The Homestart Grant is gone, but KiwiSaver can still help you into your first home

3 MIN READ June 24, 2024
With last month’s announcement that the HomeStart Grant would no longer be available to eligible first-home buyers, those working towards a deposit might feel like their dream of homeownership just got more difficult.


The HomeStart Grant provided KiwiSaver members up to $5,000 towards the purchase of an existing property or up to $10,000 for the purchase of a new home. Although the removal of the grant is a setback, there are still plenty of reasons to keep contributing to KiwiSaver for your first home. 

Using your KiwiSaver for your first home 

One of the most significant benefits of KiwiSaver is the ability to use it towards your first home deposit. If you’ve been contributing to your KiwiSaver for at least three years, you’re eligible to withdraw most of your savings to put towards your first home. You’ll need to leave $1,000 in there, however this can include your contributions as well as your employer’s contributions and the governments too. This can provide a substantial boost to your deposit.

Growing your savings

The funds you invest in your KiwiSaver account grow over time. This is because your fund manager invests your KiwiSaver savings on your behalf, which means your savings earn returns. And then the returns, earn more returns; this is the power of compounding returns. As a result the money you contribute today can significantly increase in value by the time you’re ready to buy a home.

If you’re looking to boost your deposit savings, consider increasing your contribution rate. If you’re an employee, you can adjust your rate to 3%, 4%, 6%, 8%, or 10% of your gross salary. Increasing your contributions even slightly can make a significant difference over time. And because contributions come out before you have a chance to see them, it ensures you don’t get tempted to deviate from your saving plan.

Choosing the right fund

There are different types of funds available, from conservative to aggressive. The right fund for you depends on your time horizon and risk tolerance. If you have more time before you plan to buy a home, a growth fund will generally offer higher returns, though it comes with more risk. 

Alternatively, if you’re looking to buy soon, a big dip at the wrong time could impact your deposit amount so a defensive or conservative fund might be a better option to consider.

Don’t forget the government contribution

A quick reminder that for every dollar you contribute , the government contributes 50c up to $521.43 per year. Make sure you’re taking full advantage of this by contributing at least $1,042.86 between 1 July and 30 June each year to get the maximum government contribution. This is essentially free money that can help grow your savings even faster.

While the removal of the HomeStart Grant may be a setback, your KiwiSaver remains a powerful tool in your journey to homeownership. By understanding the growth potential of your KiwiSaver, choosing the right fund, and making the most of the government contribution, you can still work towards a substantial first home deposit. If you’d like support with making sure your KiwiSaver is on the right track to buy your first home, get in touch with us via the form below!

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