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Mortgage Basics
What do the latest NZ election housing policies mean for first-home buyers?
Short answer: The biggest election proposals for first-home buyers currently focus on reducing the deposit needed to buy a home, introducing potential shared-equity options and increasing housing supply.
National is proposing wider access to 5% deposit First Home Loans, while NZ First is considering a Crown co-investment or shared-equity scheme that could reduce the size of the mortgage itself.
For first-home buyers, both could make getting into a home easier. But neither removes the need to pass a lender's affordability and servicing tests.
And with mortgage rates starting to rise again, borrowing power could become just as important as the size of your deposit.
National's 5% deposit proposal
National has announced plans to significantly widen access to the Kāinga Ora First Home Loan scheme.
Under the proposal, eligible first-home buyers earning up to $300,000 combined could potentially purchase a home with a deposit as low as 5%.
That could make a substantial difference for households with strong incomes that have struggled to save a traditional 20% deposit while paying rent and other living costs.
How much difference does a 5% deposit make?
For an $800,000 home:
| Deposit | Amount required |
|---|---|
| 20% deposit | $160,000 |
| 10% deposit | $80,000 |
| 5% deposit | $40,000 |
For some first-home buyers, lowering the deposit requirement could bring home ownership forward by several years.
Mortgage broker view
This is one of the more directly targeted proposals announced so far for reducing the first-home-buyer deposit hurdle.
Saving a deposit remains a major barrier, particularly in Auckland and other higher-priced markets.
But there is an important distinction.
A smaller deposit does not mean a smaller mortgage.
Buying an $800,000 property with a $40,000 deposit still means borrowing roughly $760,000.
The lender will still assess whether you can comfortably afford that mortgage.
So while a 5% deposit scheme could solve the deposit problem, it may not solve the borrowing-power problem.
NZ First's proposed shared-equity scheme
NZ First is considering a different approach to helping first-home buyers.
Rather than simply reducing the required deposit, the proposal could involve the Crown owning a percentage of the property alongside the buyer.
The homeowner could potentially buy the Government's share back over time or repay it when the property is sold.
This is commonly known as shared equity or co-ownership.
Could shared equity make a bigger difference than a 5% deposit?
Potentially.
Using an $800,000 home as an example:
- Buyer deposit: $40,000
- Crown equity contribution: $160,000
- Mortgage required: approximately $600,000
The important difference is that the mortgage itself becomes smaller.
That could improve both affordability and the buyer's chances of meeting lender servicing requirements.
Mortgage broker view
From a lending perspective, shared equity could potentially have a greater impact than simply lowering the deposit requirement.
A smaller mortgage means lower repayments.
But there are still major unanswered questions.
These include:
- How much of the property would the Government own?
- Who receives the capital gain on the Government's share?
- What happens if the property falls in value?
- Can the homeowner renovate or extend the property?
- How would refinancing work?
- Can the owner buy the Government's share out early?
- What happens when the property is sold?
Until those details are confirmed, buyers should treat this as a proposal rather than something they can currently rely on.
Could housing supply policies help first-home buyers?
Yes, although the impact is likely to take longer.
National and ACT have placed significant emphasis on increasing housing supply through planning reform, infrastructure investment and making more land available for development.
This matters because helping more people access deposits increases demand.
If housing supply does not increase at the same time, additional buying power can eventually contribute to higher property prices.
Increasing supply tackles the other side of housing affordability.
However, new infrastructure, planning changes and housing developments can take years to flow through into completed homes.
For someone hoping to buy their first home in the next six to 12 months, lending policy and mortgage affordability are therefore likely to matter more immediately.
Are first-home buyers struggling in the current NZ property market?
Perhaps surprisingly, first-home buyers are currently one of the strongest groups in the New Zealand housing market.
First-home buyers accounted for around 29% of property purchases in July 2026, while overall house prices remained subdued.
Property listings have also remained relatively high, giving buyers more choice and often more negotiating power than during previous property-market peaks.
That makes the current market unusual.
First-home buyers are receiving more political attention, but many are already actively purchasing homes.
Are falling house prices making it easier to buy a first home?
Lower property prices can help, but they're only one part of the affordability equation.
National property values have remained soft through 2026, including further declines during August.
For first-home buyers, this can mean:
- lower purchase prices
- more properties to choose from
- less competition at open homes
- stronger negotiating power
- greater ability to make offers conditional on finance or due diligence
However, another factor is starting to move in the opposite direction.
What do rising mortgage rates mean for first-home buyers?
