Understanding New DTI Rules in New Zealand: What Home Buyers and Investors Need to Know

If you’re planning to buy a home in Hamilton or anywhere in the Waikato region, one of the first questions you’ll ask is: How much can I borrow for a mortgage? It’s a big decision, and the answer depends on a few key things — your income, your expenses, your deposit, and even your credit score.

What Affects How Much You Can Borrow for a Mortgage?

Income, Expenses, and Credit Score

Your income is the starting point. Lenders want to know how much you earn — and how stable that income is. If you’re employed full-time, that’s fairly straightforward. If you’re self-employed or your income varies, they’ll look more closely at your financial history to understand your earning patterns.

But income is only part of the picture. Your existing debts also play a big role. Credit cards, car loans, and other personal loans can all affect how much you’re able to borrow. Lenders consider your total financial commitments to make sure you can comfortably manage a mortgage on top of them. Keeping your debt under control shows you can handle repayments responsibly, which strengthens your application.

Deposit Size and LVR (Loan-to-Value Ratio)

Your deposit is the amount of money you put toward the purchase upfront. In New Zealand, most lenders prefer a deposit of at least 20%. But there are options for lower deposits — especially for first-home buyers. You may be able to get a loan with a deposit from as little as 5%.

How Do Banks and Brokers Assess How Much You Can Borrow for a Mortgage?

Bank Assessments

When you apply directly with a bank, they’ll use their own calculator to work out how much you could borrow. They look at:

Income – not just how much you earn, but how stable it is (salary, self-employed income, or contract work).
Expenses – your everyday living costs such as food, transport, insurance, and utilities.
Debts – things like credit cards, car loans, personal loans, Afterpay, or store finance. Even small limits on unused credit cards are counted.
Deposit – how much you’ve saved or built up through KiwiSaver or other sources.

On top of that, banks apply a test (or “stress”) interest rate, which is higher than the current rate. This is to check whether you could still afford repayments if interest rates rise in the future.

Broker Assessments

Mortgage brokers, like Andre Stokes here in Hamilton, take a wider view. Instead of relying on just one bank’s criteria, brokers work with multiple lenders — each with their own calculators and lending rules. This means:

You’ll often have a better chance of approval if one bank says “no.”
You can compare borrowing amounts across lenders.
You’re more likely to find a solution that fits your income, debt, and goals.

Brokers also help you present your application in the best light — especially if you’re self-employed, have variable income, or already have existing debts.

Borrow for a Mortgage in Waikato: What’s Typical?

Waikato Property Prices

Property values across the Waikato Region can vary considerably, depending on the location:

Hamilton City: The average house price as of June 2025 is approximately NZ$788,171, according to CoreLogic data compiled by Opes Partners.
Waikato Region Overall: Median prices hover around NZ$735,000 as of June 2025, having surged from about NZ$340,000 a decade earlier.
Te Kūiti (Waitomo District): This remains one of the most affordable areas in the region. The average house value stands at NZ$392,550,

This underscores a substantial price range—from Te Kūiti’s mid-$300k to Hamilton’s upper-$700k—highlighting how location plays a pivotal role in affordability for buyers.

First-Home Buyers in Waikato

If you’re taking your first steps onto the property ladder, you may have access to several helpful schemes:

1. KiwiSaver First-Home Withdrawal

After contributing to KiwiSaver (or a complying super fund) for at least three years, you may be able to withdraw most of your savings—including member contributions, employer contributions, government contributions, and investment earnings—to help with your first home purchase.

You must leave a minimum of NZ$1,000 in your KiwiSaver account, and not all funds are withdrawable (e.g., Australian super transfers and certain government kick-start amounts may be excluded).

Withdrawals are restricted to a property you intend to live in—this cannot be used to purchase investment properties.
Check out the IRD website for more information

2. Kāinga Ora First-Home Loan

With this option, you can secure a home loan with a deposit as low as 5%, thanks to Kāinga Ora underwriting the remainder of the deposit risk for participating lenders.
Kāinga Ora – Homes and Communities

Eligibility criteria include being a first-home buyer (or a previous owner in a similar financial place as a first-home buyer), meeting maximum income thresholds (e.g., <$95,000 for individuals without dependants or <$150,000 combined for co-buyers), and purchasing a home you intend to live in.

The loan includes a 1.2% Lender’s Mortgage Insurance (LMI) premium, payable upfront or added to the loan balance.

