How Much KiwiSaver Should You Use for Your First Home Deposit? (2025 Update)
You've been diligently contributing to your KiwiSaver for years, watching that balance climb with each payday. Now, as you eye the property market, one question burns brighter than the "Open Home" sign: how much of your KiwiSaver should you actually use?
Let's cut to the chase – after 3 years of KiwiSaver membership, you can withdraw almost your entire balance for your first home. The only amount you must leave behind is $1,000.
That's right, there's no rule forcing you to keep half your savings or restricting you to a percentage. You can take nearly the whole lot. For many first home buyers, this revelation is like finding the cheat code to the deposit-saving game.
The average KiwiSaver balance for 30-year-olds is around $25,000-$30,000 (though this varies widely). That's a significant chunk of a deposit already sorted – especially for couples who could potentially combine $50,000+ from their KiwiSaver accounts.
But just because you can take (almost) all of it, should you? Let's dive into the strategy behind this critical decision.
The first home buying landscape in New Zealand has undergone major changes. The government's First Home Grant and Loan schemes have wrapped up, but don't worry – the pathway to homeownership has actually become clearer and more straightforward.
Gone are the days of navigating complex eligibility criteria, income caps, and regional price restrictions. Instead, first home buyers now have access to more flexible support options that can be combined with your KiwiSaver withdrawal for maximum impact.
The biggest game-changer? Aera Credits, which offer up to $10,000 towards your deposit without the hoops and hurdles of the previous government schemes. We'll explore how these work alongside your KiwiSaver strategy shortly.
When it comes to your KiwiSaver first home withdrawal, you've got choices. Here's how first home buyers typically approach this decision:
The All-In Approach
Most first-time buyers in New Zealand opt to withdraw the maximum amount available. Why?
As Jess from Auckland puts it: "I'd been saving for 7 years and had about $43,000 in my KiwiSaver. I withdrew all but the mandatory $1,000 for my deposit. Without it, I'd still be renting and saving for another 2-3 years minimum."
The Strategic Partial Withdrawal
Some buyers choose to leave more than the minimum $1,000 in their KiwiSaver. This approach might make sense if:
Craig, a first home buyer from Wellington, shares: "I had enough in savings plus about half my KiwiSaver to make a 20% deposit. I decided to leave the rest in my fund because it was performing really well, and I figured it would be good to keep my retirement savings growing."
To determine how much KiwiSaver to withdraw, consider your broader financial picture:
Step 1: Calculate Your Target Deposit
Different property types require different deposit amounts:
Step 2: Assess Your Other Savings
Take stock of all your deposit sources:
Step 3: Mind the Gap
Calculate the gap between your non-KiwiSaver resources and your target deposit. This helps identify how much KiwiSaver you actually need to withdraw.
Step 4: Consider Future Growth
Remember that any money you leave in KiwiSaver continues to grow through:
Real-World Example:
Let's say you're buying a $650,000 property requiring a 20% deposit ($130,000):
The gap is: $130,000 - ($50,000 + $10,000) = $70,000
In this scenario, you would need to withdraw $69,000 from your KiwiSaver (leaving the minimum $1,000), which aligns perfectly with your gap. If you were buying a new build with a 10% deposit and potential developer cashbacks, you might need to withdraw even less.
While the First Home Grant is no longer available in 2025, Aera Credits have emerged as a powerful alternative that offers several advantages over the previous government scheme.
Aera Credits allow first home buyers to earn up to $10,000 towards their deposit through a series of simple actions:
Getting Started (The Easy $400):
From there, you continue building credits through your home buying journey.
The Aera Advantage:
The concept is brilliantly straightforward: by cutting out the traditional middlemen in the home buying process (multiple real estate agents, mortgage brokers, etc.), Aera passes the savings directly to you in the form of credits towards your deposit.
This creates a powerful deposit-building trifecta when combined with your KiwiSaver withdrawal and any developer incentives.
Your KiwiSaver withdrawal works best as part of a comprehensive deposit strategy. Consider these additional support options:
Developer Cashbacks: The Hidden Advantage
New builds unlock another layer of support. Developers often offer cashback incentives that can give your deposit an extra boost. These can range up to $15,000 depending on the developer and project.
Paired with your KiwiSaver withdrawal and Aera Credits, developer cashbacks can significantly reduce the amount you need to save independently.
