Free Borrowing Capacity Calculator for New Zealanders
Estimate how much an NZ bank will lend you for a home loan, based on your household income, monthly expenses and existing debts. Uses a stress-test rate to mirror what banks actually use, and the Reserve Bank’s 6x DTI cap as a sanity check.
Your finances
Based on a household income of $140,000, monthly expenses of $3,500, and other debts of $300/month.
About our Borrowing Capacity Calculator
NZ banks lend on what your pay slip can afford to repay at a stress-tested rate, not at the rate you actually pay. With the Reserve BankRBNZReserve Bank of New Zealand; sets the OCR, regulates banks, enforces LVR and DTI caps.View in glossary →’s debt-to-income rules layered on top, the lower of the two ceilings sets the cap. Both numbers come out of this calculator.
The first ceiling is servicing. The bank tests whether your after-tax income, minus your living expenses, minus your other debt repayments, can cover the mortgage at a rate around 2.5 to 3 percentage points above what banks are advertising. At an 8.50% test rate over 30 years, every $1,000 of available monthly cash services about $130,000 of mortgage.
The second ceiling is the DTIDebt-to-income (DTI)Total monthly debt payments divided by gross monthly income; a key lender affordability test.View in glossary → sanity check. Since 1 July 2024 the Reserve Bank limits new owner-occupier lending above 6× household gross income (and investor lending above 7×). The calculator surfaces both figures so you can see which one is binding for your situation.
Move the income, expenses, and debts sliders to see each ceiling shift. Push the bank test rate up or down to see how a 1% change in the stress rate translates to roughly a 10% change in serviceable principal.
How to use it
Enter household gross income (combined for joint applications), monthly living expenses, and the total monthly servicing on any non-mortgage debt (car loan, personal loan, BNPL, credit-card minimum).
Set the bank test rate. The default 8.50% reflects what most NZ banks are using when contract rates sit around 5.5% to 6%. Some banks publish their test rate; for the rest, a rule of thumb is to add 2.5 to 3 percentage points to the lowest advertised one-year fixed rate.
The calculator returns the maximum mortgage you can service at the test rate, the after-tax monthly income figure it derived, and the 6× DTI sanity check separately so you can see which ceiling is biting.
Why use it
The single biggest mistake first-home buyers make is shopping at the rate they want to pay. Banks shop at the rate they think you might have to pay, which moves the affordable price band by tens of thousands of dollars before you even start.
The DTI cap is the second surprise. A household with a $135,000 income and minimal other debts can service well over $700,000 at a 6% rate, but the Reserve Bank’s 6× rule caps owner-occupier lending at $810,000 anyway. For higher incomes that ceiling is rarely binding; for lower incomes it almost never is, since servicing kicks in first.
Running the numbers ahead of time means you walk into a bank meeting with a realistic target price already in mind, rather than spending weeks on listings the bank will not lend on.
The maths behind it
Max P = (Available monthly × ((1+r)n − 1)) ÷ (r × (1+r)n) Max principal P is the largest loan whose monthly repayment at the test rate r over a 30-year term n equals the available monthly figure (after-tax income minus living expenses minus other debt servicing). The calculator also runs the RBNZ debt-to-income sanity check at 6× gross household income for owner-occupiers; the binding cap is whichever is lower. The test rate is around 2.5 to 3 percentage points above the contract rate banks are advertising at any given time.
Worked example
Lana and James, both teachers in Lower Hutt, with combined household income of $135,000.
Lana and James jointly earn $135,000 gross. Their combined take-home (after PAYE and ACC) lands near $109,000 a year, or roughly $9,100 a month.
Their monthly living expenses run to about $4,200 (rent, groceries, power, daycare, transport), and they carry a $400-a-month car-loan repayment. That leaves around $4,500 a month available for a mortgage.
At an 8.50% bank stress-test rate over 30 years, $4,500 a month services a loan of about $585,000. The RBNZ’s 6× DTI cap on owner-occupier lending tops out at $810,000 (6 × $135,000).
The bank applies whichever ceiling is lower, so Lana and James’s realistic borrowing limit lands around $585,000. Their actual mortgage repayment at the bank’s contract rate (say 5.95%) would be closer to $3,485 a month, but the test rate is the figure servicing is measured against.