Tips to Increase How Much You Can Borrow for a Mortgage

Reduce Your Debt
Banks look closely at your existing debt, such as credit cards, personal loans, and car finance. Paying these down (or closing unused credit facilities) lowers your monthly commitments, which can free up more borrowing power.
Increase Your Deposit
The bigger your deposit, the less risk the lender takes on. This can not only increase how much you’re able to borrow but may also give you access to better interest rates and more lenders.
Improve Your Credit Score
Your credit history shows lenders how reliable you are with money. Paying bills on time, avoiding missed payments, and keeping debt levels manageable can strengthen your application and make banks more willing to lend.
Use a Broker
Mortgage brokers have access to a wide range of lenders and know the different borrowing criteria. They can help present your situation in the best possible way and find a lender who’s more likely to offer you the maximum amount.

Contact Andre for a Personalised Borrowing Assessment

Every buyer is different. Your income, deposit, and goals all affect how much you can borrow for a mortgage. Andre Stokes is a local mortgage broker based in Hamilton. He knows the Waikato market and works with a range of lenders.

Ready to find out how much you can borrow? Contact Andre today for a free, personalised borrowing assessment.

Starting July 1st, 2024, significant changes are coming to the New Zealand property market. The Reserve Bank of New Zealand (RBNZ) is introducing new Debt-to-Income (DTI) rules that will affect how much you can borrow to buy residential property. These changes are designed to ensure the stability of the housing market and to help prevent borrowers from taking on too much debt. Here’s a closer look at what these new DTI rules mean for you.

What Are the New DTI Rules?

The DTI rules set a limit on the amount you can borrow based on a multiple of your income. This multiple varies depending on the purpose of your property purchase:

- Owner-Occupiers: You can borrow up to 6 times your income.

- Property Investors: You can borrow up to 7 times your income.

These limits are part of a broader strategy by the RBNZ to maintain financial stability. The RBNZ is trying to avoid the kind of runaway house price inflation that can lead to economic bubbles.

Why Are These Rules Being Introduced?

The introduction of DTI limits is aimed at achieving several key objectives:

1. Prevent Over-Borrowing: The RBNZ caps borrowing based on income to prevent people from taking on too much debt, especially if interest rates go up.

1. Stabilise House Prices: During housing booms, unrestricted borrowing can lead to rapid increases in house prices. The DTI limits are intended to cool down the market by restricting borrowing capacity.

1. Ensure Financial Stability: These rules aim to protect the financial system by preventing excessive borrowing and avoiding widespread loan defaults.

How Will These Changes Impact Owner-Occupiers?

The new DTI rules will likely have little impact in the short term for homebuyers. With the new DTI limits, most borrowers will not see a significant change in their ability to secure a mortgage.

However, banks may be stricter about verifying income, so borrowers must clearly document their earnings. Overall, the transition should be relatively smooth for most owner-occupiers.

How Will These Changes Impact Property Investors?

Property investors will feel the effects of the new DTI rules more acutely. With a cap of 7 times income, many investors will find it harder to leverage their properties. This is particularly true for larger-scale investors who rely heavily on rental income to service their loans.

In the short term, high interest rates are already making borrowing challenging. But as interest rates eventually fall, the DTI limits will continue to restrict borrowing, even during more stable market conditions. Investors will need to be more strategic and may have to look at alternative financing options or adjust their investment strategies.

Planning Ahead

With these new rules, it’s crucial for both home buyers and property investors to plan ahead. Here are a few tips to help navigate the changes:

- Review Your Finances: Take a close look at your income and expenses to understand how the DTI limits will affect your borrowing capacity.

- Document Your Income: Ensure all sources of income are well-documented and verifiable to meet stricter bank requirements.

- Consider Alternative Financing: For property investors, explore non-bank lending options or other creative financing solutions that may not be subject to the same DTI limits.

- Seek Professional Advice: Consulting with mortgage advisers and financial experts can provide valuable insights and help you make informed decisions.

Final Thoughts

The new DTI rules mark a significant shift in New Zealand’s housing market. While they may pose challenges, especially for property investors, they are also a step towards a more stable and sustainable market. By understanding these changes and planning ahead, you can make better financial decisions.

If you have any questions or need expert advice on how these changes could impact you, don’t hesitate to reach out to Andre Stokes your mortgage adviser. He’s here to help you through this transition and ensure you’re well-prepared for the future.