How much can you borrow? The debt-to-income rule, explained
Published 19 October 2026
Since 1 July 2024, banks have had to follow a debt-to-income (DTI) rule from the Reserve Bank. It looks at your debts compared with your income. Along with your deposit, it can affect how much a bank will lend you.
New to buying a home? See all the steps, in order →
Most first home buyers have heard about the 20% deposit. Far fewer know about this rule.
The rule in plain words
If you’re buying a home to live in, and all your debts would add up to more than 6 times your yearly income before tax, your loan counts as “high-DTI”.
Banks can still make high-DTI loans. But each bank can only make up to 20% of its new loans to home owners this way. So these loans are harder to get, and each bank decides who gets one.
For investors, the line is 7 times income, with the same 20% limit.
How to work out your DTI
It’s one simple sum:
DTI = your debts ÷ your yearly income before tax
Your debts include the home loan you’re asking for.
Here’s an example. A couple earns $150,000 a year between them, before tax.
| Amount | |
|---|---|
| Six times their income | $900,000 |
| Student loan | −$28,000 |
| Credit card limit (they owe $0) | −$10,000 |
| Home loan they could ask for before going over 6 | $862,000 |
This assumes they have no other debts that count. If they closed the credit card they never use, the figure would go up to $872,000. That doesn’t mean a bank will lend that much. It just means they’d stay under 6.
What counts as debt
This comes from the Reserve Bank’s own explainer.
| Counts | Doesn’t count |
|---|---|
| The home loan you’re applying for | Business loans |
| Student loans, even though they’re interest-free | Bridging loans, which are left out of the rule |
| Car loans and personal loans | A family loan with no interest that you only pay back when you sell, as in the Reserve Bank’s example |
| Credit cards, at the limit, not what you owe | |
| Overdrafts, at the limit |
Other family loans may be treated differently, depending on their terms. If you have something that isn’t on this list, such as buy now, pay later, ask your bank or mortgage adviser how they treat it.
A debt that doesn’t count for DTI can still matter. Banks look at all your repayments when they check whether you can afford the loan.
What counts as income
Income means what you earn before tax. It can include:
- your salary or wages
- self-employed income, usually based on past years
- rent you expect to earn, for example from a rental property
The bank decides which income it accepts and how much of it to count. That’s especially true for overtime, bonuses, commission and rent from a flatmate. Ask early, because it can change your number a lot.
Three things that decide how much you can borrow
The DTI rule is only one part of the picture. Banks look at three main things:
- Your deposit. How much you’ve saved compared with the price. See Can you buy a home in NZ with less than a 20% deposit?
- Your income and debts. That’s the DTI rule.
- Whether you can afford the repayments. The bank looks at your income, your living costs and your other repayments, and checks you could still pay if interest rates went up.
These three work together, and different banks can come to different answers. A mortgage adviser can tell you which one is most likely to hold you back.
Loans the rule doesn’t apply to
The Reserve Bank lists these as outside the DTI rule:
- Kāinga Ora loans, including First Home Loans. A First Home Loan needs as little as a 5% deposit, but it has its own rules, including income caps. Check them on the Kāinga Ora website.
- New builds. That means a loan to build a new home, or to buy a newly built home from the developer within six months of it being finished.
- Refinancing, as long as the loan doesn’t get bigger.
The rule only applies to banks. Other lenders don’t have to follow it, but they can charge higher interest, so compare carefully.
Five things you can do
- Check your credit card limits. The limit counts, not what you owe, so lowering or closing a card you don’t use may give you more room under the DTI rule.
- Think about paying off small debts. Each dollar of debt that counts uses up a dollar of your DTI room, and its repayments count in the bank’s affordability check too. If paying it off would come out of your deposit savings, ask an adviser which helps more.
- Include your student loan in your sums. It counts, even though it’s interest-free.
- Talk to a mortgage adviser early. They know which banks have room for high-DTI loans, and whether you might qualify for a First Home Loan.
- Get pre-approval before you start looking. Pre-approval gives you an idea of your budget. It isn’t a promise to lend, and it comes with conditions. It usually expires, often after about three months.
The key takeaway
Your deposit decides whether you can start. Your income and debts help decide how far you can go.
Work out your DTI before you start looking, so you know roughly where you stand before you fall for a house.
Once you know your number, the next step is freeing up your deposit. See KiwiSaver first home withdrawal: the timeline that catches people out.
This article provides general information only and is not financial or lending advice. Every bank has its own lending rules. Talk to your bank or a mortgage adviser about your situation.
Official sources
- Understanding debt-to-income restrictions — Reserve Bank of New Zealand
- First Home Loan — Kāinga Ora
Common questions
What is the debt-to-income (DTI) rule in New Zealand?
It's a Reserve Bank rule for banks that started on 1 July 2024. If you're buying a home to live in and your total debts would be more than six times your income before tax, your loan counts as high-DTI. Each bank can only make a limited share of its new home loans to high-DTI borrowers: up to 20% of its new lending to people buying a home to live in.
Can I still borrow more than six times my income?
Sometimes. It isn't a ban. Banks can still lend above six times income, but only for a limited share of their loans, so it's harder to get. Each bank decides whether to lend to you.
Does my student loan count towards my DTI?
Yes. The Reserve Bank lists student loans as debt that counts, even though they're interest-free.
Do credit cards count even if I pay them off every month?
Yes. For DTI, the Reserve Bank says banks look at your credit card limit, not what you owe. A $10,000 limit counts as $10,000 of debt, even if you owe nothing. Overdraft limits count the same way.
Are any home loans outside the DTI rule?
Yes. The Reserve Bank lists Kāinga Ora loans, including First Home Loans, as exempt. So are loans to build a new home, and loans to buy a newly built home from the developer within six months of it being finished. Refinancing is also outside the rule, as long as the loan doesn't get bigger. The rule only applies to banks, not to other lenders.