ASB joins low deposit Kāinga Ora scheme with some benefits
Mortgage advisers can now use ASB for clients buying a home under the Kāinga Ora First Home Loan scheme.
Thursday, February 19th 2026, 11:27AM
by Sally Lindsay
ASB joins Kiwibank, Westpac SBS Bank, The Co-operative Bank, Unity, Nelson Building Society and NZHL who are already part of this scheme.
The first home loan is designed for people who can afford regular mortgage repayments but are finding it difficult to save a 20% deposit. Instead of the standard deposit, eligible buyers can purchase their first home with just 5%, with the loan underwritten by Kāinga Ora.
Eligible customers who have been contributing to KiwiSaver for at least three years may also be able to withdraw their savings to put towards their home purchase and will be eligible for ASB’s first home buyer cashback offer. The offer is at least $5,000 for mortgages of $200,000 or more.
However, borrowers will be required to pay a one-off Lenders Mortgage Insurance (LMI) fee of 1.2% of the loan to protect the lender. On a $500,000 mortgage that is about $6,000 that either needs to be paid when the loan is drawn down or added to the total mortgage amount.
ASB executive general manager personal banking Adam Boyd says home ownership is a cornerstone of financial wellbeing and security for many New Zealanders.
“This loan helps to get more people into their own homes without the challenge of saving a large deposit while managing everyday expenses, like rent.
“By offering the first home loan, we’re helping to break down one of the biggest barriers to homeownership and opening doors for more New Zealanders to create their future and put down roots in their communities.”
Key Mortgages director Jeremy Andrews says all banks have slightly different criteria. “We have yet to see which banks work out of the best for the scheme.
He says while ASB might not be negotiating much on pricing it has one advantage in that it will take into account the rent from two boarders. The other banks will only take the income from one boarder into consideration for a low deposit loan.
“In the case of the ASB that might increase the purchase price for a low deposit borrower by $100,000. If a mortgage holder has two flatmates/boarders for five to 10 years it means they can pay off a massive chunk of their mortgage in that time. It also moves the borrower into a much different category of house.”
ASB will also look at whether it can do the mortgage itself without Kāinga Ora. If a borrower has a 10% deposit and its current policy allows somebody to buy a property with a 10% deposit it might not send the application to Kāinga Ora, which can be a slight downside if a client preferred that scheme.
Kiwibank, for example, even it does have funding outside Kāinga Ora, will allow a mortgage adviser to recommend which channel the client wants. “Does the client want to go the Kāinga Ora route and have low interest rates locked in or consider the bank route where they don’t have to pay the upfront LMI fee but pay a higher interest rate until they reach 20% equity.
If a client has a 5 or 10% deposit it is probably going to work out in their favour to pay the LMI fee and get the best interest rates.
Kāinga Ora will remain the gatekeeper for applications.
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