Since July 2024, New Zealand has run a hard debt-to-income (DTI) restriction alongside its existing deposit rules — a genuinely different approach from Australia, where DTI is only a portfolio-level monitoring metric, not an enforced individual cap. Here, the 6x and 7x thresholds are real limits with real consequences for how much a specific borrower can be offered.
The Two Thresholds
Owner-occupiers: most new lending is capped at 6 times gross annual income.
Investors: most new lending is capped at 7 times gross annual income — set higher because rental income helps service the debt, and banks typically count that rental income at roughly 80% of its face value ("shaded" to allow for vacancies and maintenance) when calculating the ratio.
Both figures use gross income (before tax), and — critically — DTI is calculated on total debt, not just the new mortgage. Existing debts subtract directly, dollar for dollar, from the maximum loan a bank can offer.
The Reserve Bank's Own Worked Example
Kenzo and Sachiko, an owner-occupier couple, have $135,000 combined gross income and $27,000 in existing debt, looking at an $800,000 property. Their DTI works out to ($27,000 + $800,000) ÷ $135,000 = 6.13 — just over the 6x threshold. Using the formula in reverse:
This is the maximum they could borrow and stay under the standard cap, roughly $17,000 less than the $800,000 they were hoping for, purely because of their existing $27,000 in debt.
Worked Example: How a Car Loan Changes the Ceiling
Take a household with $150,000 gross annual income, no other debt, seeking a mortgage as an owner-occupier:
| Scenario | Max Loan Calculation | Max Loan |
|---|---|---|
| No existing debt | 6 × $150,000 − $0 | $900,000 |
| $25,000 car loan | 6 × $150,000 − $25,000 | $875,000 |
| $25,000 car loan + $8,000 credit card limit | 6 × $150,000 − $33,000 | $867,000 |
A $25,000 car loan alone removed $25,000 of borrowing capacity here — not a percentage adjustment, a direct dollar-for-dollar subtraction, which is why clearing smaller debts before applying can meaningfully change what a bank will offer.
Common Mistakes
Buyers frequently calculate their own DTI using only the new mortgage amount, forgetting that all existing debt — car loans, student loans, and even unused credit card limits, not just balances — factors into the total.
Buyers also assume DTI applies everywhere — it's specifically a rule for registered banks; non-bank and second-tier lenders aren't bound by the same 6x/7x caps, which is part of why some borrowers who don't fit bank criteria look to non-bank lenders instead.
A third mistake: not checking exemptions before assuming the cap applies. Kāinga Ora First Home Loans are explicitly exempt from DTI restrictions, along with construction loans for new builds, straight refinancing without increasing the loan, and bridging finance — a first home buyer using a First Home Loan may not be constrained by DTI at all.
Where This Calculator Has Limits
It applies the standard 6x/7x thresholds and the RBNZ's published worked-example methodology, but doesn't reflect how individual banks allocate their 20% speed-limit headroom, which varies by lender and changes over time based on each bank's overall lending mix. It also can't fully model rental income shading for investor applications without a specific lender's exact policy.
Frequently Asked Questions
Does DTI apply to all lenders in New Zealand?
No — it applies to registered banks under RBNZ rules. Non-bank and second-tier lenders operate under their own separate criteria.
Is my student loan included in the DTI calculation?
Yes — student loan balances count as debt in the calculation, in addition to reducing your income through regular repayment deductions.
Are Kāinga Ora First Home Loans exempt from DTI?
Yes — First Home Loans are explicitly excluded from the DTI restrictions, which is a significant advantage for eligible first home buyers.
Does paying off a small debt actually help meaningfully?
Yes — since DTI subtracts debt directly, dollar for dollar, from your maximum loan, clearing even a modest debt before applying can free up real borrowing capacity.
Can a bank ever lend above the 6x/7x threshold?
Yes, within their 20% speed-limit allowance for exceptional cases — it's possible but not guaranteed, and reserved for the strongest applications.
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Educational content, not financial advice. DTI thresholds and speed limits are set by the Reserve Bank of New Zealand and can change — confirm your specific ratio and eligibility with a licensed New Zealand mortgage adviser. Written by the MortgagePro Global team; example methodology referenced against the RBNZ's published DTI explainer.