You can get a mortgage while you have a New Zealand student loan. The loan does not automatically prevent approval.
However, compulsory student-loan repayments can reduce the income available for assessed mortgage repayments. This means a student loan may affect how much you can borrow, even when the loan is interest-free.
The size of the effect will depend on your income, repayment obligations, other financial commitments and the lender’s assessment. Before using savings to repay the loan, it is important to compare that option with keeping the money available for your deposit and other purchasing costs.
Yes. Many first-home buyers obtain mortgage approval while they are still repaying a student loan.
When considering the application, a lender may review:
A student loan is therefore one part of the complete application. It should not be considered in isolation.
For a broader explanation of the requirements lenders apply, read our guide to mortgage lending criteria in New Zealand.
Mortgage lenders assess whether you will have enough income available to meet the proposed mortgage repayments and your other financial commitments.
If student-loan repayments are deducted from your pay, less of your income remains available. A lender may include this deduction when calculating affordability. As a result, two applicants earning the same salary could have different assessed borrowing capacities if only one has a student loan.
There is no single amount by which a student loan reduces mortgage borrowing. The effect depends on factors such as:
For the tax year from 1 April 2026 to 31 March 2027, the annual repayment threshold for New Zealand-based salary and wage earners is $24,128.
For a main job, Inland Revenue generally requires repayment of 12% of each dollar earned above the applicable repayment threshold. Pay-period thresholds apply according to whether you are paid weekly, fortnightly, every four weeks or monthly.
Thresholds can change. Check the current rules on the Inland Revenue student-loan repayment page.
Consider a New Zealand-based borrower earning a gross salary of $70,000 a year and being paid monthly through their main job.
Using the applicable monthly pay-period threshold:
This is an illustration of the compulsory student-loan deduction. It does not mean the borrower’s mortgage capacity will fall by a specific amount.
Actual deductions can differ according to pay frequency, secondary income and tax-code circumstances. The mortgage lender will also apply its own affordability assessment.
The balance and the compulsory repayment answer different questions.
For many New Zealand-based salary and wage earners, compulsory repayments are based on income above the applicable threshold rather than being calculated as a percentage of the total loan balance. A higher balance does not automatically produce a higher payroll deduction when two borrowers earn the same amount.
The remaining balance can still be relevant. For example, it may matter when:
A lender’s treatment may also differ according to its policy and the applicant’s circumstances.
During mortgage pre-approval, your student loan should be disclosed with your other financial commitments.
The lender or mortgage adviser may use payslips and bank statements to confirm the deduction. They may also request your student-loan balance or other information to understand your current position.
It is important that the figures in the application agree with the supporting evidence. If your tax code, deductions or student-loan status have recently changed, further confirmation may be needed.
Our home loan application guide explains the wider application process and the documents lenders may review.
There is no universal answer. Paying off the loan could improve assessed affordability in some situations, but it also uses money that might otherwise support your first-home deposit, purchasing costs or financial buffer.
The two options should be compared before you make the repayment.
| Factor | Keep the student loan | Repay it in full |
|---|---|---|
| Available savings | Preserves money for the deposit, costs or an emergency buffer | Uses some or all of those available funds |
| Student-loan deductions | Compulsory deductions generally continue | Deductions can stop after the loan is cleared and the required process is completed |
| Assessed affordability | The lender may allow for the continuing deduction | Available income may improve once deductions stop |
| Mortgage amount required | A larger deposit may reduce the mortgage required | Using deposit funds could increase the mortgage required |
| Timing | You can apply while the loan remains | IRD and payroll records may need time to reflect repayment |
Paying the loan off may be worth examining when it can be cleared completely without leaving you short of the deposit, transaction costs or a sensible financial buffer.
Keeping the student loan may be more appropriate when repaying it would substantially reduce your deposit or leave little money available after settlement.
Not necessarily.
