Everything You Need to Know About Withdrawing KiwiSaver for Your First Home

For most first home buyers in New Zealand, KiwiSaver is the difference between browsing TradeMe and actually attending an open home. It often makes up the bulk of the deposit, turning a 5% savings pot into a substantial 20% down payment.

However, there is a common misconception that this withdrawal is a "grant" or a government gift. It isn't. It is simply an early release of your own retirement money. Because of this, the rules are strict, and getting the timing wrong can leave you scrambling for cash on settlement day.

Who Is Eligible?

To unlock your KiwiSaver for a home purchase, you generally need to tick three main boxes:

The Three-Year Rule: You must have been a member of a KiwiSaver scheme for at least three years. This doesn't mean you have to be contributing for three years straight, but the account must have been open for that duration.

First Home Status: You must have never owned a home or land before. There is an exception for "Second Chance" buyers (see below).

Owner-Occupier: You must intend to live in the property. You cannot use KiwiSaver to buy an investment property or a holiday home.

How Much Can You Withdraw?

If you are eligible, you can withdraw almost everything in your account. This includes your own contributions, your employer's contributions, government contributions (Member Tax Credits), and any investment returns your fund has earned.

The Hold-Backs: You must leave a minimum balance of $1,000 in your account. Additionally, if you have transferred money from an Australian Superannuation fund, you cannot withdraw that Australian principal. You can, however, withdraw the investment earnings that the Australian money has generated since arriving in your KiwiSaver account.

Use our KiwiSaver First Home Calculator to estimate how much you could access for your deposit.

The "Second Chance" Withdrawal

Many New Zealanders assume that if they have owned a home in the past (perhaps with an ex-partner or decades ago) they are locked out of this benefit. This is not always true.

If you have owned property before but no longer do, and your financial position is considered similar to that of a first home buyer, you may qualify for a Second Chance Withdrawal.

Unlike a standard withdrawal (which goes straight to your KiwiSaver provider), this process requires an extra step. You must first apply to Kāinga Ora for an eligibility letter. They will assess your "realisable assets" (cash, shares, boats, caravans, etc.). If these assets fall below their current caps, they will verify you as a Second Chance buyer. You then take that letter to your KiwiSaver provider to process the withdrawal.

The "Deposit vs. Settlement" Trap

This is the single most common stumbling block for buyers.

In a property transaction, there are two times you might need money. The first is the deposit, usually 10% of the purchase price, paid when the agreement goes "unconditional" (or on the day of the auction). The second is settlement, the day you pay the remaining 90% and get the keys.

The Auction Problem: If you are buying at auction, you typically need to pay the deposit immediately upon winning, literally writing a cheque or making a transfer in the auction room. You cannot use KiwiSaver for this immediate payment. KiwiSaver withdrawals take time and must go through a solicitor's trust account; they cannot be accessed instantly on a Saturday afternoon. Read our tips for bidding at auction for more guidance.

If you are buying at auction, you generally need to have "cash in hand" (or a temporary overdraft arrangement) for the deposit. You can then use your KiwiSaver funds for the final settlement amount later.

The Conditional Offer Solution: If you are making a standard conditional offer (e.g., "Subject to Finance"), you can often use your KiwiSaver for the deposit. Your solicitor will arrange for the funds to be withdrawn and held in their trust account, ready to be paid when the deal goes unconditional.

The Timeline: Don't Rush It

KiwiSaver withdrawals are not instant. Most providers state they need 10 to 15 working days to process an application.

Step 1: Contact your provider early (before you even find a house) to check your balance and eligibility.

Step 2: Once you have a signed Sale & Purchase Agreement, send it to your solicitor and fill out your provider's application form.

Step 3: Your solicitor verifies the details and sends the documents to the provider.

Step 4: The provider pays the funds to your solicitor's trust account (never to your personal bank account).

If you leave this application until the week before settlement, you risk delaying the entire purchase and potentially facing penalty interest from the vendor.

What Happened to the First Home Grant?

You may still see old articles or friends mentioning a "First Home Grant" (the up to $10,000 government cash gift).

This grant was discontinued in May 2024. It is no longer available. The First Home Withdrawal (using your own money) remains fully active, but the government Grant (free extra money) is gone. Be careful not to confuse the two when calculating your budget.

Life After the Withdrawal

Emptying your retirement savings at age 30 can feel scary, but for most people, getting into a freehold home is the best financial move they can make.

Once the withdrawal is done, your KiwiSaver account remains open with its $1,000 balance. You and your employer will continue contributing from your next payday. While your balance has dropped, you now have a significant asset (your home) and potentially 30+ years of earnings to rebuild your retirement nest egg.

Rebuilding starts with your very next paycheck. Learn more about choosing the right contribution rate to get back on track.

Ready to buy your first home? Our mortgage advisers can help you navigate the entire process.