Helping hand for first home buyers

  • Phil Heatley

Housing Minister Phil Heatley has announced changes that will deliver a helping hand to first home buyers in higher priced areas of New Zealand and those wanting to build houses on multiple-owned Maori land.

Cabinet has approved an increase in the amount that can be borrowed under the government-funded Welcome Home Loan mortgage insurance scheme.  Other changes include extending the scheme to make it available for new builds and buying a first home on multiple-owned Maori land.

First home buyers can now borrow up to $350,000, up from the previous cap of $280,000.

“While house prices and interest rates have recently come down, bank deposit requirements have increased,” Mr Heatley said.

“Borrowers will still need to prove their ability to service loans; however the new cap reflects the reality of the situation many first home buyers in places like Auckland and Wellington find themselves in.”

“This will also help more tenants living in eligible state homes to buy their property.”

Mr Heatley also said banks were reluctant to lend to Maori groups for housing at present because multiple-owned land couldn’t be used as security for the loan.

“This of course fails to recognise the ability of prospective borrowers to service the loan, which is where this extension of the scheme comes in,” Mr Heatley said.

The changes will also allow loans for houses to be built on land already owned by the first home buyer.

“We want to encourage the building of new houses and in doing so stimulate the construction sector,” Mr Heatley said.

The Minister emphasised that the maximum amount of $350,000 is primarily to help first home buyers living in higher priced areas.

Housing New Zealand administers the scheme and it has been given discretion to constrain lending large sums in areas where house prices are relatively low and/or where there are no land costs (i.e. the potential borrower already owns the land they wish to build on), taking into account relative factors on a case-by-case basis.

Housing New Zealand is developing principles and guidelines to ensure the discretion is applied in a fair and reasonable way.


The Welcome Home Loan was introduced in 2003.  Between its inception and May 2009 a total of 4,482 Welcome Home Loans have been settled, translating into access to home finance of over $719 million.

Under the changes announced today the maximum income requirement stays the same:

  • one or two borrowers can have a maximum household income of $85,000 per annum
  • three or more borrowers can have a maximum household income of $120,000.

The benefits of extending the Welcome Home Loan mortgage insurance scheme are:

  • access to home finance for people wishing to buy or build on multiple-owned Maori land;
  • increasing housing supply;
  • and, stimulating the construction industry by enabling people to buy starter homes off the plans or build a new house.

Loans for these purposes will be available for eligible borrowers by November 2009, once the product and processes have been developed and agreed with participating lenders.

For more information on Welcome Home Loan go to