What Do NZ Lenders Look At?

New Zealand banks and lenders use a combination of factors to decide how much they're willing to lend you. Here's what matters most:

1. Your Income

Lenders will look at your gross annual income — including salary, self-employment income, rental income, and sometimes even overtime or bonuses. Most banks will lend somewhere between 5 to 6 times your annual household income, though this varies. A mortgage adviser can help you understand exactly where you sit.

2. Your Expenses and Existing Debts

Your living expenses, credit card limits, car loans, and Buy Now Pay Later accounts all affect your borrowing capacity. Even a credit card you never use can reduce how much a bank will lend you — because lenders calculate risk based on what you could spend, not just what you do spend. It's worth reviewing and reducing any unnecessary credit before applying.

3. Your Deposit

In New Zealand, most lenders require a minimum deposit of 20% for existing properties. However, first home buyers may be able to access a First Home Loan with as little as 5% deposit, subject to eligibility. The size of your deposit directly affects how much you can borrow and what interest rates you'll qualify for.

4. The Debt-to-Income (DTI) Ratio

Since mid-2024, New Zealand banks have been subject to debt-to-income (DTI) ratio limits set by the Reserve Bank of New Zealand (RBNZ). For owner-occupiers, most banks can lend up to 6 times your gross annual income. For investors, the limit is typically 7 times. These rules are designed to keep lending sustainable — and they do affect how much you can borrow.

5. The Property Itself

Banks also consider the value of the property you're buying. A registered valuation may be required, and lenders will assess the loan-to-value ratio (LVR) — essentially, how much of the property's value you're borrowing versus putting in as a deposit.

A Quick Example

Let's say you and your partner earn a combined gross income of $120,000 per year. Under a DTI of 6, you could potentially borrow up to $720,000. With a 20% deposit of $180,000, you'd be looking at homes up to $900,000.

Of course, this is a simplified example — your actual borrowing power will depend on your full financial picture. That's why talking to a mortgage adviser (rather than just using an online calculator) gives you a much clearer, more personalised view.

How Can I Increase My Borrowing Power?

• Pay down or close unused credit cards and Buy Now Pay Later accounts
• Reduce your living expenses in the months before applying
• Save a larger deposit — even an extra 5% can make a real difference
• Consider any additional income sources you can document (rental income, freelance work)
• Get pre-approval before you start house hunting — it tells you exactly where you stand

First Home Buyers: There's Extra Help Available

If you're a first home buyer in New Zealand, you may be eligible for:

• First Home Loan — as little as 5% deposit with a participating lender
• First Home Grant — a KiwiSaver-linked grant of up to $10,000 for eligible buyers
• KiwiSaver HomeStart — using your KiwiSaver contributions towards your deposit

Eligibility criteria apply to all of the above, including income caps and price caps that vary by region. A mortgage adviser can help you figure out which schemes you qualify for.

Talk to a Mortgage Mate

At Mortgage Mates, we help Kiwis across New Zealand understand their borrowing power and find the right home loan for their situation. Whether you're in Canterbury, the South Island, or anywhere in between, we'd love to have a chat.

Use our free Mortgage Calculator to get a feel for your numbers, then get in touch with Brent or Becs for personalised advice. There's no obligation — just a friendly, no-jargon conversation about your goals.

Mortgage Mates is a mortgage advisory service based in Rangiora, North Canterbury, serving clients across New Zealand. Brent Findlay and Becs Parker are experienced mortgage advisers with 20+ years in the industry who specialise in residential lending, first home buyers, and investment property finance.

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