Using KiwiSaver to buy your first home

For a lot of New Zealanders, KiwiSaver isn’t really about retirement – it’s how they get the keys to their first home. Here’s how it works, and the one mistake that can quietly shrink your deposit.

Withdrawing your KiwiSaver

If you’ve been a KiwiSaver member for at least three years and you’re buying your first home (or you’re in a similar position to a first-home buyer), you can generally withdraw most of your balance to put towards the purchase. You must leave a small minimum balance behind, and there are conditions – for example, the home usually needs to be one you’ll live in.

This is separate from any grant. It’s your own money (plus the employer and Government contributions that have built up) being released early for a specific purpose.

What happened to the First Home Grant?

If a friend got a First Home Grant a few years ago, don’t plan around one: the Government closed the scheme to new applications in May 2024, and no replacement grant has been introduced. Your own KiwiSaver first-home withdrawal is completely unaffected – that’s your money, and it works exactly as described above.

What does still exist is the First Home Loan, a separate Kāinga Ora-backed scheme that lets eligible buyers purchase with as little as a 5% deposit through participating banks. It’s a lending programme rather than a payment, and the banks assess eligibility, so talk to your lender or broker about whether you qualify.

A solicitor handles the actual withdrawal as part of your purchase, but planning ahead is what makes it smooth.

The fund trap to avoid

Here’s the mistake we see most: someone has their KiwiSaver in a growth or aggressive fund – great for long-term retirement saving – but they’re buying a house in the next year or two. If the market dips right before they buy, their deposit shrinks at the worst possible moment, and there’s no time to recover.

If your purchase is on the horizon, it often makes sense to move to a more conservative fund so your deposit is protected and predictable. Time it too early and you may miss out on growth; too late and you take on risk you can’t afford. Getting this timing right is one of the most valuable things an adviser can help with.

A quick checklist

• Have you been contributing for at least three years?
• Do you know your current balance and how much you could withdraw?
• Is your fund still appropriate, given how soon you’ll buy?
• Might a First Home Loan (the 5% deposit scheme) fit your situation?

Curious how fast a deposit builds? Try our compound interest calculator with your own contributions and timeframe.

If you’re aiming to buy in the next few years, don’t leave your fund on autopilot. Book a chat and we’ll help you line your KiwiSaver up so the money’s there – and protected – when you need it.