About this calculator
A New Zealand bank runs its own affordability test first. It takes your after-tax income (PAYE at the IRD bands — 10.5% up to $15,600, 17.5% to $53,500, 30% to $78,100, 33% to $180,000, 39% above), subtracts living expenses and every existing commitment, assesses your credit-card limits at roughly 3% a month whether you use them or not, and then asks whether the surplus covers the repayment — not at the rate you will pay, but at that rate plus a serviceability buffer, recently around 2 points, putting test rates in the 8.5%–9% area when card rates are near 6.5%. The buffer is bank practice under the responsible-lending code, not a Reserve Bank rule, and it is adjustable here because every bank sets its own.
Behind the bank sits the Reserve Bank's DTI framework, in force since 1 July 2024 and reviewed unchanged in October 2025. It limits how much of a bank's new lending may exceed a debt-to-income ratio of 6 for owner-occupiers and 7 for investors — total debt, including this loan and every other balance, divided by gross income. Only 20% of new lending in each class may sit above the multiple, so exceeding it is not an automatic no; it is a quota the bank may or may not have room in this month. New builds, refinances that do not increase debt, and Kāinga Ora First Home Loans are exempt from the framework entirely.
How to use it
- Enter gross household income before tax — the calculator applies the IRD PAYE bands (the ACC earners' levy is excluded, which slightly flatters the result).
- Pick owner-occupier or investor: it sets the DTI multiple, 6× or 7×.
- Enter the rate you expect to pay and leave the buffer at 2 points unless your bank has told you its test rate.
- Be honest with living expenses — banks compare yours against their own household benchmarks and use the higher figure.
- Enter card limits in full, not balances: the limit is what the serviceability test charges you for.
The formula
PV is the annuity present value over the loan term. The DTI is defined by the Reserve Bank as total debt divided by gross income, counting all mortgages being applied for, personal and vehicle loans, student loans and full credit-card limits. The two tests fail differently: serviceability is about monthly cash flow at a stressed rate, the DTI is about the stock of debt against a year of income.
Worked example
A household earning NZ$150,000 gross keeps NZ$9,219 a month after PAYE. With NZ$3,600 of living expenses, NZ$300 of other repayments and NZ$10,000 of card limits assessed at NZ$300, the bank's usable surplus is NZ$5,019. At a 6.50% card rate tested at 8.50% over 30 years that supports NZ$652,680 — well inside the DTI ceiling of 6 × $150,000 − $25,000 = $875,000, so serviceability binds and the DTI at the maximum loan is 4.5×. Drop expenses to NZ$1,500 on a NZ$100,000 income and the picture flips: serviceability would allow NZ$640,758 but the DTI framework caps the loan at exactly NZ$600,000 — the boundary case where the regulator, not the bank, says stop.
Sources: RBNZ Debt-to-Income Framework (in force 1 July 2024; settings reviewed and maintained October 2025), IRD PAYE tax bands from 31 July 2024, and bank serviceability practice under the responsible-lending code — the buffer is labelled market practice, not an RBNZ rule. Current October 2026. Last updated: October 2026.
Frequently asked questions
Is the DTI a hard cap on what I can borrow?
No — it is a speed limit on banks, not on you. The Reserve Bank allows each bank to put up to 20% of its new owner-occupier lending (and 20% of investor lending) above the 6×/7× multiples. A borrower at 6.5× can be approved if their bank has quota left; the same application can fail a month later or succeed at another bank. In practice high-DTI lending has run far below the limit, so for most applicants the bank's serviceability test is the binding constraint.
What income and debts count in the DTI?
Gross income before tax, including salary, self-employed income and (usually shaded) rental income. Debt means everything: the new mortgage, any existing mortgages, vehicle and personal loans, student loans, and credit-card limits at their full value — a $20,000 limit with a zero balance still counts as $20,000 of debt in the ratio. That is why closing an unused card before applying can move your maximum by tens of thousands.
Why do banks test me at a rate higher than the loan's rate?
Responsible-lending law requires the bank to be satisfied you can repay without substantial hardship, including if rates rise. Each bank sets its own test rate — commonly the card rate plus a buffer of around 2 points, or a floor rate, whichever is higher. It is practice, not an RBNZ prescription: the Reserve Bank's tools are the LVR and DTI settings, and it deliberately leaves the serviceability calibration to lenders.
Are new builds really exempt from all of this?
From the DTI framework and the LVR restrictions, yes — lending for construction, and for buying a newly built home from the developer within six months of completion, sits outside both regimes to avoid choking housing supply. The bank's own serviceability test still applies in full, and the exemption belongs to the loan purpose: buying a two-year-old ex-rental does not qualify, however new it feels.
Does the ACC levy change the answer much?
Slightly. This calculator excludes the ACC earners' levy (about 1.6–1.7% of earnings up to a cap) from the tax step, so the after-tax income is a little generous — on a $150,000 income the levy is roughly $2,500 a year, worth perhaps $25,000–30,000 of loan at test rates. Treat the maximum here as the top of the range a bank might reach, not a promise.
What formula does this affordability calculator — new zealand (serviceability & dti) calculator use?
Surplus = after-tax income − expenses − other payments − 3% × card limits; Serviceability loan = PV of the surplus at (rate + buffer); DTI loan = multiple × gross income − other debt balances; Maximum = the lower of the two PV is the annuity present value over the loan term. The DTI is defined by the Reserve Bank as total debt divided by gross income, counting all mortgages being applied for, personal and vehicle loans, student loans and full credit-card limits. The two tests fail differently: serviceability is about monthly cash flow at a stressed rate, the DTI is about the stock of debt against a year of income. The worked example on this page applies the formula step by step with real numbers, so you can verify the result by hand.