An additional repayment reduces the outstanding balance, but standard salary deductions generally continue while the student loan remains unpaid. Inland Revenue explains that voluntary repayments are made in addition to normal deductions.
This means a partial repayment may use valuable savings without immediately improving the income available in a lender’s affordability calculation.
Before making a lump-sum repayment, compare:
You can use Inland Revenue’s student loan repayment calculator to estimate how long repayment may take.
Student-loan obligations can work differently when you are self-employed or receive income that is not subject to ordinary salary deductions.
You may have an end-of-year repayment obligation based on your adjusted net income. A mortgage lender may therefore need to understand both the income being used in the application and the associated student-loan obligation.
Check your position through myIR or read Inland Revenue’s guidance on repaying a student loan when self-employed or earning other income.
Do not assume that the rules for a New Zealand-based borrower apply if you have lived overseas.
If you are outside New Zealand for 184 consecutive days, Inland Revenue will generally treat you as an overseas-based borrower from the first day of that absence. The loan will normally stop being interest-free from that date, although Inland Revenue provides exceptions in some circumstances.
Minimum repayments for overseas-based borrowers are generally determined by the total student-loan balance rather than current income. Your status, outstanding balance, interest charges and repayment history may therefore require closer review during a mortgage application.
If you have recently returned to New Zealand, confirm that Inland Revenue has recorded the correct status. Read the current IRD guidance for overseas-based student-loan borrowers.
Having a student loan is not the same as having adverse credit.
However, an overdue student-loan obligation is different from a loan that is being managed correctly. Inland Revenue may charge late payment interest on qualifying overdue amounts. A lender may also ask for more information about unresolved obligations.
Check that your balance, repayment status and contact information are correct before applying. If you are concerned about wider credit information, read our credit score guide.
Before applying, take these student-loan-specific steps:
For wider preparation steps, read our guide on how to prepare your finances for a mortgage.
A mortgage adviser can calculate how your current student-loan deductions affect your assessed position and compare that result with a full-repayment scenario.
This comparison can help establish:
The purpose is not to assume that every student loan should be repaid. It is to understand the complete effect before committing your savings.
No. A borrower can obtain mortgage approval while a student loan remains outstanding. The lender will consider its effect alongside income, expenses, debts, deposit, credit history and the proposed mortgage.
There is no standard reduction that applies to everyone. The result depends on the compulsory repayment, the rest of your financial position and the lender’s affordability calculation.
Both can matter, but they affect the assessment differently. The compulsory repayment has an immediate effect on available income. The balance becomes especially relevant if the loan could be cleared completely or if overseas-based repayment rules apply.
Having a student loan does not automatically exclude you from the First Home Loan scheme. You must still meet the scheme requirements and obtain approval from a participating lender.
Read our dedicated First Home Loan guide for eligibility and application information.
It can. Interest treatment and mortgage affordability are separate issues. Even when the student loan is interest-free, compulsory deductions can reduce the income available for assessed mortgage repayments.
That depends on which option produces the stronger complete position. Repaying the loan may improve available income, but keeping the money could provide a larger deposit or better financial buffer. Compare both scenarios before transferring the funds.
If you have a student loan and want to understand how it may affect your mortgage application, Platinum Mortgages can compare the available options with you.
We can examine the effect of your current deductions, the consequences of repaying the loan and how each option affects your deposit and wider application.
Contact Platinum Mortgages to discuss your position before applying or making a large voluntary repayment.
Platinum Mortgages New Zealand Limited (FSP752271) is a Financial Advice Provider licensed and regulated by the Financial Markets Authority. Angela Downie (FSP742251) is a Financial Adviser at Platinum Mortgages who provides mortgage advice to New Zealand borrowers under that licence and has worked in the financial industry since 2006.
For first-home buyers with student loans, Platinum Mortgages can compare how compulsory deductions affect assessed affordability and whether retaining savings or repaying the loan better supports their plans.
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