A major developer is threatening to pull out of Auckland's 'affordable' housing scheme as a result of tighter lending and restrictions.

GJ Gardner Franklin and Papakura managing director Mike O'Meeghan says around 60 potential first home buyers have walked away in the last month because they couldn't get loans.

The company is building 36 'affordable' homes on sites in Papakura and Pukekohe as part of the Special Housing Area legislation, however they are becoming increasingly difficult to sell, O'Meeghan says.

Nigel Moffiet GJ Gardner Franklin and Papakura managing director Mike O'Meeghan

Under the legislation, the properties can only be sold to first-home buyers who are New Zealand citizens. It also sets a salary cap of $120,000 for couples.

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The homes, which have been on the market since October and February which are considered 'affordable' under the legislation and range from $569,000 to $618,000, with 17 still available.

O'Meeghan says he would like the salary cap increased to allow more people into the scheme.

"We entered into this market as we noticed that there were not many affordable homes being built in our area. We wanted to be able to supply affordable homes to people .

"There are clients that currently earn more than this [$120,000 income cap] and it is their first home but unfortunately they don't qualify.

"If the current rules with the income thresholds don't change then we may have to consider not entering into the affordable market again," he says.

Loan Market mortgage broker Karen Tatterson says it's become "increasingly more difficult" for people looking to buy in the affordable home schemes.

Loan-to-value ratios (LVRs) put in place last September by the Reserve Bank and the Responsible Lending Code put in place in 2015 have had big impacts, Tatterson says.

Banks are permitted to make no more than 10 per cent of their residential owner occupier mortgage lending to borrowers with less than 20 per cent deposit and "many who may have qualified are missing out".

It is "especially hard" for first-home buyers who are just over the income salary caps, she says.

Recent data from property information and analytics provider CoreLogic shows in Auckland, investors are 43 per cent of the market while first-home buyers are just above 20 per cent.

The firm's head of research Jonno Ingerson says the number of sales to first-home buyers was the lowest in 20 years.