Briana McDonagh — Mortgage Adviser

DTI explained

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.

1What DTI actually is

Your total debt, measured against your income

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.

Total debt ÷ Gross annual income = DTI ratio

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.

2The current thresholds

Owner-occupiers and investors are treated differently

The Reserve Bank sets a different ceiling depending on whether you're buying to live in or buying to rent out.

Owner-occupier

6×

income

Investor

7×

income

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.

3What counts toward your debt

It's more than just the mortgage

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The new mortgage you're applying for

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Any existing mortgages on other properties

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Car loans and personal loans

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Credit card and overdraft limits, the full limit counts, not just what you owe

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Buy now, pay later balances

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.

4Exemptions worth knowing

Some lending sits outside DTI altogether

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New builds, including off the plan purchases and house and land packages

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Construction loans for building a new home

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Refinancing, as long as you're not increasing the loan amount

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Bridging finance and property remediation loans

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.

5Why this matters more for investors

It changes what "how much can I borrow" actually means

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.

Where this gets specific to you

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.

This is general information current as of 2026 and doesn't take the place of financial advice specific to your situation. Reserve Bank settings can change, and individual banks apply their own criteria on top of these rules.