Things to keep in mind
- The test rate is a hurdle, not a payment. NZ banks assess servicing at a stress rate roughly 2.5 to 3 percentage points above the contract rate. The figure shown is what the bank tests; what you actually pay each fortnight uses the contract rate, not the test rate.
- <span class="term" tabindex="0" aria-describedby="term-tip-rbnz">RBNZ<span class="term__tip" role="tooltip" id="term-tip-rbnz"><strong>RBNZ</strong><span class="term__tip-def">Reserve Bank of New Zealand; sets the OCR, regulates banks, enforces LVR and DTI caps.</span><a href="/glossary/#rbnz" class="term__tip-link">View in glossary →</a></span></span> DTI restrictions. From 1 July 2024 the Reserve Bank caps high-DTI lending: banks can write no more than 20% of new owner-occupier loans above 6× DTI, or above 7× DTI for investors. The calculator uses the 6× owner-occupier figure as the sanity check.
- Living-expense estimates differ. Banks pull bank-statement and credit-card data to verify expenses; the figure you enter is your own estimate. If yours is materially below what the bank’s data shows, the bank uses its own number and the borrowing figure drops.
- Other debts count fully. Personal loans, hire purchases, BNPL repayments, student loan PAYE deductions, and credit-card minimums all reduce serviceable income. Even credit cards with a $0 balance reduce capacity by their assumed minimum repayment based on the card limit.
- <span class="term" tabindex="0" aria-describedby="term-tip-lvr">LVR<span class="term__tip" role="tooltip" id="term-tip-lvr"><strong>LVR</strong><span class="term__tip-def">Loan-to-Value Ratio; loan as a percentage of property value. RBNZ caps it at 80% for owner-occupiers.</span><a href="/glossary/#lvr" class="term__tip-link">View in glossary →</a></span></span> sets a separate ceiling. Servicing and DTI sit alongside loan-to-value caps. Owner-occupiers above 80% LVR face the low-equity premium and tighter scrutiny; the deposit calculator covers the LVR side.
NZ-specific notes
FAQs
Why is the bank’s test rate so much higher than the rate I would actually pay?
It is a serviceability hurdle, not a payment estimate. Banks check whether you could still afford repayments if rates rose meaningfully from where they are today. The Reserve Bank does not set the test rate directly, but each bank’s internal policy lands the rate roughly 2.5 to 3 percentage points above its current contract rates. Stress rates around 8.5% are common when contract rates sit near 6%.
How does the DTI rule actually work?
DTI is total loan as a multiple of gross household income. From 1 July 2024 the Reserve Bank caps the proportion of new lending banks can write above 6× DTI for owner-occupiers and 7× for investors. Each bank chooses how it allocates the 20% headroom; many banks reserve high-DTI capacity for very strong applicants.
Does the figure include a deposit?
No. The calculator returns the maximum you can borrow. Adding your deposit gives the maximum property purchase price. The deposit calculator handles the savings side.
Why does adding a $400/month car loan drop my borrowing by ~$50,000?
Each $1 of monthly debt servicing pulls roughly $130 of borrowing capacity at an 8.5% test rate over 30 years. Banks treat every committed monthly payment the same way: the dollar that goes to the car loan does not go to the mortgage repayment, and the calculator solves for the largest mortgage that fits the leftover.
How do banks treat KiwiSaver contributions?
Most banks deduct your employee KiwiSaver contribution from after-tax income before the servicing test, on the basis that it is a committed outgoing. A few banks add part of it back if you can show it as discretionary. Check the affordability assessment from the specific bank you are applying with.
Does the calculator handle joint applications?
Enter your combined gross household income, your combined monthly expenses, and your combined other debts. The calculator does not split contributions between borrowers; banks treat joint applications as a single income pool.
What if my income is variable (commission, bonus, contractor)?
Most banks use a two-year average for variable income, sometimes shading down by 20-30% for sustainability. Use a conservative annualised figure rather than a peak-year number to keep the calculator’s output close to what a bank will actually credit.
References & sources
- Reserve Bank of New Zealand, "Understanding debt-to-income (DTI) restrictions". rbnz.govt.nz
- Reserve Bank of New Zealand, "Loan-to-value ratio (LVR) restrictions". rbnz.govt.nz
- Reserve Bank of New Zealand, "Residential mortgage lending by debt-to-income (DTI) and purpose use (C40)". rbnz.govt.nz
- Inland Revenue, "Tax rates for individuals". ird.govt.nz