Everything first home buyers need to think about

Buying your first home is one of the most significant financial decisions you'll make. It's also one of the most confusing, there's a lot of jargon, a lot of steps, and a lot of conflicting advice floating around.

This guide covers everything you need to know, in the order it actually matters. No fluff, no upsell, just a straight run-through of what's involved and what to think about.

1. How much deposit do you actually need?

The standard answer is 20% of the purchase price. On a $700,000 home, that's $140,000. But there's more to it than that.

Why 20%? New Zealand banks have Loan-to-Value Ratio (LVR) restrictions, rules from the Reserve Bank about how much of a property's value they can lend. For most owner-occupiers, they can only lend up to 80% of the value. Your 20% deposit covers the remaining 20%.

Can you buy with less than 20%? Yes, but it's harder. Some banks can lend up to 90% LVR (meaning you need just 10% deposit), but they're limited in how much of their lending can be in this higher-risk bracket. These spots go fast and usually require a clean credit history, stable income, and strong overall application.

Where does the deposit come from? Banks want to see "genuine savings", money you've saved yourself over time, not a lump sum gifted last week. Your KiwiSaver counts (see below). Gifts from family can be used but need to be documented carefully.

2. Using your KiwiSaver

If you've been contributing to KiwiSaver for at least 3 years, you can withdraw most of your balance to put toward your first home. This is often the single biggest deposit-builder first home buyers have.

What you can withdraw: Your total balance minus $1,000 (you must leave $1,000 in the account). This includes your contributions, your employer's contributions, and any investment returns. Government contributions stay in the account.

Timing: The withdrawal usually takes 10-15 working days once your application is approved. You'll need to coordinate this with your settlement date, I help clients manage this timing as part of the mortgage process.

3. Getting pre-approved, and why it matters

Pre-approval (sometimes called conditional approval or approval in principle) means a lender has assessed your financial situation and agreed in principle to lend you up to a certain amount. It's valid for a set period, typically 60-90 days.

Why you want it before you start looking:

• You know exactly what you can actually afford, not just what you think you can afford
• You can make an offer confidently when you find the right property
• Agents and sellers take you more seriously
• You avoid the heartbreak of falling in love with something you can't buy

What's needed for pre-approval: Recent payslips, 3 months of bank statements, details of existing debts and credit cards, proof of deposit/KiwiSaver balance, and your ID. I handle the paperwork and present your application to multiple lenders to find the best fit.

4. Costs beyond the purchase price

First home buyers are often surprised by how many other costs are involved. Budget for these on top of your deposit:

• Legal fees: $1,500–$2,500 for a property lawyer to handle the purchase. Don't skip this, a good conveyancing lawyer is non-negotiable.
• Building inspection: $500–$800 for an independent inspector to assess the property condition. Worth every dollar.
• LIM report: $250–$400 from the local council. Shows rates, consents, zoning, and any issues on record.
• Valuation: $600–$900. The bank may require this. Sometimes the bank orders it themselves.
• Moving costs: Varies hugely, factor this in.
• Immediate home costs: A dishwasher that needs replacing, a fence that needs painting. Budget a buffer.

As a rough guide, add $5,000–$10,000 on top of your deposit for these costs.

5. Mortgage structure, what to choose?

Once you've got your approval and found a property, you need to decide how to structure your mortgage. The main choice is between fixed and floating, and most people end up with a split of both.

Fixed rate: Your interest rate is locked in for a period (6 months to 5 years). Predictable repayments, protection from rate rises, but less flexibility if your circumstances change.

Floating rate: Moves with the market. More flexible, you can make extra payments or lump sums without penalty, but less certainty.

For first home buyers, I generally recommend fixing the majority of your loan for stability (you've got enough new costs and adjustments to deal with), while keeping a portion floating so you have flexibility. The exact split depends on your situation.

6. Protecting your first home

This step is often the last thing first home buyers think about, and it shouldn't be. When you sign up for a mortgage, you're taking on a significant financial obligation. If something happens to your income, your ability to service that debt disappears. The debt doesn't.

At a minimum, consider:

• Mortgage protection insurance, covers your repayments if you can't work due to illness or injury
• Life cover, if you're buying with a partner and one of you died, could the other continue to service the mortgage?
• Income protection, broader cover that replaces up to 75% of your income if you can't work

I review insurance alongside mortgages as part of the same process. The right time to sort cover is before settlement, not after something has already happened.

7. What the whole process looks like