Kāinga Ora First Home Partner Scheme
Kāinga Ora offers a type of shared ownership, also known as co-ownership, for property purchase. Shared ownership is a type of homeownership in which you are the majority homeowner, but you initially own a portion of the home with a third party, Kāinga Ora, who contributes a portion of the purchase price. Over time, you purchase the portion owned by Kāinga Ora until you are the sole homeowner. The arrangement is established as tenants in common on the home’s title.
The specifics of shared ownership are unique to each homeowner and are determined by various factors such as your deposit, the amount a participating bank is willing to lend you, and Kāinga Ora’s contribution. For example, you may have a 5% deposit, the bank may lend you 80%, and Kāinga Ora may contribute the remaining 15%.
When purchasing a home through the First Home Partner program, it is similar to regular home ownership with the exception that Kāinga Ora is a co-owner and the relationship is governed by a shared ownership agreement. Eligibility for the First Home Partner program requires that you are over 18 years old, a New Zealand citizen or permanent resident, a first home buyer (with some exceptions i.e. you may apply for approval on the basis that you can prove you are in the same financial position as a first home buyer), have a household income of $130,000 or less, and meet other criteria such as deposit requirements, and agreeing to live in the property for a minimum time period of at least three years.
It is important to note that First Home Partner only supports the purchase of brand new homes, and has a maximum contribution of 25% or $200,000. It is also not available for purchasing land or existing homes. The minimum deposit required is 5% and the amount you can borrow from a participating bank will depend on the banks lending criteria.
It is also important to remember that whilst First Home Partner program may help to keep your mortgage repayments lower than they would be if you were purchasing the property on your own, you must factor in that you will need to have a plan for buying out Kāinga Ora in accordance with the requirements under the agreement and you may find that you need to buy the property back at a higher price, if the property market continues to increase, meaning, Kāinga Ora will have the benefit of capital gains over time.
What is First Home Partner?
First Home Partner is not a home loan as such, but a financial contribution towards the purchase of a home in exchange for Kāinga Ora holding ownership to a portion of the property. The funds must be repaid along with any capital gains (if and where applicable).
What is the maximum amount of money that Kāinga Ora will contribute to the purchase of the property?
The maximum contribution from Kāinga Ora is either 25% or $200,000, whichever is lower, and each case is evaluated individually.
What type of home can I buy with First Home Partner?
Only new homes that have received their CCC (Code Compliance Certificate) in the past 12 months and have never been owned (excluding the initial builder or developer) can be purchased through First Home Partner.
Can I use First Home Partner for buying bare land to eventually build a home?
No, First Home Partner is only available for purchasing brand new homes, including turn-key and off-plan properties.
Is there a minimum income requirement?
No, but your household income must meet the lending requirements of a participating bank and it is important you can service your mortgage with a plan to eventually buy out Kāinga Ora’s share.
How much do I need for a deposit?
A minimum deposit of 5% of the entire purchase price is required. You can use KiwiSaver Funds (subject to eligibility) and may be eligible for a Kāinga Ora First Home Grant of up to $10,000 each or $20,000 for a couple.
How much can I borrow from a participating bank?
The amount you can borrow will depend on the bank’s lending criteria. You can apply with one of the supporting banks (currently BNZ, Westpac, or SBS) for First Home Partner.
For more information or if you’re thinking of buying through the Kāinga Ora program, get in touch with us today – we’d love to chat!