How Much Can I Borrow in NZ? LVR, DTI and Serviceability Explained (2026)

"How much can I borrow?" has two answers in New Zealand, and the bank checks both. The first is the deposit rule set by the Reserve Bank. The second is whether you can service the loan at a rate higher than the one you will actually pay. Most people only know about the first.

The deposit rule: loan-to-value ratio

LVR is the loan as a percentage of the property's value. A $640,000 loan on an $800,000 house is 80% LVR, meaning a 20% deposit. The Reserve Bank limits how much high-LVR lending banks can do, and from 1 December 2025 the settings are: banks may put up to 25% of their new owner-occupier lending into loans above 80% LVR, and up to 10% of new investor lending into loans above 70% LVR.

In practice this means a 20% deposit is the standard for owner-occupiers and 30% for investors, and a smaller deposit is possible but competitive: you will be assessed more strictly and may pay a low-equity margin on the rate. New builds are exempt from the LVR restrictions, which is why they are often the route in with a 10% deposit.

The income rule: debt-to-income ratio

Since 1 July 2024, banks also work under DTI restrictions: most owner-occupier lending must be at or below six times gross income, and most investor lending at or below seven times, with a 20% allowance for loans above those ratios. A household earning $150,000 therefore tops out around $900,000 of total debt (all loans, not just the mortgage) under the main rule. For many buyers this now binds before the deposit rule does.

Serviceability: the test rate

Banks do not assess repayments at the advertised rate. They add a buffer, testing whether you could still afford the loan if rates were materially higher than today — historically several percentage points above the carded rate. Then they subtract living costs (using their own benchmark figures, not yours), existing debt repayments, and credit card limits (treated as though fully drawn), and what remains is your surplus. A thin surplus gets a smaller loan or a decline regardless of your deposit.

This is why paying off a car loan or cancelling an unused credit card before applying can raise your borrowing power more than a larger deposit would.

What counts as income

Base salary counts in full. Overtime, bonuses and commission are usually counted at a discount and only with a history. Rental income on an investment property is typically counted at 70–80% to allow for vacancies and costs. Boarder income is capped. Self-employed income is assessed on two years of accounts and is the area most likely to disappoint; talk to an adviser before you make an offer.

A worked example

A couple with combined gross income of $160,000, no other debt, one credit card with a $5,000 limit, and a $170,000 deposit:

• DTI cap at six times income: $960,000 of total debt.
• LVR at 80% with a $170,000 deposit: a maximum purchase of $850,000 and a loan of $680,000.
• Serviceability at a test rate on $680,000 over 30 years, less living costs and the card limit: whether this clears depends on the bank's benchmarks, but on these figures it usually does.

The binding constraint here is the deposit, not income. Double the deposit and DTI or serviceability becomes the limit instead. Knowing which constraint binds tells you whether saving more, earning more or clearing debt is the fastest path.

Before you talk to a bank

1. Pull your deposit into one account and document its source (banks ask).
2. Close unused credit cards or reduce limits.
3. Clear small consumer loans and buy-now-pay-later balances.
4. Three months of clean bank statements: no unarranged overdrafts, no gambling transactions, consistent saving.
5. Get pre-approval before you go to open homes; it defines your ceiling and speeds up an offer.

The free borrowing power and LVR calculator runs the deposit and servicing checks so you can see which one is holding you back before you apply.

General information, not financial advice. LVR and DTI settings are as published by the Reserve Bank; bank test rates and living-cost benchmarks vary and change. Confirm with your lender or a mortgage adviser.