Buying a home in New Zealand involves more than saving a deposit. Your income, existing debts, expenses and the amount you want to borrow can all affect your mortgage application. This is where DTI rules become important.
DTI stands for debt-to-income ratio. It compares your total debt with your gross annual income. The Reserve Bank of New Zealand introduced DTI restrictions for new residential lending on 1 July 2024. The rules apply to both owner-occupiers and property investors.
Understanding DTI rules can help you work out your potential borrowing position before you start looking at properties. If you are planning to buy your first home, upgrade your existing home, refinance or purchase an investment property, knowing how DTI works can make the mortgage process easier to understand.
If you are starting your home-buying journey, you can also explore home loan options with GM Finance.
What Are DTI Rules?
DTI rules set limits around how much high-debt lending banks can provide compared with a borrower’s income.
The basic DTI calculation is:
DTI = Total debt ÷ Gross annual income
For example, if your household earns $120,000 before tax and your total debt is $600,000:
$600,000 ÷ $120,000 = DTI of 5
A DTI of 5 means your total debt is five times your gross annual income.
The Reserve Bank says the DTI restrictions are designed to limit the amount of new bank lending going to borrowers with high levels of debt relative to their income.
For the official explanation, see the Reserve Bank of New Zealand’s DTI rules guide.
How Do DTI Rules Work in New Zealand?
The current DTI rules use different thresholds for owner-occupiers and investors.
Owner-occupier DTI rules
For people borrowing to buy a home they will live in, borrowing above 6 times gross annual income is considered high-DTI lending.
Banks can have up to 20% of their new owner-occupier lending above this threshold.
Investor DTI rules
For residential property investors, borrowing above 7 times gross annual income is considered high-DTI lending.
Banks can have up to 20% of their new investor lending above this threshold.
These are known as DTI speed limits.
Importantly, a DTI of 6 or 7 is not an automatic borrowing limit. It also does not guarantee mortgage approval if your DTI is below the threshold. Banks still assess your income, expenses, debt, deposit and ability to service the mortgage.
What Does a DTI of 6 Mean?
A DTI of 6 means your debt is six times your gross annual income.
For example, imagine a couple has a combined gross income of:
$150,000 per year
Six times their income is:
$150,000 × 6 = $900,000
A total debt position of $900,000 would represent a DTI of 6 before considering the lender’s wider assessment.
Now suppose they already have $50,000 of existing debt.
The simple calculation becomes:
$900,000 − $50,000 = $850,000
This illustrates why existing debt matters when calculating your potential borrowing position.
It is only an example. A bank may approve less or more depending on its own lending criteria and affordability assessment.
What Counts as Debt Under DTI Rules?
Your existing debt can affect your DTI calculation and your potential borrowing capacity.
Depending on the circumstances and DTI calculation, debt can include:
- Existing home loans
- Personal loans
- Car loans
- Student loans
- Credit card commitments
- Overdrafts
- Other qualifying debt
The RBNZ provides examples showing how existing debt can affect the DTI calculation.
This is why it can be useful to review your existing borrowing before applying for a mortgage.
If you want to understand how your current debts can affect borrowing, Sorted’s guide to borrowing for a home provides useful information about income, repayments, debt and lender assessments.
Do Credit Card Limits Affect Your DTI?
Credit card limits can also be important when you apply for a mortgage.
For example, imagine you have:
- Credit card limit: $10,000
- Current balance: $2,000
A lender may consider the available credit limit when assessing your overall debt position rather than simply looking at the amount currently owing.
This is one reason it can be worth reviewing unused credit facilities before applying for a home loan.
You should also remember that lenders look beyond DTI. They assess whether your income is sufficient to meet mortgage repayments and your other financial commitments.
How DTI Rules Affect First Home Buyers
First home buyers often have a different financial position from existing homeowners.
You may have:
- A smaller deposit
- A student loan
- Car finance
- Credit card limits
- Limited credit history
- One or two incomes
- Less existing equity
The DTI rules are only one part of the assessment.
If you are buying your first home, you can read our guide to first home buyer mortgages in New Zealand to learn more about deposits, lending and mortgage preparation.
The RBNZ has previously noted that first home buyers tend to borrow at lower DTI ratios than other owner-occupiers and investors.
DTI Rules and Your Deposit
Your DTI and deposit measure different things.
Your deposit is the amount you contribute towards the property purchase. DTI looks at your debt compared with your income.
For example:
Property price: $800,000
Deposit: $160,000
Mortgage: $640,000
Your loan would represent 80% of the property value.
Your DTI would depend on your income and other debt.
This means you need to consider both your deposit and your borrowing position when planning to buy a home.
For more information about how much you may be able to borrow, see how much you can borrow for a home from Sorted.
DTI Rules vs LVR Rules
DTI and LVR are different.
DTI looks at:
Your debt compared with your income.
LVR looks at:
Your loan compared with the property’s value.
For example, if you purchase an $800,000 home with a $640,000 mortgage:
$640,000 ÷ $800,000 = 80% LVR
Your DTI would then depend on your income and other debt.
The two rules work alongside each other. The RBNZ describes DTI restrictions as additional to LVR restrictions.
The current LVR settings allow banks to have up to 25% of new owner-occupier lending above 80% LVR and up to 10% of new investor lending above 70% LVR. These settings were maintained in the RBNZ’s August 2026 review.
You can read the RBNZ’s LVR restrictions guide for the official explanation.
Can You Get a Home Loan Above a DTI of 6?
Potentially, yes.
The DTI rules do not completely prevent banks from lending above a DTI of 6 to owner-occupiers.
