative funds to cover this.
What qualifies as a “new-build”?
The First Home Grant recognises a new build as any of the following:
- A vacant residential section on which a new dwelling will be built within specified time frames – there must be a fixed price build contract included in the application
- A house and land package purchased from plans
- A new apartment built from plans
- A newly built dwelling that has received its building code compliance certificate less than six months before the buyer’s application. This does not mean a code compliance certificate issued for renovations/additions.
- The First Home grant CANNOT be used to fund building a dwelling on land that is already owned by the KiwiSaver member.
- If you are buying land, a house and land package or an apartment off the plans, a signed fixed price building contract containing clear construction start and end dates (and a sunset clause) must accompany the application.
- The purchase price of the land + the cost of the build must be less than the regional property cap.
For example
If you are buying a section in Kumeu for $400,000, the fixed price building contract would need to be for $475,000 or less.
Applications
The First Home grant is administered by Kainga Ora, and applications need to be made to Kainga Ora (NOT to the KiwiSaver fund provider)
You as purchaser must make this application yourself on the Kainga Ora website at https://kaingaora.govt.nz/home-ownership/first-home-grant/apply-for-the-first-home-grant/
However, if the property is a “new build” it is a good idea that your solicitor reviews the agreements and contracts with a mind to the requirements of the application (prior to you signing and contracts)
The application form
- Each person applying for a First Home Grant needs to complete an individual application form
- If the property is being purchased by more than one person (i.e., they are listed on the Sale and Purchase Agreement), but the other persons are not applying for the First Home grant, the full names of all the purchasers, and evidence of their income earned over the previous 12 months will need to be attached to the application
Supporting Documents
In addition to the application form, you will need to supply the following supporting documents:
- Certificate of earnings for the last 12 months (IRD)
- KiwiSaver contribution statement (IRD)
- Birth certificate, passport or drivers licence
- Two months payslips
- Agreement for sale and purchase
- Signed fixed price building contract, including sunset clause and occupation date details (for bare land purchases)
- Evidence of minimum 5% deposit
Further details on how to access this information can be found at https://kaingaora.govt.nz/home-ownership/first-home-grant/apply-for-the-first-home-grant/apply-for-pre-approval-for-a-first-home-grant/
How long do applications take?
We recommend that you apply for pre-approval. Pre-approvals are valid for 6 months, after six months you will need to re-apply.
If you have pre-approval, you need to allow a minimum of 10 working days prior to settlement date.
Without pre-approval, Kainga Ora requires a minimum of 20 working days (4 weeks) to process applications.
It is therefore imperative that all agreements relating to the purchase are negotiated bearing in mind these timeframes (finance conditions for example)
Key Points to Note – What Can Go Wrong?
The most important thing to be aware of when using a KiwiSaver First Home Grant is to be careful with the dates in your agreement and when you are applying for the grant.
If the funds have not arrived from Kainga Ora in time for settlement, they cannot be used towards the purchase. In this situation you cannot get a loan from somewhere else to cover the shortfall (for settlement) and then use the First Home Grant to repay that shortfall loan. You may end up forfeiting your right to the First Home Grant funds forever.
If the KiwiSaver Grant funds have not arrived from in time for settlement you are still legally obligated to continue with the purchase. You will need to cover any shortfall, any delay in settlement will make you liable for settlement delay penalty fees and if you are not able to cover the shortfall, you will be liable for breach of contract.
If you default on any of the agreement terms (for example renting out the property and not living in it), Kainga Ora will require you to repay the grant amount plus interest.
How do you make sure it all goes right?
1) Apply for pre-approval
2) If you have pre-approval, allow at least 10 working days to satisfy the finance condition
3) If you do not have pre-approval, allow at least 20 working days to satisfy the finance condition
4) Allow at least 10 working days from the date the agreement goes unconditional until settlement date
5) Get your property lawyer to review the Agreement for Sale & Purchase BEFORE you sign, to ensure everything aligns with your KiwiSaver requirements.
If you would like to discuss any matters related to buying and selling residential property, please contact Property Lawyer, Wade Hansen on 09 837 6845 or at wade.hansen@smithpartners.co.nz
Full List of Regional House
Region
|
Existing properties($) |
New properties($) |
| Far North District | 400,000 | 675,000 |
| Whangārei District | 600,000 | 800,000 |
| Kaipara District | 525,000 | 875,000 |
| Auckland | 875,000 | 875,000 |
| Thames-Coromandel District | 875,000 | 925,000 |
| Hauraki District | 525,000 | 525,000 |
| Matamata-Piako District | 625,000 | 625,000 |
| Hamilton Urban Area (Hamilton City, Waipā District, Waikato District) | 650,000 | 725,000 |
| Ōtorohanga District | 400,000 | 500,000 |
| South Waikato District | 400,000 | 500,000 |
| Waitomo District | 400,000 | 500,000 |
| Taupō District | 575,000 | 575,000 |
| Tauranga Urban Area (Tauranga, Western Bay of Plenty District) | 800,000 | 875,000 |
| Rotorua District | 525,000 | 525,000 |
| Whakatāne District | 500,000 | 500,000 |
| Kawerau District | 625,000 | 625,000 |
| Ōpōtiki District | 400,000 | 500,000 |
| Gisborne District | 450,000 | 500,000 |
| Wairoa District | 400,000 | 500,000 |
| Napier-Hastings (Napier City, Hastings District) | 625,000 | 825,000 |
| Central Hawke’s Bay District | 500,000 | 500,000 |
| New Plymouth District | 525,000 | 675,000 |
| Stratford District | 400,000 | 525,000 |
| South Taranaki District | 400,000 | 500,000 |
| Ruapehu District | 400,000 | 500,000 |
| Whanganui District | 425,000 | 500,000 |
| Rangitikei District | 400,000 | 500,000 |
| Manawatū District | 525,000 | 525,000 |
| Palmerston North City | 575,000 | 700,000 |
| Tararua District | 400,000 | 500,000 |
| Horowhenua District | 525,000 | 650,000 |
| Wairarapa (Masterton District, Carterton District, South Wairarapa District) | 575,000 | 800,000 |
| Wellington Urban Area (Kāpiti Coast District, Upper Hutt City, Porirua City, Lower Hutt City, Wellington City) | 750,000 | 925,000 |
| Nelson-Tasman (Nelson City, Tasman District) | 650,000 | 875,000 |
| Marlborough District | 550,000 | 575,000 |
| Kaikōura District | 700,000 | 700,000 |
| Buller District | 400,000 | 500,000 |
| Grey District | 400,000 | 500,000 |
| Westland District | 400,000 | 500,000 |
| Hurunui District | 425,000 | 500,000 |
| Christchurch Urban Area (Waimakariri District, Christchurch City, Selwyn District) | 550,000 | 750,000 |
| Ashburton District | 400,000 | 500,000 |
| Timaru District | 400,000 | 500,000 |
| Mackenzie District | 500,000 | 500,000 |
| Waimate District | 400,000 | 500,000 |
| Waitaki District | 400,000 | 500,000 |
| Central Otago District | 525,000 | 800,000 |
| Queenstown-Lakes District | 875,000 | 925,000 |
| Dunedin City | 500,000 | 675,000 |
| Clutha District | 400,000 | 500,000 |
| Southland District | 500,000 | 500,000 |
| Gore District | 400,000 | 500,000 |
| Invercargill City | 400,000 | 500,000 |
