The $300,000 cap in Christchurch will rise to $400,000 in Christchurch and Selwyn; while 10 other regions have the cap lifted to $350,000.
Buyers must have a minimum 10 per cent deposit - which can include the first home withdrawal from Kiwisaver and the Government subsidy.
Changes will also be made to the Welcome Home Scheme, which at present helps income earners to buy their first home without a deposit at all if the house is under $200,000 - and a 15 per cent deposit on any amount over the $200,000 price. Housing New Zealand doesn't fund the mortgage but insures the loan for the lender.
The changes announced today will end the no-deposit part of the scheme but lower the deposit required on the over $200,000 part to 10 per cent, rather than 15 per cent.
Read the PM's full speech here
Mr Key said that the number of loans under Welcome Home would expand from about 850 a year to 2500 a year.
The changes to the scheme would bring the criteria in line with the Kiwisaver scheme.
Mr Key anticipated that the changes would fund $64 million extra in first-home buyer subsidies over the next four years.
He made his announcements in his speech to the National Party conference in Nelson.
He said National valued homeownership because it provided stability for families, strength for communities and security for retirement.
"But we also share the concern of many New Zealanders about some young people being locked out of the housing market or having to commit far too much of their incomes to housing."
