January 5, 2026

How Much Can I Borrow for My First Home?

The Big Question for First-Home Buyers

One of the first things Kiwi first home buyers ask is a simple one: how much will they lend me? Knowing your borrowing power helps you set a realistic price range and avoid wasting time on homes that will not fit your budget. The answer is different for everyone because banks look at your full financial picture, not just your income.

This guide explains the key factors that determine how much you may be able to borrow, along with practical steps that could help you strengthen your application. If you want tailored figures based on your situation, our mortgage advisers are here to help. You can get in touch anytime for guidance.

What Determines Your Borrowing Limit?

When you apply for a home loan, lenders assess a range of factors to see whether you can manage mortgage repayments for the long term.

1. Income

Your household income is a major factor. This includes wages or salary, and may include bonuses, overtime, commission, or other income. Lenders test whether your income can comfortably cover a mortgage, along with your other costs. If you are buying with a partner, both incomes are considered.

2. Existing Debts & Short Term Liabilities

Personal loans, credit cards, car finance, Buy Now Pay Later, and student loans all impact how much you can borrow. Even unused credit card limits can count against you, because lenders see them as potential debt. Reducing or closing credit facilities can improve your borrowing strength.

3. Living / Lifestyle Expenses

Landers will review bank statements to understand your spending habits. If money is tight after rent, groceries, transport, and other essentials, the amount you can borrow may be lower. Demonstrating consistent savings can help build confidence that you can afford repayments.

4. Deposit Size and LVR Restrictions

Your deposit directly affects how much you need to borrow. A larger deposit may increase your borrowing power and improve your interest rate options. Many first-home buyers use KiwiSaver withdrawals toward their deposit, and some may qualify for a First Home Loan with a smaller deposit.

5. Test Interest Rates

Banks test your borrowing ability at a higher interest rate than current mortgage rates to ensure you could handle future increases. When test rates are high, maximum borrowing limits tend to drop. This is outside your control, but important to understand.

6. Loan Term

A longer loan term, 30 years for example means lower repayments, which improves your borrowing power. You can still pay it off faster later, but many first-home buyers start with a longer, or longest term to allow flexibility.

7. Credit History

A clean credit report supports a stronger application. Late payments or defaults on your month-to-month expenses may limit the amount a lender is willing to approve or add conditions to your loan.

How to Increase Your Borrowing Power

If the amount you qualify for is lower than you hoped, there are straightforward ways to improve your position.

Pay Down Short Term Liabilities

Reducing personal loans, credit limits, or Buy Now Pay Later commitments and paying of and closing down your credit cards can make a noticeable difference. Even small weekly payments toward debt reduction can improve your borrowing calculation.

Limit Discretionary Spending

Lenders look carefully at your recent spending. Reducing non-essential costs three months before applying can help present a stronger financial picture.

Increase Your Deposit Amount

Savings, KiwiSaver first-home withdrawals, and family gifts can help increase your deposit and reduce the amount you need to borrow. A larger deposit may also widen your lender options.

Consider Joint Buying or Boarder Income

Buying with a partner generally increases borrowing power because of shared living costs. If you plan to have a flatmate, although it may require a letter from the border, some lenders will include boarder income in their assessment.

Getting Pre-Approved

A home loan pre-approval gives you a clear price guide and strengthens your position when making offers. It also highlights any issues early so you can resolve them before committing to a purchase. Pre-approval typically lasts three to six months and can be renewed if needed.

If you are planning to purchase your first home, you can learn more about the lending process on Home Loans, or explore options specific to new buyers for their First Home Loan.

Working With a Mortgage Adviser

Different lenders can arrive at different lending amounts for the same borrower. That is one reason first-home buyers choose to work with mortgage brokers. At Capital Advice, we:

• Compare lenders to find suitable borrowing outcomes
• Help structure lending so repayments are manageable
• Support you from pre-approval through to settlement
• Provide ongoing guidance as your needs change

If you would like clarity on what you may be able to borrow, contact Capital Advice for a conversation with one of our mortgage advisers in Wellington. There is no cost to you, and it may give you the confidence you need to take the next step toward owning your first home.

Get in Touch