Using KiwiSaver for a First Home Deposit and the First Home Grant

KiwiSaver is arguably doing the most to assist New Zealander’s into putting down a deposit for their first home.

First home withdrawal

Most people know that you can supplement your first home deposit with your KiwiSaver, but do you know all the rules surrounding it? To be eligible to use your KiwiSaver on your first home deposit, you must…

  • have been a member of KiwiSaver for over three years

  • Intend to live in the property (i.e. it can’t be an investment property)

  • Be purchasing a property in New Zealand

If you meet the criteria above, you are eligible to use all of the funds accumulated in your KiwiSaver, including Government contributions and employer contributions, however you must leave $1,000 in there. For example, if your KiwiSaver balance is $35,000, you can only take out $34,000 to use on your first home.

First home grant

The ‘First home grant’ offers free money towards a deposit on your first home just for being a KiwiSaver member. There are a few more rules associated with this grant, however if you’re eligible it’s definitely worth taking advantage of.

  • The first rule is you need to have been contributing towards your KiwiSaver Fund for at least three years. You also need to make sure your employer has been contributing over this time (unless you are self-employed).

  • Next is you need to earn less than $85,000 as an individual, or $130,000 if there are two (or more) of you purchasing the home. This is your earnings per IRD for the prior 12 months - to see this log onto your My IRD.

  • The third requirement is the purchase price cannot exceed the following amount:

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Once you’ve been deemed as eligible, the First Home Grant will provide you with $1,000 towards an existing home, and $2,000 towards a new build, for every year that you have been a regularly contributing towards KiwiSaver. Regularly contributing means 3% of your salary if you are employed, or contributing regularly if you are self-employed. This differs to the KiwiSaver withdrawal above given, to be eligible to withdraw, you must only have been a member for 3 years. See below for what you’d be eligible for…

For an exisiting home:

  • 3 years of regular contributions = $3,000 (the minimum you can get)

  • 4 years of regular contributions = $4,000

  • 5 years of regular contributions = $5,000 (the maximum you can get)

For a new build:

  • 3 years of regular contributions = $6,000 (the minimum you can get)

  • 4 years of regular contributions = $8,000

  • 5 years of regular contributions = $10,000 (the maximum you can get)

The cool thing about the First Home Grant is that if you’re going in with your partner, then you are both eligible for the grant. Further, if you are going in on a house in an even bigger group, as long as you still meet the eligibility requirements (big one being income cap), then you can all get the grant.

To get pre-approved for the First Home Grant, follow the link: First Home Grant Pre-approval

KiwiSaver, on top of your own savings and investments, will make the daunting task of getting into your first home possible, it just takes a bit of perseverance.

If you want to know if you’re KiwiSaver fund is being optimised for a first home deposit, and for your personal situation, follow the link below to our online fact find. The fact find only takes 5 minutes to complete, and once you have finished we will provide you with a free no-obligation KiwiSaver recommendation.

Nick Hay