The Reserve Bank increased the Official Cash Rate from 2.50% to 2.75% on 2 September 2026.
Major banks subsequently increased floating mortgage rates.
This creates an interesting situation for first-home buyers.
Property prices may be slightly cheaper, while borrowing money is becoming more expensive.
That makes borrowing power and mortgage servicing increasingly important.
A buyer might save $30,000 on the purchase price of a home but still find their maximum lending amount reduced if bank servicing rates increase.
Do first-home buyers still need a 20% deposit in New Zealand?
No.
A 20% deposit is often considered the standard benchmark, but it is not an absolute requirement.
Depending on the borrower, property and lender, first-home buyers may be able to purchase with a smaller deposit.
Options can include:
- First Home Loans
- low-deposit bank lending
- KiwiSaver first-home withdrawals
- family assistance
- gifted deposits
- family guarantees
- shared ownership
- non-bank lending
The appropriate structure depends on the individual buyer's circumstances.
Should first-home buyers wait until after the 2026 election?
Not necessarily.
Election policies could improve access to home ownership for some buyers, but there is no guarantee a particular policy will become law or that every buyer will qualify.
Meanwhile, current market conditions already favour first-home buyers in several ways.
Property prices remain relatively soft, listings are high and buyers generally have more negotiating power than they did during the property boom.
Rather than assuming you need to wait for an election result, it may be worth finding out what you can already do.
Mortgage broker perspective: what actually matters most?
For first-home buyers, there are really three hurdles:
1. The deposit
Can you put together enough money to meet the lender's minimum equity requirement?
National's proposed expansion of 5% First Home Loans directly targets this problem.
2. Borrowing power
How much will a lender actually allow you to borrow?
Income, expenses, existing debt, dependants and interest-rate servicing tests all influence this.
NZ First's proposed shared-equity model could potentially help here by reducing the amount that needs to be borrowed.
3. Mortgage affordability
Just because a bank will lend you a certain amount doesn't necessarily mean you should borrow it.
Buyers need to consider what repayments would look like if mortgage rates increase further.
The bottom line for first-home buyers
The latest NZ election housing policies could genuinely help some people buy their first home sooner.
National's 5% deposit proposal could make it easier for buyers with good incomes but limited savings to enter the market.
NZ First's proposed shared-equity scheme could potentially go further by reducing the amount buyers need to borrow.
Housing-supply reforms could also help affordability over the longer term.
But government policy is only one part of buying your first home.
Different banks have different lending criteria, and small differences in how a lender assesses income, expenses or existing debt can substantially change borrowing power.
Before deciding you need another year of saving, a 20% deposit or a particular election result, it can be worth answering a much simpler question:
What could you afford to buy today?
A mortgage adviser can look at your deposit, income, KiwiSaver, borrowing power and different lender options to help you understand where you actually stand.
First-home buyer FAQs
What deposit do first-home buyers need in NZ?
Many buyers aim for a 20% deposit, but some eligible first-home buyers can purchase with considerably less. Depending on the lender and scheme, deposits as low as 5% may be possible.
Can I buy a house in NZ with a 5% deposit?
Potentially. The Kāinga Ora First Home Loan scheme allows eligible buyers to purchase with a minimum 5% deposit. Buyers still need to meet the participating lender's affordability and credit requirements.
What is National proposing for first-home buyers in 2026?
National has proposed increasing the income threshold for the First Home Loan scheme to $300,000, allowing more first-home buyers to potentially access 5% deposit lending.
What is NZ First proposing for first-home buyers?
NZ First is considering a Crown co-investment or shared-equity scheme where the Government could own part of the home alongside the buyer, potentially reducing the size of the mortgage required.
Is it a good time to buy a first home in NZ?
There is no single answer for every buyer. Property prices remain relatively soft and listings are high, which can favour buyers. However, mortgage rates and bank servicing requirements also need to be considered.
Should I wait until after the NZ election to buy a home?
Not necessarily. Proposed policies may change or have eligibility requirements. First-home buyers may already have access to low-deposit lending, KiwiSaver and other financing options, so it can be worth checking your borrowing position now.
Can a mortgage broker help a first-home buyer with a small deposit?
Yes. A mortgage adviser can compare lenders, assess low-deposit options, help structure family or gifted deposits and identify which banks may assess your circumstances most favourably.
A quick note: We’re looking at these policies purely through a housing and mortgage lens, not telling you who to vote for. Policies can change, so it’s worth doing your own research and looking at the full picture before making your call.
