The Government is offering first-home buyers a discount on the sale price of some state houses.
Housing Minister Nick Smith says about 400 homes no longer needed by Housing New Zealand will be available for sale over the next three years under the FirstHome scheme.
They are vacant houses in provincial areas, including Otorohanga, Levin and Invercargill.
Dunedin is the largest city where some houses will be available.
First-home buyers eligible for the scheme will have to earn no more than the average wage, and be committed to living in the house for three years.
Successful buyers will get a grant of up to 10% of the property's value, to a maximum of $20,000.
Dr Smith says the FirstHome scheme will help modest income earners in provincial New Zealand buy their first home.
"The FirstHome initiative is about helping families, low income in provincial New Zealand, get that first rung of the property ladder by giving them a 10% gift towards a deposit on a home."
He says it will also help free up capital for Housing New Zealand to invest in new state houses in areas with high demand, including Auckland and Christchurch.
Labour says scheme fails to target highest need
Labour's housing spokesperson Phil Twyford says the scheme fails to target areas of highest need, including Auckland.
He says what the country needs is 10,000 new affordable homes built every year in areas where there is a crisis.
The Green Party says a subsidy for low-income earners to buy vacant state houses is a poor use of public money.
Greens co-leader Metiria Turei says the subsidy will cost taxpayers $6 million.
She says it's a great deal of money for just a few families.
"And the justification that there's somehow surplus state houses around New Zealand is just ridiculous, everywhere there are state houses there are families desperate to get into those homes."