National is promising to dramatically widen access to low-deposit home loans if re-elected, lifting the income threshold for the Government-backed First Home Loan scheme to $300,000 as it sets a goal of returning New Zealand home ownership to around 74 percent.
Housing spokesperson Chris Bishop says saving a deposit remains one of the biggest barriers facing aspiring homeowners, particularly younger people paying high rents while also dealing with food, childcare and other living costs.
Under National’s Election 2026 policy, eligible first-home buyers earning up to $300,000 would be able to apply for a First Home Loan requiring a deposit of as little as 5 percent.
Income caps would jump dramatically
The existing Kāinga Ora-backed scheme has significantly lower income limits.
Currently, a single buyer without dependants must have earned no more than $95,000 before tax over the previous 12 months.
A single buyer with dependants can earn up to $150,000, while two or more people purchasing together are limited to a combined income of $150,000.
National says those thresholds have failed to keep pace with wages and housing-market realities.
Its proposal would replace them with a $300,000 ceiling applying regardless of whether the application came from an individual or multiple buyers.
That would potentially bring thousands of additional households within reach of the scheme.
The deposit problem
The attraction of the First Home Loan is straightforward.
Most lenders typically expect buyers to have a deposit of around 20 percent, although individual lending arrangements can vary.
The Government-backed scheme reduces the minimum deposit to 5 percent for eligible buyers because participating lenders receive an underwriting arrangement through Kāinga Ora.
On a $700,000 property, the difference between a 20 percent and 5 percent deposit is substantial.
A 20 percent deposit would be $140,000.
Five percent would be $35,000.
For households capable of servicing a mortgage but struggling to accumulate a large deposit while paying rent, that difference can potentially bring home ownership forward by years.
But a 5 percent deposit doesn’t guarantee a mortgage
National is stressing that widening eligibility would not mean applicants automatically receive larger mortgages.
Banks and other participating lenders would continue making the final lending decision and assessing an applicant’s income, existing debts, credit history and ability to service the mortgage.
That distinction matters.
Lowering the deposit hurdle does not eliminate the challenge of servicing a large mortgage, particularly when interest rates are elevated.
Borrowers using the current scheme must also pay a 1.2 percent Lender’s Mortgage Insurance premium, which can be paid upfront or added to the loan.
First-home buyers already grabbing a bigger slice of the market
National says first-home buyers accounted for 29 percent of all property purchases in July, which Bishop says was their highest monthly market share in more than two decades.
More than 33,000 households have used the First Home Loan scheme since its earlier iterations began, while National says more than 7,700 new applications were approved between July 2025 and the end of April 2026.
The party is now setting a much bigger ambition.
National wants New Zealand’s home ownership rate to climb from around 66 percent to its previous peak of approximately 74 percent.
What could it mean for Māori?
The home ownership debate carries particular significance for Māori.
For whānau trying to enter the housing market, the deposit can be only one part of the challenge.
Income, intergenerational wealth, servicing costs and the ability of parents or grandparents to contribute towards a deposit can all influence whether someone can purchase a home.
The existing First Home Loan rules also explicitly state that ownership of Māori land does not automatically disqualify an applicant under the requirement that buyers must not own other property or land.
For Māori households who meet the expanded income criteria and can service a mortgage, reducing the deposit hurdle could therefore create additional pathways into home ownership.
But the policy does not by itself address every challenge around building or financing homes on collectively owned whenua Māori.
Critics warn about pumping up demand
The announcement has already attracted criticism from the New Zealand Taxpayers’ Union, which argues New Zealand’s fundamental housing problem is insufficient supply rather than a shortage of mortgage demand.
It says expanding taxpayer-backed low-deposit lending risks increasing demand without producing additional houses and potentially shifts more lending risk towards the state.
That argument is likely to become one of the central questions around National’s policy.
Helping more people compete for the same number of houses can put upward pressure on prices.
Increasing supply alongside greater access to finance could produce a very different result.
National’s wider housing strategy will therefore be important in determining whether the policy ultimately improves affordability or primarily makes it easier for more buyers to enter the market.
Relatively small price tag for a big expansion
National estimates expanding the scheme could cost the Government between $4 million and $6 million, which it expects would be met from existing funding.
The relatively modest estimated cost reflects changes made through Budget 2025 requiring borrowers to meet the full cost of Lender’s Mortgage Insurance rather than taxpayers subsidising part of it.
National says the First Home Loan scheme cost around $14.5 million to administer in the 2024/25 financial year, when it supported 3,085 loan underwrites.
Housing moves onto the Election 2026 battlefield
Housing is now shaping up as another major dividing line heading towards November.
The debate is no longer simply about building more houses.
It is about who can afford them, who can secure finance, how much debt first-home buyers should carry and what role the Government should play in helping people through the front door.
National’s answer is to lower one of the biggest hurdles.
Instead of requiring many aspiring buyers to save towards a conventional 20 percent deposit, it wants far more people to have access to a Government-backed pathway requiring just 5 percent.
For a generation of renters watching house prices, interest rates and their weekly rent payments while trying to accumulate a deposit, that could be an attractive proposition.
But there is a larger test for whichever party forms the next Government.
Getting more whānau through the door matters — but so does ensuring there are enough affordable homes to buy once they get there.
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