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First Home Buyers - The Budget, Banks, and a Bunch of Cap Increases

In today’s market (this blog was written in 2021), where house prices are skyrocketing and banks have large deposit requirements, there are many people wondering whether home ownership is right for them.


And you know what? That’s fine! There are other ways to build wealth that do not involve buying a home.



For most New Zealanders the dream of owning a home does live on, especially among 18 – 39-year-olds “Generation Rent” want to buy property to live in.

We know the housing market feels nearly impossible to approach right now, but there’s still hope. To start, you need to know where to look for help and what to be prepared for and we have started with a brief overview of the 2022 Budget.


The 2022 BUDGET and what it means for First Home Buyers?

Budget 2022 sees more New Zealanders able to access support to get into their first home because of changes to First Home Grants and First Home Loans.

  • House price caps are being removed entirely from the First Home Loan, which will hopefully provide a larger choice of homes for prospective first home buyers.

  • The First Home Grant will also have increasing house price caps for new and existing properties.


What does Foxplan think? “This is welcomed news for first home buyers. The Cap was previously very restrictive and unrealistic. This change hopefully gives all kiwis the chance to own property”.

What are the New Price Caps for First Home Grants?

Wellington The cap rises to $750,000 for existing properties and $925,000 for new builds.

Christchurch The cap rises to $550,000 for existing properties and $750,000 for new builds.

Auckland The cap rises to $875,000 for existing and new builds

Queenstown-Lakes The grant cap will lift to $875,000 for existing properties and $925,000 for new builds.

Tauranga The cap will be $800,000 for an existing property and $875,000 for a new build.

Hamilton The cap rises to $650,000 for existing properties and $725,000 for new builds. Its important to note that the house price and income gap will be reviewed every six months to make sure they are up to date.

What First Home Products are available? So now you know the price caps, what exactly is a First Home Grant and a First Home Loan

The First Home Products support first home buyers to overcome the deposit barrier to home ownership. The Grant provides a subsidy for first home buyers to put towards a deposit and the Loan reduces the minimum deposit required.

  • First Home Grant – up to $10,000 to put towards a deposit for eligible first home buyers who have been contributing to KiwiSaver for at least three years

  • First Home Loan – reduces the deposit requirement to 5% for eligible first home buyers


The First Home Products can sit alongside other initiatives to support first home buyers, including:

  • the Progressive Home Ownership Scheme,

  • KiwiBuild programme,

  • First Home Partner.

Changes to the First Home Grant came into effect on 19 May 2022. Changes to the First Home Loan take effect from June 2022.


What does Foxplan think?

“These changes mean that people who were falling short with their deposits may have some options available to them. We encourage anyone either starting their first home buying process or just having a look to chat with the experts. Some people do not know what’s available to them!” How much deposit will I need to buy my first home? Currently, if you're buying your first home, you'll need at least a 20% deposit (or 40% if you're buying an investment property). As the average house price in New Zealand ranges from $500,000 in the rural areas to more than $1 million in large cities like Auckland, you might need to estimate having at least $200,000 to spare.

Why not book to chat to one of our Mortgage Experts who can help wrap your head around these new changes?



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