Instead, the rules allow banks to allocate a limited proportion of their new owner-occupier lending to borrowers above the threshold.
The same principle applies to investors above a DTI of 7.
However, you should not assume that being above the threshold means your mortgage will automatically be declined, or that being below it means your application will automatically be approved.
Banks still carry out their own affordability assessments.
What Else Does a Bank Consider?
DTI is only one part of a home loan application.
A lender may also consider:
- Your income
- Employment and income stability
- Existing debts
- Household expenses
- Deposit
- Property value
- LVR
- Credit history
- Loan term
- Interest rates
- Repayment affordability
- The lender’s own lending policy
Sorted explains that lenders look at what you can afford to repay from your current income as well as how much they are prepared to lend against the property.
This means your actual borrowing capacity may be different from a simple DTI calculation.
How Interest Rates Affect Your Borrowing Position
Interest rates can also affect your mortgage affordability.
Even if your DTI appears acceptable, the lender needs to assess whether you can manage the repayments under its lending criteria.
For example, a larger mortgage can result in significantly higher repayments when interest rates are higher.
Before deciding on a loan structure, read our guide to fixed and floating home loan rates to understand how different rate structures can affect your mortgage.
How Can You Improve Your Borrowing Position?
If your DTI is higher than you would like, you can review several parts of your financial position.
1. Reduce Existing Debt
Paying down personal loans, car finance or other debt can reduce your overall debt.
2. Review Credit Card Limits
If you have unused credit facilities, consider whether you still need them.
3. Increase Your Deposit
A larger deposit means you may need to borrow less for the property.
4. Review Your Spending
Look at your regular household expenses before applying for a mortgage.
5. Avoid Taking on New Debt
Taking out a new personal loan or increasing credit shortly before a mortgage application can affect your overall lending position.
6. Check Your Borrowing Capacity
Before attending open homes, work out your income, deposit, existing debt and likely repayments.
7. Consider Mortgage Pre-Approval
A mortgage pre-approval can give you a clearer indication of the price range you may be able to consider.
You can read our mortgage pre-approval guide to understand how the process works.
How Much Can I Borrow Under DTI Rules?
There is no single borrowing amount that applies to everyone.
For example, consider a household earning $120,000 gross per year.
A simple owner-occupier DTI calculation at 6 times income would be:
$120,000 × 6 = $720,000
But if the household already has $40,000 of qualifying debt, the simple calculation becomes:
$720,000 − $40,000 = $680,000
This does not mean a bank will automatically lend $680,000.
The lender may assess the application differently after considering expenses, interest rates, property value, deposit, LVR and its own lending policy.
For a broader explanation of borrowing capacity, read Sorted’s guide to how much you can borrow.
What About Low-Deposit Home Loans?
DTI and LVR become particularly relevant when you have a smaller deposit.
The RBNZ’s LVR restrictions limit the amount of high-LVR lending banks can provide, but they do not mean every bank must lend at the maximum allowed level.
Sorted also notes that some borrowers may be able to borrow with a deposit below 20%, although this can involve additional costs and risks.
So if you have a 5%, 10% or 15% deposit, it is worth checking your complete lending position rather than looking at DTI alone.
What Documents May You Need?
When applying for a home loan, prepare documents that help demonstrate your income, expenses, debts and deposit.
These may include:
- Recent payslips
- Employment information
- Bank statements
- Existing loan statements
- Credit card information
- Evidence of savings
- KiwiSaver information where relevant
- Identification
- Property information once you have found a home
Having your information ready can make the application process easier.
Why Mortgage Pre-Approval Matters
Once you understand your potential borrowing position, mortgage pre-approval can help you establish a realistic price range.
Pre-approval is not the same as unconditional approval. The lender may still need to assess the property and complete other requirements before settlement.
If you are preparing to buy, read our detailed guide to mortgage pre-approval in NZ.
How a Mortgage Adviser Can Help
DTI rules can become confusing when you also need to consider LVR, deposits, interest rates, expenses and lender-specific criteria.
A mortgage adviser can help you understand how these factors may affect your home loan application and compare lending options available to you.
You can learn more about the advantages of working with a mortgage adviser through GM Finance.
The goal is not simply to find out the maximum amount you could borrow. It is also important to understand what level of borrowing fits your income and financial situation.
DTI Rules Checklist for Home Buyers
Before applying for a mortgage, check:
- Your gross annual income
- Your existing home loans
- Personal loans
- Car finance
- Student loans
- Credit card limits
- Overdrafts
- Your available deposit
- Your potential LVR
- Regular household expenses
- Potential mortgage repayments
- Your credit history
- Your likely property price range
- Whether mortgage pre-approval could help
Final Thoughts on DTI Rules in New Zealand
The DTI rules are an important part of New Zealand’s home lending system.
For owner-occupiers, borrowing above six times gross annual income is considered high-DTI lending. For investors, the high-DTI threshold is above seven times gross annual income. Banks can allocate up to 20% of their new lending in each category above those thresholds.
However, DTI is not the only factor that determines how much you can borrow.
Your income, existing debt, deposit, LVR, expenses, interest rates and the lender’s own affordability assessment can all affect the final lending decision.
If you are planning to buy a home in New Zealand, understanding your complete borrowing position before you start making offers can help you prepare with greater confidence.
Contact GM Finance to discuss your home loan options.
Disclaimer: This article provides general information only and does not constitute financial advice. Lending criteria, interest rates and regulatory settings can change. Your lender will assess your individual circumstances before deciding whether to approve a home loan.