Can you still get a first home loan with bad credit?


If your credit score is stopping you from getting your first home loan, it can feel like you’ll never find a place of your own in New Zealand. But there is a light at the end of this tunnel.

Here’s what you need to know.



‘Credit’, ‘credit score’, ‘credit history’. These are all different ways of describing the same thing: your previous borrowing behaviour.

If you take out a loan and miss a repayment, your credit usually gets worse. If you take out a loan and make consistent repayments, it usually gets better.

There are lots of other ways that your credit can be affected which you can find out more about in our dedicated guide to credit scores.



Your first home loan is (probably) one of the biggest financial commitments you’ll ever make. There’s a lot of money involved, so the stakes are high for both you and the company that lends to you.

If someone has poor credit, this could tell the lender that they are risky to lend to. When you’re potentially going to lend out hundreds of thousands of dollars, it becomes important to manage that risk.

As a result, the worse a person’s credit is, the more difficult it will be to get a first home loan. The borrower might need to accept a higher interest rate, or they might be rejected for a loan altogether.



If you do have bad credit and have been rejected for a loan from the banks, there are still options available to you.

Your first option is to go through a mortgage broker. These professionals will find an appropriate lender for you---one who can provide bad credit home loans. They also handle most of the paperwork too, with some information from you, and most of the time, you don’t need to pay them either. They get a commission from the lender they set you up with instead.

Alternatively, if you prefer to do the hunting yourself, you should look at going through a non-bank lender.

Non-bank lenders often specialise in working with people who have been rejected by the bank, first home buyers included. The interest rates can be a little higher to compensate, but remember that after a few years of good repayments, you’ll be able to refinance and get a better deal with your newly improved credit rating.

Non-bank lenders may also offer a 'near prime' home loan. These near prime loans usually have interest rates similar to the big banks, but broader lending criteria that makes it easier for people with bad credit to get a home loan.


If you’re struggling to find a first home loan because you have bad credit, don’t give up! There are people who can help and ways to get you approved. For more information on buying your first home in New Zealand, check out our other guides on what you should expect to pay for a first home and how you can get a first home loan with less than a 20 per cent deposit.

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