Since July 2024, New Zealand banks have been subject to debt-to-income (DTI) restrictions set by the Reserve Bank of New Zealand (RBNZ). For most owner-occupiers, this means your total mortgage debt cannot exceed 6 times your gross annual income. DTI rules now sit alongside LVR restrictions as the two key macro-prudential tools shaping how much New Zealanders can borrow.
Since July 2024, NZ banks cannot lend more than 20% of new mortgage lending at a debt-to-income ratio above 6× for owner-occupiers, or above 7× for residential investors. In practice, 6× functions as the effective borrowing ceiling for most NZ home buyers.
What Is a Debt-to-Income Ratio?
Your DTI ratio is the total amount you owe on all debt relative to your gross (pre-tax) annual income.
Formula: $$\text{DTI} = \frac{\text{Total debt}}{\text{Gross annual income}}$$
Example:
- Gross annual income: $100,000
- Mortgage: $550,000
- Car loan: $25,000
- Total debt: $575,000
- DTI: $575,000 ÷ $100,000 = 5.75 ✓ (within the 6× limit)
All borrower debt is included — not just the mortgage. This means existing personal loans, car finance, student loans, and any other credit facility count toward the DTI calculation.
The RBNZ DTI Caps
The RBNZ’s DTI framework operates as a speed limit on high-DTI lending rather than a hard ban. Banks are restricted in how much of their new mortgage lending can be at high DTI ratios:
| Borrower type | DTI threshold | Maximum share of new lending |
|---|---|---|
| Owner-occupiers | Above 6× | 20% |
| Investors | Above 7× | 20% |
In practice, banks use the threshold as an effective ceiling for most borrowers. Lending above 6× (owner-occupier) is possible but not guaranteed — banks reserve that 20% headroom for the strongest cases.
How DTI Interacts With LVR Restrictions
DTI and LVR restrictions are separate rules — both apply simultaneously.
| Restriction | What it limits | Set by |
|---|---|---|
| LVR | Maximum loan as a % of property value | RBNZ (banking supervision) |
| DTI | Maximum loan as a multiple of income | RBNZ (banking supervision) |
You must satisfy both constraints. If LVR allows you to borrow $900,000 but your DTI cap is $720,000 (based on $120,000 income × 6), the bank will offer $720,000.
See LVR Restrictions NZ 2026 for current LVR rules.
DTI in Practice — The Numbers
Owner-occupier maximum loan by income
| Gross income | Max loan at DTI 6× | With 20% deposit, max property |
|---|---|---|
| $80,000 | $480,000 | $600,000 |
| $100,000 | $600,000 | $750,000 |
| $120,000 | $720,000 | $900,000 |
| $150,000 | $900,000 | $1,125,000 |
| $200,000 | $1,200,000 | $1,500,000 |
Joint borrowers
| Combined gross income | Max loan at DTI 6× |
|---|---|
| $120,000 | $720,000 |
| $150,000 | $900,000 |
| $180,000 | $1,080,000 |
| $200,000 | $1,200,000 |
These figures assume no existing debt. If you have a car loan, student loan, or personal loan, those balances are added to your mortgage to calculate the total debt figure — reducing the mortgage available.
What Counts as Debt in the DTI Calculation?
- The new mortgage (the full loan amount, not just the first year’s balance)
- Any existing mortgage (if you’re buying a second property)
- Personal loans
- Car loans and vehicle finance
- Credit card limits (typically the limit, not the balance)
- Student loans (included as a debt in the DTI calculation, though they also reduce income via PAYE deductions)
- Buy Now Pay Later balances in some cases
Not included:
- General operating expenses (rent, utilities, food — these are captured in the serviceability assessment separately)
- Future expenses not yet contracted
Are Any Borrowers Exempt from DTI Restrictions?
The RBNZ allows some exemptions within the 20% high-DTI lending allowance:
New build property: New builds typically receive preferential treatment — similar to the LVR exemption for new builds. Banks can lend at higher DTI ratios more freely for new builds. If you’re buying a new build or house-and-land package, you may have more flexibility.
Bridging finance: Short-term bridging loans are generally excluded from DTI calculations given their temporary nature. See Bridging Loans NZ.
Refinancing without top-up: If you’re refinancing your existing mortgage to a new lender without increasing the loan amount, DTI rules are less likely to create a barrier.
DTI vs Serviceability — What’s the Difference?
DTI and serviceability are related but different tests:
| Test | What it measures | How it’s applied |
|---|---|---|
| DTI | Total debt ÷ gross income | Hard cap at 6× |
| Serviceability | Can your income cover repayments? | Stress-tested at ~2%–3% above current rates |
A borrower might pass the DTI test (loan is under 6× income) but fail serviceability if their expenses are very high. Both must pass.
See How Much Can I Borrow? for the full picture of how banks assess your application.
How to Maximise Your Borrowing Under DTI Rules
Reduce existing debt before applying Because all debt counts toward the DTI calculation, paying down a car loan or personal loan before applying directly increases the mortgage available. Paying off $30,000 in car finance frees up $30,000 of DTI headroom.
Reduce credit card limits Credit card limits are typically included in the DTI calculation. Reducing a $20,000 card limit to $5,000 recovers $15,000 of DTI capacity.
Use a joint application Adding a co-borrower with income increases the denominator of the DTI ratio. A joint application on a $120,000 combined income has a DTI cap of $720,000 — significantly more than a single borrower on $70,000 ($420,000 cap).
Target new builds New builds may receive more flexible DTI treatment, allowing higher lending multiples. If affordability is borderline under DTI rules, a new build purchase could unlock additional capacity.
Work with a broker Different banks apply DTI headroom decisions differently. A mortgage broker can identify which lender is most likely to approve your application within the 20% high-DTI allowance. See Using a Mortgage Broker NZ.
DTI Restrictions and the Investment Property Market
Investors face a higher DTI cap of 7× — but investors also typically carry more total debt (existing mortgages) which quickly pushes them above the cap.
Example:
- Investor gross income: $120,000
- Existing home mortgage: $450,000
- New investment loan: $600,000
- Total debt: $1,050,000
- DTI: $1,050,000 ÷ $120,000 = 8.75 ✗ (above 7× investor cap)
In this example, the investor would need to qualify under the 20% high-DTI allowance, which is at the bank’s discretion.
See Investment Property Mortgage NZ for investor-specific lending guides.
Frequently Asked Questions
What is the DTI limit for mortgages in NZ?
The RBNZ’s DTI limit is 6× gross annual income for owner-occupiers and 7× for residential investors, introduced in July 2024. Banks can lend above these thresholds within a 20% speed limit — meaning up to 20% of new lending can exceed the cap at the bank’s discretion.
When did DTI restrictions start in New Zealand?
NZ’s debt-to-income mortgage restrictions took effect in July 2024, implemented by the RBNZ as a macroprudential tool alongside existing LVR restrictions.
Does a student loan count toward DTI in NZ?
Yes. Student loan balances are included in the total debt figure used to calculate your DTI ratio, in addition to their income-reducing effect via PAYE repayments. Both effects reduce the mortgage available to you.
What debt is included in the DTI calculation in NZ?
Your DTI includes the new mortgage plus all existing debt: personal loans, car finance, student loans, credit card limits, and any other residential mortgages. Living expenses are assessed separately through the serviceability test and are not part of the DTI calculation itself.
Are new builds exempt from NZ’s DTI restrictions?
New builds are not fully exempt, but banks typically apply more flexibility — similar to the LVR treatment of new builds. If your borrowing would otherwise exceed 6× on an existing property purchase, a new build may offer more room within the DTI framework.