How Much Can I Borrow? NZ Mortgage Guide

On a single income of $100,000, you can typically borrow between $500,000 and $600,000 for a mortgage in New Zealand, depending on your expenses, existing debts, and the lender. A couple earning $150,000 combined can usually borrow $750,000 to $900,000. These are rough ranges because banks don't just multiply your income by a set number. They run a detailed affordability calculation that factors in your actual expenses, stress-tests your repayments at a higher interest rate, and checks you against the RBNZ's new DTI limits.

How banks calculate your borrowing power

Banks look at four things when deciding how much to lend you:

1. Your income (what comes in)
2. Your expenses and existing debts (what goes out)
3. The stress-tested mortgage repayment (can you still pay if rates rise?)
4. DTI and LVR limits (RBNZ-imposed caps)

All four matter. A high income doesn't guarantee a large mortgage if you also have high expenses or existing debt. Here's how each piece works.

Income assessment: what counts and what doesn't

Banks assess your income differently depending on its type and stability.

Income type	How banks typically treat it
Salary/wages (PAYE, permanent)	100% of gross income. The gold standard.
Salary/wages (PAYE, fixed-term contract)	100% if more than 12 months remaining, otherwise discounted or excluded
Overtime/shift allowances	50% to 80% of average over 12 to 24 months
Commission/bonuses	50% to 80% of average over 2 years, sometimes excluded if inconsistent
Self-employed income	Average of last 2 years' net profit (from financial statements or tax returns). Often discounted.
Rental income	60% to 80% of gross rent (to account for vacancies and expenses)
Government benefits (Working for Families, Accommodation Supplement)	Varies by bank. Some include it, some exclude it.
KiwiSaver contributions	Not counted as income

If you're self-employed or earn variable income, banks are more conservative. Having at least two years of financial statements or tax returns showing consistent income makes a significant difference.

The expense test: UMI (Uncommitted Monthly Income)

Banks calculate your Uncommitted Monthly Income (UMI), which is what's left after all your committed expenses and the proposed mortgage repayment. Your UMI needs to be positive, and most banks want a buffer of at least $100 to $200 per month above zero.

The expenses banks count include:

• Living expenses (using either your declared expenses or a minimum floor based on household size, whichever is higher)
• Existing debt repayments (credit cards, personal loans, car finance, hire purchase, student loans, buy now pay later)
• Insurance premiums
• KiwiSaver contributions
• Any child support or maintenance payments
• The proposed mortgage repayment, tested at the stress rate (not the actual rate)

Credit card limits matter, even if you don't use them. Banks typically assume you could draw down your full credit card limit and assess repayments on that basis (usually 3% of the limit per month). A $10,000 credit card limit adds $300/month to your assessed expenses, even if you pay it off in full every month. Closing unused credit cards or reducing limits before applying for a mortgage can increase your borrowing power.

Stress testing: why banks test at higher rates

Banks don't test whether you can afford repayments at today's rate. They test at a "stress rate" or "assessment rate," typically 2% to 3% above the current advertised rate. If the current 2-year fixed rate is 5.59%, the bank might test your affordability at 7.59% to 8.59% (bank websites, general lending criteria).

This protects both you and the bank. If rates rise during your mortgage term, you still need to be able to make your repayments. The stress test ensures you have that buffer.

What the stress test means in dollar terms

Mortgage amount	Repayment at 5.59% (30-year term)	Repayment at 8.09% (stress test)	Difference
$400,000	$2,298/month	$2,958/month	+$660/month
$500,000	$2,873/month	$3,698/month	+$825/month
$600,000	$3,447/month	$4,437/month	+$990/month
$700,000	$4,022/month	$5,177/month	+$1,155/month
$800,000	$4,596/month	$5,916/month	+$1,320/month

At a stress rate of 8.09%, a $600,000 mortgage costs $4,437 per month. The bank needs to see that you can handle that repayment alongside all your other expenses while still having a positive UMI.

DTI limits: the hard cap on borrowing

Since 1 July 2024, the RBNZ has imposed debt-to-income (DTI) restrictions that act as a hard ceiling on borrowing (RBNZ).

Borrower type	Maximum DTI	Speed limit
Owner-occupiers	6x gross annual income	20% of new lending can exceed this
Investors	7x gross annual income	20% of new lending can exceed this

DTI is calculated as your total debt (the proposed mortgage plus all other debts) divided by your gross annual income.

