Policy pledge would double First Home Loan scheme size, but economists flag deposit risk
The National Party has pledged to significantly widen access to the government's low-deposit First Home Loan scheme if re-elected, in a move that would directly affect how much buyers need saved before applying for their first home.
Housing spokesperson Chris Bishop announced the policy on 6 September, proposing to lift the scheme's income cap to $300,000 for all applicants — regardless of whether they're buying alone or with a partner, RNZ, Stuff, and 1News reported.
Who the change would affect
The Kāinga Ora-backed scheme currently allows eligible buyers to purchase with a deposit as low as 5%, rather than the 20% most banks require, but the income caps have been static since 2022: $95,000 for single buyers without dependants, and $150,000 for multiple buyers or single buyers with dependants.
Bishop argued those thresholds have fallen out of step with wages and cost-of-living pressures.
"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," he said.
Bishop noted the average gross income of first-home buyers currently sits around $146,000, meaning many buyers already earn above the existing combined cap while still struggling to save a full 20% deposit.
Scheme has grown alongside a buyer-friendly market
More than 33,000 households have used the First Home Loan scheme since 2003, with over 7,700 applications approved between July 2025 and April 2026. National expects the changes would roughly double the scheme's size, costing an extra $4–6 million annually, and said first-home buyers made up 29% of all property purchases in July — the highest monthly share in more than two decades.
That first-home buyer momentum contrasts with investors, who a separate NZHL Property Report found are pulling back over "concerns about the general election outcome" — the same vote National's own policy now hinges on.
Lower deposits carry a trade-off, economists warn
Not everyone is convinced wider access is unambiguously good for buyers. Independent economist Shamubeel Eaqub, writing separately, told Stuff that a 5% deposit leaves buyers with far less of a buffer if prices fall in a future downturn.
"We've seen real house prices [adjusted for inflation] fall by nearly 30% from the peak... house prices can fall a very large amount, and it can wipe out people's equity. And if that's happening to people who have limited means anyway, then is that a good thing?" Eaqub said.
The scheme is administered through participating banks and lenders, with loans underwritten by Kāinga Ora — a structure that would remain unchanged under National's proposal, which is contingent on the party's re-election in November.
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