How Much Can I Afford to Borrow?
Calculate your borrowing capacity based on income and expenses
Affordability Calculator
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Frequently Asked Questions
NZ banks typically lend 6-7 times your annual gross income, subject to serviceability tests. Your borrowing capacity depends on your income, expenses, existing debts, deposit size, and the bank's assessment of your ability to service the loan at test interest rates (usually 7-8%).
Most NZ banks use a debt-to-income (DTI) ratio of 6-7 times your annual gross income. However, the Reserve Bank has implemented DTI restrictions, and banks assess your ability to service the loan at higher test rates to ensure you can afford repayments if rates rise.
Banks assess borrowing capacity using: (1) Your gross income minus living expenses and existing debts, (2) Serviceability test at a higher interest rate (7-8%), (3) Debt-to-income ratio limits (typically 6-7x annual income), and (4) Loan-to-value ratio (LVR) based on your deposit.
Banks consider: salary/wages (gross income before tax), bonuses (if consistent), rental income (typically 75% of rental), self-employed income (averaged over 2-3 years), and partner's income if applying jointly. They may exclude irregular income like overtime or commissions.
Existing debts (car loans, personal loans, credit cards, student loans) reduce your borrowing capacity significantly. Banks assess your total debt servicing costs and may count the full credit limit even if you don't use it. Paying off debts before applying can increase your borrowing power.
Most banks require a 20% deposit to avoid low equity fees. First home buyers may access Welcome Home Loans or First Home Grants with as little as 5-10% deposit. You can use KiwiSaver funds, savings, or gifts from family as your deposit.