What is the debt-to-income (DTI) limit for a home loan in NZ?

Since 1 July 2024, owner-occupiers are capped at 6 times their gross annual income, and investors at 7 times, under Reserve Bank restrictions. It's a speed limit rather than a hard wall — banks can write up to 20% of new lending above those ratios — but most banks treat it as close to a ceiling in practice.

What counts as debt in my DTI ratio?

Everything, not just the mortgage you're applying for. Existing car finance, personal loans, other mortgages, and other borrowing all count against your total debt figure before it's measured against your income.

Does an unused credit card or overdraft limit affect how much I can borrow?

Yes. Banks treat an unused limit as money you could draw on tomorrow, whether you've ever spent a cent of it. Cancelling or reducing limits you don't use before you apply is one of the fastest ways to move your number.

Is the First Home Loan scheme exempt from DTI restrictions?

Lending under the Kāinga Ora-backed First Home Loan scheme sits outside the standard DTI restrictions, which is one reason it can get eligible first home buyers further than a straight six-times-income calculation would suggest. Confirm current eligibility directly with Kāinga Ora, or with us.

Why did one bank offer me more than another with the same income and deposit?

Because each bank runs its own version of the DTI and servicing test — different treatment of bonus or overtime income, different living-cost benchmarks, different appetite for what's left of its DTI allowance that quarter. Same numbers, different policy, different answer.

Does self-employed income affect how much I can borrow?

It can. Lenders vary in how many years of accounts they want and how they average variable income, so a self-employed applicant can get very different numbers from different lenders on the same set of accounts. This is exactly the kind of file worth placing with the right lender the first time.

What's the difference between what I can borrow and what I should borrow?

The three ceilings tell you the maximum the numbers allow. What you should actually borrow is a separate conversation about your own comfort with repayments if rates move or your circumstances change — worth having before you fall for a listing sitting right at the top of your limit.

How much deposit do I need before a bank even looks at my income?

Deposit and income are tested together, not in sequence, but as a guide: 10–20% for most owner-occupier lending, 5% for eligible first home buyers through the First Home Loan, and 35% for investment property. See our full guide to home loan deposits in NZ for where that money can actually come from.

Home Loans

How Much Can I Borrow? The Real Numbers Behind Your Home Loan in NZ

By Kundan Singh, Home Loan Adviser (FSP 512966)7 August 2026

Couple sitting at their kitchen table with a calculator and paperwork, working out how much they can borrow for a home loan

Photo: Mikhail Nilov / Pexels

How much can you borrow for a home loan in NZ? Ask three banks the same question with the same numbers and you can get three different answers. (No, that's not a typo. I wish it were.)

The honest answer isn't one figure — it's the lowest of three ceilings: your deposit, your debt-to-income ratio, and the bank's own test on whether you can actually afford the repayments. Whichever one is lowest sets your number, and it's rarely the ceiling people ask about first.

The Short Answer: Three Ceilings, Not One Number

Three things cap how much you can borrow for a home loan, and the smallest one wins.

Your deposit sets your loan-to-value ratio (LVR) — most owner-occupiers need 10–20% down, eligible first home buyers can get in on 5% through the Kāinga Ora-backed First Home Loan scheme, and investment lending needs 35%. Your debt-to-income ratio (DTI) caps your loan at 6 times your gross income as an owner-occupier, or 7 times as an investor. And the bank's servicing test checks you can actually afford the repayments at a rate higher than the one you'll be paying, once your real living costs and existing debts are counted.

Ask for a number based on income alone and you'll get an answer that ignores two of the three ceilings — about as useful as a weather forecast for last week.

Debt-to-Income: The Ceiling Most Borrowers Haven't Heard Of

The Reserve Bank's debt-to-income (DTI) restrictions have applied since 1 July 2024. Owner-occupiers are capped at 6 times gross annual income, investors at 7 times — and that's total debt against total income, not just the new mortgage. Existing car finance, personal loans, and other mortgages all count against the ceiling too. Six times your income sounds generous, right up until the bank reminds you your buy-now-pay-later balance counts as debt as well.

It's a speed limit, not a hard wall — banks can write up to 20% of new lending above those ratios, so a slightly higher DTI isn't an automatic decline. Most banks guard that allowance carefully, though, and they don't spend it on a borrower who doesn't need to be over it. See the Reserve Bank's own explainer on debt-to-income restrictions for the full mechanics.

