Debt-to-income NZ rules took effect on 1 July 2024 and now form part of how banks assess mortgages. Think of DTI as a guardrail that limits very high leverage relative to income. At the same time, Loan-to-Value (LVR) settings were eased a little, which is good news for many first-home buyers and a nudge for some investors to re-enter the market. We cover the essentials in this guide.
Definitions of DTI and LVR
- DTI (Debt-to-Income): Your total debt divided by total gross income. The higher the number from the calculation, the more leveraged you are relative to your income.
- LVR (Loan-to-Value Ratio): Your loan divided by the property value. A Lower LVR (as a result of a larger deposit), the less risk there is for the lender.
These tools work together. DTI manages the probability you can keep paying through ups and downs, whilst LVR limits the impact if things go wrong. See debt-to-income ratios in New Zealand for more insights
Debt-to-Income Settings at a Glance
DTI “speed limits”
This refers to how much of a bank’s new lending can sit above certain DTIs:
- Owner-occupied: a limited share can be above DTI 6
- Investors: a limited share can be above DTI 7
LVR limits
Limits were eased in 2024.
- Owner-occupied: Banks can allocate up to 20% of owner-occupier lending to borrowers with and LVR > 80%.
- Investors: banks can allocate an additional 5% to borrowers with an LVR of 70% (previously this was 65%)
Each bank manages these settings across their whole book, so appetite can vary week-to-week.
Common Exemptions
- Portability: when you are selling and buying, keeping the mortgage but changing the property
- Straight refinance: you switch lenders without increasing the total loan.
- Kāinga Ora loans (specific programmes).
- Bridging finance.
- Remediation lending (e.g., weathertightness).
How Much Could I Borrow Under DTI?
As a quick sense check for debt-to-income rules, take your gross annual income and multiply that by six to see the upper thresholds banks watch for owner-occupier lending.
Example: on $100,000 income, 6 × $100,000 = $600,000 potential borrowing (subject to full affordability checks).
Important note – this will not be an approval amount you can expect, it’s just a quick way to gauge whether you’re in the right ballpark before we model your full position.
How Lenders Actually Assess You
DTI is only one part of the picture. Banks also run detailed affordability calculators that consider:
- Income type: salary vs self-employed, rental income shading, boarder/flatmate income.
- Existing commitments: credit cards, personal loans, BNPL, car finance.
- Buffers and test rates: lenders “stress-test” at higher rates than today’s pricing.
- Loan structure: interest-only vs principal & interest, splits, and terms.
- Property type and valuation: especially relevant for investors and new builds.
If you’re declined at a bank purely on servicing, specialist/non-bank lenders can sometimes help—criteria and pricing differ. (That’s a separate conversation; we’ll walk you through pros and cons if it’s relevant.)
What Does This Mean for Borrowers?
First-home buyer (owner-occupier):
Talia earns a combined $150k with her partner and has modest car finance. Their DTI sits near 6 after factoring a small credit-card limit. We trim the card limit, tidy spending, and structure lending so they meet servicing and LVR—bringing a purchase within reach.
Investor adding a property
Moana owns one rental and a home. With the 2024 settings, her deposit hurdle is a touch easier than last year, but servicing is tight at the bank’s test rate. We model rent shading, consider interest-only on the investment split, and check whether a specialist lender could make the numbers work—without over-gearing.
If servicing is tight at bank test rates, our mortgage restructure team can explore alternative and structure options for you.
Why Both DTI and LVR Matter
Having both tools in place aims to mitigate risk. DTI limits reduce the chance borrowers can’t meet repayments when conditions change, while LVR limit ensure an equity buffer if house prices fall. Together, they curb very high-risk lending in good times and make households and lenders more resilient in tougher times.
Unsure What This Means for You?
I know, acronyms, acronyms! Don’t get bogged down with them. Bring your numbers and your goal to us, we’ll run a clear borrowing model and outline your options: We will:
- Confirm income sources
- List debts and limits (example credit cards, personal loans)
- Set a target purchase price that will work for you, or refinance goal.
- Choose a structure that balances today’s cashflow with tomorrow’s flexibility.
If you are weighing up your next steps – whether its your first purchase, adding an investment to your portfolio, or simply checking capacity – book a quick chat and we’ll map out a realistic plan for you.
★ We Are Trusted
Angela is an accredited Financial Adviser, licensed under FSP742251 and has been in the Financial Industry since 2006. Our 5-star Google reviews reflect the excellent customer experience we promise — making your home loan journey positive, stress-free, and rewarding. At Platinum Mortgages, our clients are the reason we exist — so you can be confident every step is guided by genuine care and expertise.