"We know how difficult it is for many whanau to save enough money for a deposit and we want to make home ownership achievable for more New Zealand families," he said.
Mr Paenga made the announcement alongside Associate Housing Minister Tariana Turia and Pita Sharples at Te Hapua, where the first pilot for the Rural Regeneration Fund programme was being launched.
The fund was a great opportunity for iwi and other collectives to manage a fund for small loans or grants to home owners for repairs to their substandard houses in rural areas, Mr Paenga said.
"He Korowai Trust in Kaitaia, who will manage this fund, is an example of how a local Maori community trust can help address substandard housing in their rural area."
The Maori Party also intended to increase the number of low income homes insulated under the Warm Up New Zealand policy to around 46,000 by 2015/2016, he said.
The housing warrant of fitness policy has been raised before.
In February Housing Minister Nick Smith launched the trial of the scheme but it was limited to 500 state houses.
Last month the Greens announced a proposal to require and fund a full warrant of fitness test for all of the country's 453,000 rental houses.
Announcing the policy, co-leader Metiria Turei said the Greens would advocate paying local councils $8 million a year for inspectors to check every rental property at least every three years, and more often for homes that do not come up to standard.
Documentary maker Bryan Bruce, who first raised the idea in a controversial TV3 programme just before the 2011 election, said a survey of 12 political parties in July showed "a remarkable shift in political attitudes" with only Act and the Conservative Party saying they still opposed a general warrant of fitness scheme for all rentals.