One exemption worth knowing: lending under the Kāinga Ora-backed First Home Loan scheme sits outside the standard DTI restrictions. Worth asking about if you're a first home buyer sitting right on the line.

Model houses, cash, and a calculator laid out together, representing the numbers behind a home loan borrowing limit — Photo: Jakub Zerdzicki / Pexels

The Servicing Test: Why the Advertised Rate Isn't the One That Matters

Even if your deposit and your DTI both check out, the bank still runs its own affordability test — at a rate higher than the one advertised, and after subtracting your real living costs and existing debts, not an estimate of them.

That test rate moves with the interest-rate environment and differs by lender, so I won't print a figure here that could be stale by the time you read it. What doesn't change: it's usually the tightest of the three ceilings, and it's the one most online calculators skip entirely, because it needs your actual expenses, not just your income.

The bank's servicing test is basically a fitness test for your bank account — nobody enjoys it, and you don't get to pick the pace.

Your Deposit Still Sets a Hard Ceiling

Clear the DTI and servicing tests and your deposit can still be the ceiling that bites. Standard owner-occupier lending wants 10–20% down. Eligible first home buyers can get in on 5% through the Kāinga Ora-backed First Home Loan. Buying to rent it out needs 35%, under current LVR restrictions, though non-bank lenders on our panel can sometimes flex that for a borrower with strong existing equity.

We've covered exactly where that deposit can come from — savings, KiwiSaver, a gift, a guarantor — in our guide to home loan deposits in NZ. Worth reading alongside this one if the deposit percentage, not the income multiple, is your actual constraint.

Why One Bank Says Yes and Another Says No, on the Same Numbers

The pattern I see more than any other: a borrower gets a lower number, or a decline, from one bank, and a meaningfully higher approval from another, on the exact same income, deposit, and debts. The numbers didn't change. The lender's policy did.

Each bank calculates DTI and runs its servicing test slightly differently — how it treats bonus or overtime income, how conservatively it counts rental income, which living-cost benchmark it uses. Banks have internal checkpoints most borrowers never see. The same application sails through one lender's calculator and gets stuck at another's, not because the deal was weaker, but because the policy was stricter. I've done this since 2017 and I still see borrowers walk in with one bank's number, sure it's gospel. It's a guess with good manners, nothing more.

Couple meeting with a home loan adviser to go through their borrowing options — Photo: RDNE Stock project / Pexels

An adviser who only deals with one or two banks isn't really advising — they're just a referral desk for whoever pays the best commission. We work across 20 banks and non-bank lenders (7 banks, 13 non-bank), plus non-panel access to institutional and sophisticated investors, specifically so your file gets tested against the calculator most likely to say yes, not just the one your usual bank happens to run. If a bank's servicing test has already knocked your number down once, a non-bank lender with a different policy might not.

What Actually Moves Your Number

A few things genuinely shift your number, and none of them take long to sort out. Cancelling or reducing credit card and overdraft limits you don't use is the quickest win — an untouched limit is treated as money you could draw on tomorrow, and it counts against both your DTI and the servicing test whether you've ever spent a cent of it.

Clearing short-term debt helps more than the monthly repayment suggests. A car loan or a buy-now-pay-later balance eats into your DTI ceiling directly, on top of what it does to your servicing test.

Getting pre-approved before you start house hunting tells you which of the three ceilings is actually yours to worry about, instead of guessing at an open home. Our guide to mortgage pre-approval in NZ covers the timeline and paperwork. And if you're buying to rent it out rather than live in, run the numbers separately — the 35% deposit changes the maths completely, which is exactly what our page for first time investors walks through.

Why This Is Easier With the Right Adviser

Working out your own number from a bank's online calculator gets you an estimate based on income. It won't tell you which of our 20 banks and non-bank lenders will actually stack your deposit, your DTI, and your servicing test in your favour, on your specific numbers. That comparison is the part that actually changes your outcome.

We reply within 2 business hours, and we've settled 200+ home loans since 2017 — plenty of them exactly this kind of "the online calculator said one thing, the right lender said another" situation. There's no fee for that first conversation. In the typical case, the lender pays us once the loan settles, and we set out exactly how before anything's lodged.

AML Financial Services Limited is a licensed Financial Advice Provider — FSP 714331. Kundan Singh, FSP 512966. Both on the public register, worth checking for any adviser you're talking to, not just us.

Know your three ceilings before you fall for a listing you can't actually get across the line. Give us a call — we'll run the numbers honestly, before a bank's spreadsheet does it for you less kindly.