Example: On a salary of $100,000 with no other debts, the DTI cap limits your mortgage to $600,000 (6x $100,000). If you also have a $20,000 car loan, your total debt allowance is still $600,000, so the maximum mortgage drops to $580,000.

Banks have a 20% speed limit, meaning they can approve some loans above the DTI cap. But these are allocated sparingly, and you'd need strong credentials (large deposit, stable income, clean credit history) to qualify.

In practice, the stress-test affordability calculation often limits your borrowing to less than the DTI cap. DTI acts as a backstop that catches cases where low expenses and high income might otherwise allow an outsized loan.

Borrowing power at different income levels

These estimates assume a single borrower, no existing debts, moderate living expenses, a 20% deposit, a 30-year loan term, and a stress test rate of approximately 8% (bank websites, general lending criteria). Actual results vary by bank.

Single borrower

Couple (combined income, no other debts)

These ranges are estimates only. Your actual borrowing power depends on your specific expenses, debts, credit history, and the individual bank's lending criteria. A mortgage broker or bank pre-approval is the only way to get a definitive number.

How existing debts reduce your borrowing power

Every dollar of existing debt repayment reduces the mortgage amount a bank will approve. Here's the approximate impact on borrowing power for common debts.

Existing debt	Monthly repayment (assessed)	Approximate reduction in borrowing power
Credit card ($5,000 limit)	$150 (3% of limit)	$25,000 to $30,000 less
Credit card ($10,000 limit)	$300 (3% of limit)	$50,000 to $60,000 less
Personal loan ($15,000 balance)	$350	$55,000 to $65,000 less
Car loan ($25,000 balance)	$500	$80,000 to $95,000 less
Student loan ($30,000 balance)	$275 (12% of income over $22,828)	$45,000 to $55,000 less
Buy now pay later ($2,000 limit)	$60 to $100 (bank dependent)	$10,000 to $20,000 less

Student loans are assessed differently from other debts. Most banks calculate the repayment as 12% of your gross income above the $22,828 repayment threshold (IRD, 2025/26 tax year), rather than using a fixed repayment schedule. This means the assessed repayment scales with your income.

Worked example: single borrower on $100,000

Profile: Age 32, single, earning $100,000/year (PAYE), 4% KiwiSaver, no dependants, $15,000 car loan remaining ($400/month repayments), $5,000 credit card limit (paid off monthly). (Example uses 4%, the default rate from April 2028.)

Income assessment

Item	Annual	Monthly
Gross salary	$100,000	$8,333

Expense assessment (bank's view)

Item	Monthly
Living expenses (bank minimum floor, single person)	$1,600
Car loan repayment	$400
Credit card (3% of $5,000 limit)	$150
KiwiSaver (4% of gross)	$333
Proposed mortgage repayment at stress rate (8.09%, $500,000, 30 years)	$3,698
Total assessed expenses	$6,098

UMI calculation

Item	Monthly
Gross income	$8,333
PAYE + ACC	$2,527
Net income	$5,806
Total assessed expenses (excluding KiwiSaver from net)	$5,848
UMI	Approximately -$42

At $500,000, the UMI is slightly negative, which means this borrower would likely be approved for around $480,000 to $490,000, not $500,000.

DTI check

Total debt: $480,000 mortgage + $15,000 car loan = $495,000. DTI: 4.95x. Well within the 6x limit.

The takeaway: For this borrower, the stress-test affordability is the binding constraint, not DTI. Paying off the car loan and closing the credit card would increase borrowing power by approximately $75,000 to $90,000.

How to increase your borrowing power

Reduce existing debt. Pay off credit cards, personal loans, and car finance before applying. Close credit cards you don't need, or reduce the limits.

Reduce your expenses. Banks use either your declared expenses or a minimum floor, whichever is higher. If your actual expenses are well above the floor, trimming discretionary spending (subscriptions, dining out) for the 3 months before applying can improve your assessed position.

Increase your deposit. A larger deposit means a smaller mortgage, which makes it easier to pass both the affordability test and DTI check. It also gives you access to better interest rates (no low-equity margin), which reduces your repayments.

Add a co-borrower. A partner, family member, or friend can join the application as a co-borrower, adding their income to the calculation. The bank will also count their debts and expenses, but the net effect of two incomes usually increases borrowing power substantially.

Use a mortgage broker. Different banks have different lending criteria, living expense floors, and stress test rates. A broker can match you with the lender most likely to approve the amount you need. Broker services are typically free to the borrower (the bank pays the broker's commission).

