Debt to income restrictions are one of the biggest factors in how much you can borrow right now, and most people have never heard of them. Here's what they mean for you.
DTI stands for debt to income. It's a rule the Reserve Bank introduced in July 2024 that limits how much banks can lend you, based on how that lending compares to your gross annual income, not just the deposit you've saved or the property you want.
If your household earns $150,000 before tax and your total debt (including the new loan) is $750,000, your DTI ratio is 5. Simple as that, it's just a multiple of your income.
The Reserve Bank sets a different ceiling depending on whether you're buying to live in or buying to rent out.
These aren't hard, absolute cut offs. Banks are allowed to lend above these thresholds for a small portion of their total lending (a "speed limit" of around 20%), but in practice most banks reserve that room for borrowers with strong compensating factors like a large deposit or very stable income. For most people, treating 6 and 7 as the real ceiling is the safer assumption.
That credit card limit point catches people out the most. A card with a $15,000 limit counts as $15,000 of debt in this calculation, even if you pay it off in full every month and owe nothing on it.
If you're an investor sitting close to the 7× threshold, a new build can be a genuinely useful way through, since it isn't measured against the DTI cap at all.
Before DTI came in, your borrowing power was mostly about serviceability, whether your income could cover the repayments, and your deposit. Now there's a third ceiling sitting alongside those, and for investors building a portfolio, it's often the one that bites first.
Every property you already own, and its existing mortgage, adds to your total debt figure. Rental income from the property you're buying does get counted toward your income, which helps. But as a portfolio grows, the debt side tends to grow faster than the income side, and DTI becomes the thing that decides whether the next purchase is possible, more than your deposit does.
DTI, LVR, and serviceability all apply at the same time, and whichever one produces the lowest number is the one that actually limits you. Working out where you sit, and whether an exemption like a new build could change the picture, is exactly the kind of thing worth talking through properly rather than estimating from a guide. Get in touch and we can run your actual numbers.