Two Reserve Bank rules shape how much you can borrow. They measure different things, and whichever bites first is the one that limits you.
LVR: how much deposit you need
Loan-to-value ratio compares your loan to the property's value. A $640,000 loan on an $800,000 house is an 80% LVR — a 20% deposit. Banks may write up to 25% of their new owner-occupier lending above 80% LVR, and up to 10% of new investor lending above 70% LVR. Both limits were eased from 20% and 5% on 1 December 2025.
So lending with a smaller deposit isn't forbidden — it's rationed. That's why low-deposit approvals can be slower, more conditional and often carry a low-equity premium. New builds and Kāinga Ora First Home Loans are exempt from LVR restrictions entirely.
DTI: how much debt your income supports
Debt-to-income restrictions have applied since 1 July 2024. Owner-occupiers are generally capped at 6 times gross income, investors at 7 times, with banks able to write 20% of new lending above the threshold.
The critical detail is what counts as debt: all of it. Your mortgage, car loan, personal loans, hire purchase, your student loan balance — and your credit card limits.
Why your unused credit card limit costs you
Banks count the full limit on your credit cards, not the balance. A $10,000 limit you never touch is treated as $10,000 of debt because you could draw it tomorrow. On a 6× DTI that limit can reduce your borrowing capacity by $10,000 directly — so reducing or closing unused cards before applying is one of the few genuinely quick ways to improve your position.
Serviceability: the test that usually binds first
Separately from the regulatory caps, banks test whether you could still afford repayments if rates rose. They apply a servicing rate well above carded rates — a buffer of roughly 2 to 2.5 percentage points, which put test rates around 6.4–7.0% in mid-2026. For most borrowers, serviceability rather than the DTI cap is what actually sets the limit.
Exemptions worth knowing
- Kāinga Ora First Home Loans are exempt from both LVR and DTI restrictions
- New builds and construction lending are exempt
- Refinancing without increasing the loan, portability, bridging and remediation are exempt