What is a debt-to-income ratio?
Your DTI ratio is calculated by dividing your total debt by your total gross income.
It shows you how many more times your debt is in relation to your total gross income. For example, a DTI of five means your debt is five times your total gross income.
The Reserve Bank of New Zealand (RBNZ) is New Zealand’s central bank, and it supervises all registered banks operating in the country.
From 1 July 2024, banks need to follow the new DTI restrictions, set by the RBNZ. These restrictions apply to new loans for residential homes, for both owner-occupiers and investors.
DTI, together with loan-to-value ratio (LVR) restrictions, are in place to ensure banks don't take on too much risk. This helps support New Zealand's financial stability and reduce the likelihood of a future housing-related downturn.
DTI restrictions
If you're an owner-occupier or investor, you'll need to meet our lending criteria to ensure that you're able to make repayments on your loan, as well as other criteria, such as DTI and LVR requirements. The DTI requirements are effective from 1 July 2024
Owner-occupiers
If you’re buying a house to live in, you’ll generally need a DTI ratio of 6 or lower.
Investors
If you’re purchasing an investment property, you’ll generally need a DTI ratio of 7 or lower.
Exemptions and exceptions
There are some exemptions to the DTI rules which are outlined on the RBNZ website. In addition, when it comes to applications with a high DTI ratio, exceptions can be made in certain circumstances. If you have a high DTI ratio, it's still worth talking to one of our home loan specialists about your options
Working out your DTI ratio
Your total debt will include things such as any existing home loans, personal debts (e.g. car loans), and student loans, as well as the limits of any credit cards and overdrafts, plus any new loans being considered. Your total gross income will include your annual salary, rental income and other extra income you receive.
For example, if you have a total debt of $500,000 and your total gross income is $80,000, your DTI ratio is 6.25. This means your total debt is 6.25 times your total gross income.
Calculate your indicative DTI ratio
Our home loan calculators however don't take into account any student loans or non-home loan debts you may have.
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