Since July 2024, the Reserve Bank of New Zealand (RBNZ) has imposed debt-to-income (DTI) restrictions on mortgage lending. Owner-occupiers can generally borrow up to 6 times their gross annual income. Investors face a 7 times cap. These limits are now one of the key constraints on how much New Zealanders can borrow, yet most buyers have no idea where they sit. Enter your income, existing debts, and proposed mortgage below to find out your DTI ratio, whether you are inside or outside the RBNZ limits, and the maximum property price your income can support.
Enter your income, existing debts, and proposed mortgage to see your DTI ratio and maximum borrowing capacity
From 1 July 2024, the Reserve Bank of New Zealand (RBNZ) introduced debt-to-income (DTI) ratio restrictions on residential mortgage lending. These rules set limits on how much banks can lend relative to a borrower's gross annual income. For owner-occupiers, no more than 20% of new residential mortgage lending can have a DTI above 6. For residential property investors, no more than 20% of new lending can have a DTI above 7.
In practice, this means most banks treat 6x (for owner-occupiers) and 7x (for investors) as a hard cap for the vast majority of borrowers, because they allocate their limited "high-DTI quota" carefully and typically only use it for borderline cases with strong compensating factors. If your DTI comes out above these thresholds, most lenders will decline or significantly reduce the loan.
The DTI restrictions sit alongside the existing LVR restrictions (which require a minimum 20% deposit for owner-occupiers buying existing homes) as the two primary macroprudential tools the RBNZ uses to manage risk in the housing market. Both constraints apply simultaneously, and whichever produces the lower maximum loan amount is the binding one for your situation.
DTI is calculated as total debt divided by gross annual income. Every debt you have counts toward the numerator: the proposed new mortgage, any existing mortgages, car loans, student loans, personal loans, hire purchase, and credit card limits. For income, banks use your total gross household income before tax from all accepted sources.
The formula looks simple but there are important nuances. First, banks include your credit card limits, not your current balances. If you have two cards with a $5,000 limit each, $10,000 goes into the debt total regardless of whether you owe anything on them. This surprises many borrowers. Second, rental income from investment properties is typically discounted to 70-75% of the stated rent before being added to income, because banks account for vacancy and management costs. Third, some banks treat student loans differently, either partially including them or applying their own assessment methodology.
Using a $750,000 purchase with a 20% deposit ($150,000), the proposed mortgage is $600,000. For a household earning $170,000 combined, the DTI on this loan alone is $600,000 divided by $170,000 = 3.53x. Well within the 6x cap. But add a $40,000 student loan and a car loan of $25,000, and total debt becomes $665,000, pushing the DTI to 3.91x. Still fine, but it illustrates how quickly non-mortgage debts consume DTI headroom.
The RBNZ sets different DTI caps for owner-occupiers and investors. Owner-occupiers buying a property to live in are subject to a 6x DTI cap. Investors buying residential property to rent out face a 7x cap. The higher cap for investors reflects their typically stronger cash flow position (rental income contributing to the debt servicing) but also acknowledges the higher systemic risk that concentrated investment lending can create.
If you are buying a property that will be partly owner-occupied and partly rented (such as a multi-unit property where you occupy one unit and rent others), your lender will classify the loan based on the primary purpose of the borrowing. Ask your bank or mortgage broker how they will classify your specific situation before making any assumptions.
DTI and LVR restrict different things. The LVR restriction limits the loan as a proportion of the property's value : it is a deposit-based constraint. The DTI restriction limits the loan as a multiple of your income : it is an income-based constraint. Both apply to every mortgage application.
A borrower with a large deposit but low income may find their DTI is the binding constraint. A borrower with high income but limited savings may find their LVR is the binding constraint. For most first home buyers, the deposit is the harder barrier; for buyers trading up to more expensive properties or carrying significant other debt, the DTI often becomes the limiting factor.
This calculator shows both constraints side by side so you can see which one is limiting your maximum purchase price and by how much.
Because DTI is a ratio, you can improve it by either increasing the denominator (your income) or decreasing the numerator (your total debt). In practice:
Pay down existing debts before applying. Every dollar of car loan, personal loan, or credit card limit reduced lowers your total debt and improves your DTI. Paying off a $20,000 car loan on a $170,000 income improves your DTI headroom by 0.12x. It also frees up cash flow, which helps with serviceability.
Cancel unused credit cards. You do not need to have a balance on a credit card for it to count against your DTI. A $10,000 credit card limit you never use still adds $10,000 to your debt total. If you have cards you do not use, cancel them before applying for a mortgage.
Include all eligible income. Make sure your bank is using all income sources they will accept: salary, any bonuses that are regular and documented, partner income, and eligible rental income. Getting the income figure right can meaningfully change the maximum borrowing available to you.
Increase your deposit. A higher deposit means a lower loan amount. Lowering the loan directly reduces total debt, which reduces your DTI. On a $750,000 property, increasing your deposit from 20% ($150,000) to 25% ($187,500) reduces the loan from $600,000 to $562,500, improving your DTI by roughly 0.22x on a $170,000 income.
The RBNZ's DTI restrictions are technically "speed limits" rather than hard caps. They allow banks to lend above the threshold for up to 20% of new residential mortgage lending by value. This means it is not impossible to get a loan with a DTI above 6x, but it is significantly harder.
Banks allocate their high-DTI quota carefully. They typically reserve it for borrowers with strong compensating factors: very stable high incomes, large deposits, low LVRs, excellent credit history, and solid assets outside of property. A first home buyer at a 5% deposit asking for a loan at 6.5x DTI will almost always be declined. A long-standing customer with an 8-year employment history, 30% deposit, and DTI of 6.2x may be considered depending on the bank's current quota position.
If your DTI is marginally above the cap (say, 6.1x to 6.3x), it is worth talking to a mortgage broker who can approach multiple lenders and identify who has quota capacity at that point in time. The quota resets each reporting period and availability varies by bank.
The lower your DTI, the better. A DTI below 4x is considered comfortable by most NZ lenders. Between 4x and 5x is acceptable for most applications. Between 5x and 6x is where scrutiny increases and you may be asked to justify your position. Above 6x (or 7x for investors) places you outside the RBNZ's standard lending parameters.
Most NZ banks include the outstanding student loan balance in your total debt for DTI purposes, though treatment varies. Some banks assess student loans separately through income obligations (the repayment impact on cash flow) rather than including the full balance. Check with your specific lender. The safest assumption for planning purposes is to include your full student loan balance in your DTI calculation.
NZ banks use credit card limits, not current balances. The rationale is that you could draw the full limit at any time, creating the full liability. If you have credit cards you do not use, cancelling them before your mortgage application reduces your DTI debt total. Even reducing limits on active cards before applying can help.
It is possible but significantly harder. The RBNZ allows banks to lend above the DTI cap for up to 20% of new residential mortgage lending. Banks allocate this quota carefully and typically require strong compensating factors. Talk to a mortgage broker who can identify lenders with current quota capacity if your DTI is marginally above the threshold.
The RBNZ DTI restrictions apply to all residential mortgage lending including new builds. However, new builds are often exempt from the standard LVR restrictions, meaning buyers may be able to purchase a new build with a smaller deposit. The DTI cap still applies regardless of whether the property is new or existing.
Both DTI and LVR restrictions apply simultaneously. DTI limits your loan relative to your income. LVR limits your loan relative to the property value. For most borrowers, one will be more constraining than the other depending on their specific deposit and income situation. This calculator shows both limits side by side so you can see which one is binding for you and by how much.
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