First Home Partner is a shared home ownership scheme administered by Kāinga Ora (previously Housing New Zealand), as an alternative way to help first home buyers to get into their own homes.
This is a scheme that was to help first home buyers just get into brand new homes, but in August 2023 this has now been extended to include existing or older houses that are in good condition – with less than $5,000 of maintenance due.
A brand new home means that the home is a new build that has not been previously owned (other than by the developer or builder) and has received a code compliance certificate within the previous 12 months. Essentially the home can be purchased off the plans or as a completed build. Any home yet to be built needs to be a turn-key build contract, not a contract with progress payments.
What Is Shared Home Ownership?
Shared home ownership is where you are the majority homeowner, but you initially share ownership of a home with a third party – in this case, with Kāinga Ora. Shared ownership schemes are usually designed to help those who have an insufficient deposit or cannot service a larger mortgage on their own.
With First Home Partner, the home buyer (you) must provide a minimum deposit of 5% toward the purchase price of the home. Kāinga Ora then contributes an agreed amount in return for an equivalent share in ownership – up to 25% of the purchase price or $200,000 (whichever is lower).
The buyer (you) can then progressively purchase back the share of the home owned by Kāinga Ora at the current market value, increasing your share of the ownership in the home.
Some people refer to this as progressive home ownership, as you progressively purchase the home until you own it outright.
The goal is to achieve full ownership within 20 years.
Understanding The Criteria For First Home Partner
When you want to take advantage of the First Home Partner shared home ownership scheme you still need to meet the lending criteria of the bank to receive a home loan, including providing the mortgage adviser all of the supporting information.
The First Home Partner shared home ownership scheme is designed specifically for first home buyers who may struggle to get a standard mortgage due to a combination of a lower than ideal deposit and possibly a lower income than the banks may require too, and therefore there is some specific eligibility criteria.
It is not designed to help people with bad credit. Your mortgage adviser will complete a credit check to ensure that you have a good credit score and nothing adverse.
You need to commit to living in the home as your primary place of residence for at least three years (from settlement) and to meet annually with a Kāinga Ora Relationship Manager to review the financial circumstances of your household. The idea is to work towards the goal of achieving full home ownership and you will need to do your best to purchase the share of the home owned by Kāinga Ora within the first 20 years of ownership, and must have purchased the share in full by the 25th anniversary from the date of settlement on the home.
When you use the shared home ownership (using First Home Partner) it won’t feel very different from full home ownership as you are the majority homeowner. Kāinga Ora are financially a partner but will not use or occupy your home.
To be eligible for First Home Partner, you must:
- Be over 18 years old
- Be a New Zealand citizen, permanent resident, or resident visa holder who is ordinarily resident in New Zealand or be applying with someone who meets the citizenship or residency requirements, and you are married to or in a civil union or de facto partnership with that person
- Be a first home buyer or a previous homeowner in a similar financial position to a first home buyer
- Have a total household income of no more than $150,000 (before tax) from the last 12 months (increased from $130,000 in August 2023)
- Be in a financial position to contribute a minimum deposit of 5% towards the home purchase
- Be buying the home for you to live in and commit to living there as your primary place of residence for at least three years from your settlement date
- Have not previously received shared ownership support from Kāinga Ora
Buying The Kāinga Ora Share
It’s a great way to get into your own new home, especially if you do not have a high enough deposit and/or if you have a limited income.
Kāinga Ora can help by funding up to 25% of the purchase price or $200,000 (whichever is lower) and you pay no interest or repayments on this amount. It can be tempting to try and keep this for the full 205-years as it seems like a good deal; however if (when) the value of your home increases then so does the amount that you repay to Kāinga Ora.
In the example above, the value of the house increases by $100,000 and therefore if they hold an ownership of 20% then that increased value will cost you $20,000.
Kāinga Ora are offering the First Home Partner scheme to help you get into your home, but the concept is you will buy the Kāinga Ora share as soon as you are able to. The longer you leave it, the more likely that the house value will increase and in that case the more you will need to repay to buy the share owned by Kāinga Ora.
You will be encouraged at your annual review to “pay off” / reduce the shared ownership, but regardless this should be a focus anyway.
Let’s Get Started
If you want to buy your first home then you want to have experienced mortgage advisers to help you navigate the options and help prepare your applications.
While there is never a guarantee that you will be able to buy your first home now, our advisers can ensure that you have the best chance and get the best advice.
Our advisers can help you now, or to get prepared for home ownership in the future.
We have also created a guide that you can download.
This steps you through First Home Partner and explains the simplified 4-step process that we have developed to ensure that the process is easy for you.
It’s a good guide to explain First Home Partner.