Extend the loan term. A 30-year term has lower monthly repayments than a 25-year term, which improves your UMI. Most banks allow terms up to 30 years. Some allow 35 years for younger borrowers, though this isn't standard.

Common questions

How much can I borrow on a $100,000 salary in NZ?

On a $100,000 salary with no existing debts and moderate expenses, you can typically borrow between $500,000 and $600,000. The exact amount depends on your expenses, the bank's stress test rate, and whether you have any other debts. The RBNZ's DTI limit caps owner-occupier borrowing at 6x income ($600,000), but the bank's affordability test often limits you to less than this (RBNZ, bank websites).

How much can a couple borrow for a mortgage in NZ?

A couple earning $150,000 combined with no debts can typically borrow $750,000 to $900,000. The DTI cap is 6x combined income ($900,000). As with single borrowers, actual approval depends on expenses, debts, and the bank's stress test. Two incomes significantly increase borrowing power compared to a single income (RBNZ).

What is the DTI limit for mortgages in NZ?

Since 1 July 2024, the RBNZ limits owner-occupier borrowing to 6x gross annual income and investor borrowing to 7x gross annual income. Banks can exceed this limit for up to 20% of their new lending. DTI is calculated as total debt (mortgage plus all other debts) divided by gross annual income (RBNZ).

What interest rate do banks use to test affordability?

Banks test your ability to repay at a "stress rate" typically 2% to 3% above the current advertised rate. If the current rate is 5.59%, the bank might test at 7.59% to 8.59%. This ensures you can still afford your mortgage if rates rise during your loan term. Each bank sets its own stress rate (bank websites, general lending criteria).

Does my student loan affect how much I can borrow?

Yes. Banks factor in your student loan repayment, which is 12% of your gross income above $22,828 per year (IRD, 2025/26 tax year). On a $100,000 salary, that's about $9,261 per year ($772/month) in assessed student loan repayments. This reduces your borrowing power by roughly $120,000 to $145,000 compared to someone without a student loan.

Do credit card limits affect my mortgage application?

Yes, significantly. Banks typically assess 3% of your credit card limit as a monthly expense, regardless of whether you carry a balance. A $10,000 credit card limit adds $300/month to your assessed expenses, reducing your borrowing power by roughly $50,000 to $60,000. Closing unused cards or reducing limits before applying is one of the simplest ways to increase your borrowing capacity.

How do I find out exactly how much I can borrow?

Get a mortgage pre-approval. This is a formal assessment by a bank or lender that confirms how much they'll lend you, subject to conditions like a satisfactory property valuation. Pre-approval typically takes 1 to 2 weeks and lasts 60 to 90 days. You can apply directly with a bank or through a mortgage broker who can compare options across multiple lenders.

Can self-employed people get mortgages in NZ?

Yes, but the process is more involved. Banks typically want two years of financial statements or tax returns showing consistent profit. They'll average your net profit over two years and may discount it further. Variable income, recent business startups, or declining profits can all reduce borrowing capacity. Some non-bank lenders are more flexible with self-employed borrowers but may charge higher interest rates.

What's the difference between borrowing power and pre-approval?

Borrowing power is an estimate of what you might be able to borrow based on general criteria. Pre-approval is a formal conditional commitment from a specific lender to lend you a specific amount. Pre-approval involves a full application, credit check, and income verification. It's the only reliable way to know your actual borrowing limit.

Does KiwiSaver affect how much I can borrow?

Your KiwiSaver contributions reduce your take-home pay, which affects your UMI calculation. At 4% contributions on a $100,000 salary, that's $4,000/year ($333/month). The minimum employee rate is 3% (rising to 3.5% from April 2026 and 4% from April 2028). Some banks allow you to temporarily reduce your KiwiSaver contribution rate to the minimum to improve affordability, but this must be done before applying. Your KiwiSaver balance itself can be withdrawn for a first home purchase, which helps with your deposit rather than your borrowing limit (IRD).

What to do next

• LVR rules explained: Understand deposit requirements and LVR restrictions
• First home buyer guide: Full guide including grants, KiwiSaver withdrawal, and the buying process
• NZ mortgage rates: Compare current rates across all major banks
• PAYE calculator: Check your take-home pay and see how it affects affordability
• Mortgage calculator: Model different loan amounts, rates, and terms (coming soon)

---

Last updated: 1 March 2026. Sources: RBNZ (rbnz.govt.nz), IRD (ird.govt.nz), bank websites (general lending criteria). DTI limits effective 1 July 2024. Borrowing estimates are indicative only and vary by lender. This is financial information, not financial advice.