Bank Cashbacks: Your Settlement Bonus
While bank cashbacks come after settlement (meaning they can't help with your deposit), they're still worth factoring into your plan. These typically range from $2,000 to $5,000 and can help with:
Accessing your KiwiSaver for your first home isn't automatic – you need to apply for it. Here's the process:
Step 1: Confirm Your Eligibility
To withdraw KiwiSaver for a first home:
Step 2: Submit Your Application
Contact your KiwiSaver provider directly (the process varies slightly between providers). You'll need:
Step 3: Processing Time
Allow 10-15 working days for your application to be processed. This timing is crucial when making an offer on a property!
Step 4: Fund Transfer
If approved, your KiwiSaver provider doesn't send the funds to you directly. Instead, they're transferred to your solicitor's trust account for settlement.
Important Timing Tip: Apply for your KiwiSaver withdrawal as soon as your offer is accepted. Don't wait until just before settlement, as processing delays could cause major headaches.
Your KiwiSaver withdrawal and Aera Credits might help with the deposit, but you still need bank approval for your mortgage. Here's how to get "Bank Fit" in preparation:
Clean Up Your Bank Statements (3-Month Sprint)
Banks scrutinize your last three months of statements like they're judging your financial Olympics. Here's what gets you gold:
Your Regular Income Story:
Your Savings Game:
Red Flags to Eliminate:
Credit Score Bootcamp
Your credit score is like your financial fitness rating. Here's how to pump it up:
Immediate Actions:
Long-term Gains:
When you withdraw from your KiwiSaver for a first home, you're effectively borrowing from your future self. It's important to understand what this means long-term.
The Opportunity Cost
Money withdrawn from KiwiSaver misses out on:
For example, $50,000 withdrawn at age 30 could potentially grow to over $300,000 by retirement age (at 6% average annual return).
The Property Upside
However, buying property creates another form of retirement saving:
Many financial advisors consider property ownership a crucial part of retirement planning, making the KiwiSaver withdrawal a strategic reallocation rather than just a depletion of retirement funds.
If you do withdraw a significant portion of your KiwiSaver, consider these strategies to rebuild your retirement savings:
At Aera, we're all about getting Kiwis into their first homes faster. While KiwiSaver is an excellent deposit-building tool, combining it with our services can accelerate your journey even further.
The Aera Deposit Boost
Our members can unlock up to $10,000 in credits towards their first home deposit. When combined with your KiwiSaver withdrawal and potential developer cashbacks, this creates a powerful deposit-building trifecta.
High-Yield Savings
Our super-powered savings app targets higher interest rates than the banks, helping any additional savings grow faster while you're preparing for your KiwiSaver withdrawal.
First Home Faster Team
Our experts can guide you through:
The result? A faster, smoother path to homeownership with a deposit strategy tailored to your specific situation.
The journey to your first home is a sprint, not a marathon. Here's how it typically breaks down:
Deciding how much KiwiSaver to withdraw for your first home is ultimately a personal choice based on your unique circumstances. Here's how to move forward:
The New Zealand property market waits for no one. Using your KiwiSaver strategically alongside Aera Credits can be the difference between getting into your first home this year versus waiting several more years while prices potentially continue to rise.
Download the Aera app or visit our website to see how we can help you maximize your KiwiSaver withdrawal and other deposit-building strategies for your first home.
How much of my KiwiSaver can I withdraw for my first home?
You can withdraw almost everything except for $1,000. This includes your contributions, your employer's contributions, government contributions, and any investment returns.
Now that the First Home Grant is gone, what alternatives are there?
Aera Credits offer up to $10,000 towards your first home deposit without the income caps and regional restrictions of the old government schemes. Developer cashbacks and bank incentives provide additional support.
Are Aera Credits actually real money?
Absolutely! They convert directly to cash for your deposit when you buy through Aera. You can earn credits through various actions, starting with simply signing up.
How long does a KiwiSaver first home withdrawal take?
Most providers take 10-15 working days to process withdrawal applications once all documentation is received. Plan accordingly when making property offers.
Can I withdraw my KiwiSaver if I've owned property before?
In some cases, yes. "Second chance" buyers who no longer own property and are in a similar financial position to a first home buyer may qualify. You'll need to apply to Kāinga Ora to confirm your eligibility.
Can I withdraw KiwiSaver for buying land to build on?
Yes, you can use your KiwiSaver to purchase land if you intend to build your first home on it. You'll need to provide evidence of your building plans.
Can I combine KiwiSaver with other deposit sources?
Absolutely! The most successful first home buyers combine their KiwiSaver withdrawal with Aera Credits, savings, potential family gifts, and developer incentives for maximum impact.
What if the house purchase falls through?
If your purchase doesn't proceed, the funds are returned to your KiwiSaver provider to be reinvested in your account.
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