How much a bank will lend you in New Zealand depends on two things: your ability to repay (income vs expenses) and your deposit (LVR). Banks apply both tests and lend to whichever gives the lower amount. Understanding each test — and what reduces your limit — lets you plan accurately and enter pre-approval with realistic expectations.
Most NZ borrowers can access a maximum mortgage of approximately 6 times their gross annual income under the RBNZ's DTI restrictions (July 2024). On a $100,000 salary, the cap is around $600,000. Your deposit, existing debts, and a bank serviceability stress test at approximately 7.5%–8.5% may all reduce this further.
The Two Tests Banks Apply
Test 1: Debt-to-Income (DTI)
Since July 2024, the RBNZ requires banks to limit lending above a DTI of 6× for owner-occupiers. This means most borrowers can access a maximum loan of around 6 times their gross annual income.
| Gross income | DTI 6× loan limit |
|---|---|
| $80,000 | $480,000 |
| $100,000 | $600,000 |
| $120,000 | $720,000 |
| $150,000 | $900,000 |
| $200,000 | $1,200,000 |
For joint applications, the 6× cap applies to combined household income:
| Combined income | DTI 6× limit |
|---|---|
| $120,000 | $720,000 |
| $150,000 | $900,000 |
| $180,000 | $1,080,000 |
| $200,000 | $1,200,000 |
The DTI limit is a RBNZ macroprudential rule: banks cannot lend more than 20% of their new mortgage lending at DTI above 6× for owner-occupiers. In practice, most banks use 6× as their effective ceiling for most borrowers.
Test 2: Debt Servicing (Income vs Expenses)
Banks also calculate whether your income is sufficient to service the loan at a stress-tested interest rate — typically 2%–3% above the current market rate. If current 2-year fixed rates are around 5.5%, banks test at 7.5%–8.5%.
At a 7.5% stress rate, monthly repayments on a $600,000 loan over 30 years = approximately $4,196/month.
Banks also deduct:
- Living expenses (using either your actual expenses or the bank’s minimum benchmark — whichever is higher)
- All existing debt repayments — personal loans, car loans, credit cards (assessed at 3%–5% of the limit, regardless of actual usage), student loans (assessed as income reduction)
- Any dependent children (each dependent reduces your assessed capacity by approximately $10,000–$15,000)
The bank’s DTI limit and serviceability test will often produce different numbers — the bank lends to the lower of the two.
What Reduces Your Borrowing Capacity
These are the most common factors that cut your maximum loan:
Credit cards and BNPL Even if you pay your credit card in full every month, banks assess your credit card limits as potential debt. A $20,000 credit card limit reduces your borrowing capacity by roughly $60,000–$80,000. Reduce or cancel cards you don’t need before applying.
Student loans In NZ, student loan repayments are deducted from your net income automatically by IRD. Banks treat them as a reduction in income rather than a debt — but the effect is the same. A $200/fortnight repayment reduces your assessed annual income by approximately $5,200.
Personal loans and car finance These are assessed at their actual repayment amount. A $500/month car loan reduces your mortgage capacity by roughly $80,000–$100,000.
Living expenses Banks use their own minimum expense benchmarks (typically derived from Household Living Cost data). If your actual documented expenses are higher than the benchmark, they use actual figures. If lower, the benchmark applies.
Number of dependants Each child reduces assessed borrowing capacity. Most banks reduce the assessed surplus by $10,000–$15,000 per dependent per year.
Rental income (if applicable) If you earn rental income, banks typically shade it by 25%–35% for risk, assessing $1,000/month in rent as around $650–$750 of qualifying income.
How Pre-Approval Works in Practice
Pre-approval is not a guarantee — it’s a conditional assessment. Banks issue pre-approval based on:
- Your income documentation at the time of application
- Your current expense profile
- A general property type (residential, owner-occupied)
- A maximum loan amount
Pre-approvals are typically valid for 60–90 days. If your circumstances change (new car loan, job change, credit card application) during this period, your pre-approval may no longer be valid.
See How Long Does Mortgage Approval Take in NZ? for typical bank timeframes.
How a Broker Can Help Maximise Your Borrowing Capacity
Different banks apply slightly different expense benchmarks, shade rental income differently, and apply the DTI rules with varying strictness. A mortgage broker can:
- Compare your application across multiple lenders simultaneously
- Identify which bank’s assessment model works best for your income type
- Help structure existing debts to maximise your capacity before applying
See Mortgage Broker vs Bank NZ for a full comparison.
Borrowing Capacity by Salary
For salary-specific breakdowns of what you can borrow, how much deposit you’ll need, and which NZ cities are within reach:
- $60,000 salary — how much can I borrow?
- $70,000 salary — how much can I borrow?
- $80,000 salary — how much can I borrow?
- $90,000 salary — how much can I borrow?
- $100,000 salary — how much can I borrow?
- $120,000 salary — how much can I borrow?
- $150,000 salary — how much can I borrow?
- Joint $100,000 — how much can we borrow?
- Joint $120,000 — how much can we borrow?
- Joint $150,000 — how much can we borrow?
Income Needed to Afford a Specific Home
If you’re working backwards from a target price, see:
- Income needed to buy a $500,000 home in NZ
- Income needed to buy a $700,000 home in NZ
- Income needed to buy a $1,000,000 home in NZ
Frequently Asked Questions
What is the maximum I can borrow for a mortgage in NZ?
Under the RBNZ’s DTI 6× rule (in force since July 2024), most owner-occupiers can borrow up to 6 times their gross annual income. On a $100,000 salary, that’s $600,000 — though existing debts, credit card limits, and the bank’s serviceability stress test may reduce the actual offer.
Do credit cards affect my mortgage borrowing capacity in NZ?
Yes. Banks include your total credit card limits — not just the outstanding balance — in their DTI calculation. A $20,000 credit card limit reduces your borrowing capacity by roughly $60,000–$80,000. Reducing card limits before applying is one of the most effective ways to increase your maximum loan.
Does a student loan reduce how much I can borrow for a mortgage in NZ?
Yes. NZ student loan repayments are deducted from net income via PAYE, so banks treat them as a reduction in your available income. A $200/fortnight repayment reduces your assessed annual income by approximately $5,200, which flows directly into lower borrowing capacity.
Can I borrow more than 6 times my income for a mortgage in NZ?
Technically yes — the RBNZ allows banks to lend up to 20% of new mortgage lending at DTI above 6× for owner-occupiers. In practice, banks reserve this headroom for exceptional cases with strong compensating factors. Assume 6× as your working maximum.
What is the DTI limit for investment property mortgages in NZ?
The DTI cap for residential investors is 7× gross income. However, investors typically carry more total debt (including their own home mortgage), which quickly pushes total DTI above 7×. Most investor borrowing is constrained well below this cap by accumulated debt.