If buying your first home has felt out of reach for the past few years, 2026 may be the year that changes. Interest rates have dropped significantly, house prices have settled, and banks are lending again – even to buyers who don’t have a 20% deposit saved. Property data firm Cotality (formerly CoreLogic) reported that first-home buyers hit a record 28.4% of all property purchases in late 2024, and conditions have continued to favour them into 2026.
But “conditions are good” doesn’t mean “straightforward.” The rules around home buying have changed significantly over the past two years, and understanding them before you start house-hunting can make the difference between a smooth process and a frustrating one. Here’s a plain-English guide to what’s actually changed, and what it means for you.
To understand where rates are now, it helps to know where they’ve been. Between 2021 and 2023, the Reserve Bank of New Zealand (RBNZ) hiked the Official Cash Rate (OCR), the benchmark that drives mortgage rates, from 0.25% all the way to 5.50% to fight inflation. That pushed mortgage rates to painful highs and locked many buyers out of the market.
Then, between August 2024 and November 2025, the RBNZ cut the OCR nine times, bringing it back down to 2.25%. Mortgage rates followed. Borrowing became more affordable, and buyers came back.
Here’s the catch: that window may be narrowing. New global pressures, including rising oil prices driven by the Middle East conflict, are pushing inflation up again, and the RBNZ has signalled that rate increases are likely sooner than expected. Major bank economists are forecasting the OCR could climb back to 3–4% by 2027. Some banks have already started lifting their longer-term fixed rates in anticipation.
What this means practically: If you’re close to ready, acting on well-informed financial advice sooner rather than later could lock in today’s better rates. The question of whether to fix for 1, 2, or 5 years also matters more now than it has in a while – it’s not a decision to make by guesswork.
The 20% deposit rule is real – but it’s not the only path. In 2026, there are several ways to get into the market with less, and they’re being used by thousands of Kiwis.
Banks are allowed to lend a portion of their mortgages to buyers with deposits below 20%. As of December 2025, the RBNZ increased that allowance to 25% of a bank’s new owner-occupier lending. Currently, banks are only using about 12–13% of that allowance – meaning there’s still meaningful capacity available for buyers who qualify.
This government-backed scheme is still open in 2026 and allows eligible buyers to purchase with as little as 5% down. To qualify, your income needs to be under $95,000 as a single buyer (or $150,000 combined if buying with someone else). There’s a small insurance premium of 1.2% of the loan amount – on a $600,000 loan, that’s $7,200, which can be added to your mortgage rather than paid upfront.
Important: the First Home Grant closed permanently in May 2024 and has not been replaced.
Buying a newly built home (or purchasing off the plans) comes with a meaningful advantage: new builds are exempt from some of the stricter lending rules that apply to existing homes. This can make it easier to get approved with a smaller deposit or if you carry other debt. The trade-off is that new builds often cost more than comparable existing properties.
This is arguably the biggest change to home lending in recent years – and the one that surprises buyers most when they sit down with a bank.
Since July 2024, banks must follow Debt-to-Income (DTI) restrictions set by the RBNZ. In simple terms: most buyers can borrow no more than six times their gross (pre-tax) household income. So if your household earns $120,000 a year before tax, you’re generally looking at a maximum mortgage of around $720,000 – regardless of how much deposit you have.
The two things that catch buyers off guard:
The good news: Kāinga Ora First Home Loans and new builds are largely exempt from DTI restrictions, which is another reason those pathways are increasingly popular.
If you’ve been contributing to KiwiSaver for at least three years, you can withdraw almost your entire balance to put toward a first home – leaving just $1,000 in the account. For many Kiwis, this is what makes the deposit achievable.
Two things have changed recently that are worth knowing about:
If you’re buying with a partner, both of you can make a withdrawal (as long as you each meet the three-year rule). Combined, that could be $40,000–$50,000 or more toward your deposit – often the difference between needing a 10% deposit and hitting the 20% mark, which unlocks better interest rates and more lender options.
Worth knowing: You can only make this withdrawal once in your lifetime, so when you do it, and how you combine it with other saving, matters. Getting advice before you apply is time well spent.
One thing many buyers overlook: check what your KiwiSaver is actually invested in. If you’re close to signing a sale and purchase agreement, you can’t afford to have your balance drop right before settlement. A KiwiSaver fund invested in growth assets like shares can lose value quickly in a volatile market – and if that happens in the weeks before you settle, it could leave a real gap in your deposit. As a general rule, it’s worth talking to your adviser about your fund type at least a few months before you plan to buy, so there’s enough time to shift to a more conservative option if needed and protect the value you’ve worked to build.
Multiple property commentators have called 2026 a “Goldilocks year” for first-home buyers: prices have softened from their 2021 peaks, stock levels are high, and in many parts of the country, a monthly mortgage repayment is now roughly comparable to rent. That combination is rare.
But with rates likely to rise before the end of 2026, and property investors expected to return to the market in greater numbers, the balance will shift. Waiting for the “perfect” moment tends to cost buyers more than it saves. What matters is being genuinely ready: deposit sorted, debt managed, KiwiSaver optimised, and mortgage structure chosen deliberately.
The good news is that home ownership is more achievable right now than it’s been in several years. The complexity, though, is real. Navigating LVR rules, DTI limits, KiwiSaver timing, income caps, and mortgage structure all at once, while also trying to find and secure a home, is a lot to manage without guidance.
A registered financial adviser can help you:
If you’d like to understand where you currently stand and what a realistic path to your first home looks like, talk to a registered financial adviser today. The rules have changed – make sure your plan has too.