The National Party has pledged to expand New Zealand’s First Home Loan scheme by lifting the combined income cap to $300,000 and widening access to 5% deposits, aiming to push homeownership back to its peak of 74% if re-elected.
Yet, saving for a substantial down payment remains a persistent obstacle for ambitious workers. While standard lending requirements typically demand a 20 percent deposit from buyers, government-backed initiatives offer an alternative pathway into the market.
The proposed changes would eliminate the distinction between single and multiple applicants, establishing a single uniform income threshold for all prospective participants.
Overhauling Income Caps for High-Earning Professionals
Under the existing guidelines administered through Kāinga Ora, individual buyers without dependents face a $95,000 income ceiling, while multiple buyers or single applicants with dependents are capped at $150,000. National argues these limits, which have remained unchanged since 2022, fail to reflect current wage growth and housing market realities.
“Right now, a junior doctor on $100,000 can’t access the scheme. Nor can a young couple, like an electrician on $85,000 and a teacher on $78,000, or two friends who have just graduated from police college and are earning $77,000 each.”
Chris Bishop, National housing spokesperson, via RNZ
Raising the cap to $300,000 ensures that dual-income households and high-earning professionals caught in rental cycles can qualify for low-deposit backing.
Mechanics of the First Home Loan Scheme and Fiscal Costs
The First Home Loan scheme operates through participating private banks and lenders while being underwritten by the Crown. This arrangement allows lenders to issue mortgages with a 5 percent deposit that they would otherwise decline under standard loan-to-value ratio rules. Notably, these specific government-backed loans remain exempt from Reserve Bank high LVR restrictions.
National anticipates that widening eligibility will double the size of the scheme, bringing thousands of additional applicants into the fold. Historical data shows that over 33,000 households have used the initiative since its 2003 inception, with more than 7,700 applications approved between July 1, 2025, and April 30, 2026.
“While a combined income of $150,000 might sound like a lot of money, the reality is that plenty of young couples now earn more than that but still struggle to save for a 20 percent deposit while juggling the cost of rent, food, and childcare.”
Chris Bishop, National housing spokesperson, via Newstalk ZB
To fund the expansion, the party estimates an additional cost between $4 million and $6 million per year, which will be drawn from existing baselines. Administration costs for the scheme totaled $14.5 million during the 2024/25 financial year, though recent budgetary adjustments requiring borrowers to cover the full cost of Lenders Mortgage Insurance have substantially lowered ongoing fiscal outlays.
Contrasting Approaches to First-Home Support
The policy announcement also highlights a sharp contrast in political strategies regarding housing affordability. In 2024, the coalition government dismantled the previous administration’s First Home Grant, which provided cash grants of up to $10,000 to eligible buyers.
Defending the shift away from direct cash handouts, Bishop characterized direct grants as a blunt instrument. By focusing instead on lowering the deposit barrier through underwritten lending, the party aims to tackle what it identifies as the single greatest hurdle facing young buyers.
Importantly, party policy documents stress that the proposed changes alter the deposit hurdle rather than the income servicing test. Lending institutions will continue evaluating every applicant against rigorous stress-tested interest rates and responsible lending obligations, ensuring that final lending approvals rest firmly with the banks.
Long-Term Goals and Broader Economic Policies
National’s low-deposit policy is tied to a broader vision of lifting New Zealand’s national homeownership rate from its current 66 percent back up to its historical peak of approximately 74 percent, a milestone last achieved in the early 1990s.
This housing measure accompanies a wider legislative platform that includes commitments to introduce no new taxes, adjust KiwiSaver settings, extend paid parental leave, implement a rates cap, and lower student loan repayment rates.
