Most people work out their budget by looking at their income. Banks do it the other way round. They start with your income, take out tax, take out every commitment you already have, take out what they think your household costs to run, and lend against whatever survives. Then they stress the whole thing at an interest rate well above the one you would actually pay.
That last part catches nearly everyone. With one year fixed sitting around 4.79% (as at 31 August 2026), the bank is likely testing your ability to pay at roughly 7%. On a 600,000 dollar loan over 30 years that is the difference between about 3,144 dollars a month and about 3,992 dollars a month. You have to prove you could cover an extra 847 dollars a month, close to 200 dollars a week, that you will not actually be paying.
Base salary is straightforward. Overtime, commission, bonuses and shift allowances are not. Most lenders will only count a portion of variable income, and most want to see it for at least six to twelve months before they count it at all. Self-employed income is usually averaged over two years of financial statements, and the figure they use is the one after your accountant has finished reducing it.
Not what you pay. What you could be made to pay. A credit card with a 10,000 dollar limit and no balance still gets treated as a real monthly cost, usually around 3% of the limit, whether or not you ever use the card.
Student loans are the exception. They behave less like a debt and more like a tax: no interest while you live in New Zealand, and a fixed percentage of income above the threshold. A 2,000 dollar balance and a 16,000 dollar balance are treated almost identically by the servicing calculation, which is why paying a student loan down to improve your borrowing power is usually a poor trade against putting the same money in your deposit. Car loans, personal loans and hire purchase are the opposite, and clearing those genuinely moves the number.
Banks use a benchmark figure per adult and per child, then compare it against your last three months of bank statements. If your actual spending is higher than the benchmark, they use yours.
Dependants move this number more than most people expect. Every child adds a benchmark living cost to the assessment, before the lender looks at what you actually spend. A couple on the same income with three children will be assessed as being able to borrow meaningfully less than the same couple with none, and childcare costs sit on top of that again. Solo parents feel it hardest, because the benchmark for one adult plus children comes out of a single income. It is not a reason to expect a no, but it is the reason two households on identical salaries get very different answers.
This decides which lending bucket you fall into, not how much you can service.
| Deposit | What it usually means | Extra cost |
|---|---|---|
| 5% | Kāinga Ora First Home Loan through a participating lender, or a new build with a small number of banks | 1.2% premium on the loan amount, added to the loan |
| 10% | Possible with most main banks, but you are competing for a limited allocation | Low equity margin, commonly 0.25% to 1.20% on top of the rate depending on lender and LVR band |
| 15% | Easier again, and more lenders in play | Low equity margin, usually at the lower end of that 0.25% to 1.20% band |
| 20% | Standard lending, full rate card, most negotiating room | None |
The low equity margin is the bit people find out about late. A 10% deposit pre-approval priced at 6.79% is typically a 6.04% floating rate plus a 0.75% margin. That is normal, and it is not a mistake on the offer. It usually falls away once you are back under 80%, but you have to ask for it to be removed.
Couple, combined 145,000 dollars, 70,000 in KiwiSaver, 48,000 in savings, no debt, no children. Deposit of 118,000 buys at around 15% down for a 780,000 place. Servicing is comfortable at that income with no debt. Their real constraint is stock, not lending.
Single, 95,000 dollar income, 50,000 in KiwiSaver, no savings, 7,000 of debt. Deposit is 50,000, which is under 10% on most Wellington standalone houses. This is where a First Home Loan or a new build usually becomes the path, and where clearing that 7,000 makes a bigger difference than another six months of saving.
The question we get more than any other is some version of “we earn X, we have Y saved, what can we buy?” Nobody in New Zealand publishes a straight answer, so here is one. Treat it as a starting shape, not a number to make an offer on.
| Household income | No debt, no dependants | With a $400/month car loan | What limits it |
|---|---|---|---|
| $80,000 single | about $450,000 | about $390,000 | Servicing |
| $110,000 single | about $660,000 | about $640,000 | DTI cap, then servicing |
| $145,000 couple | about $780,000 | about $720,000 | Servicing |
| $180,000 couple | about $1,080,000 | about $1,020,000 | DTI cap |
How these were worked out, so you can argue with them. PAYE income after tax and ACC, less an indicative benchmark living cost ($1,650 a month for one adult, $2,750 for a couple), less the surplus buffer a lender wants left over. The remainder is capitalised at a 7% test rate over 30 years, then capped at a 6× debt-to-income ratio. Figures are rounded down. No dependants, no other debt, no student loan, and no allowance for the low equity margin if your deposit is under 20%.
This is a general illustration, not personalised financial advice and not a pre-approval. Every lender assesses income, living costs and debt differently, and the spread between the most and least generous main bank on the same application is regularly $100,000 or more. The only number that counts is the one a lender puts in writing for you.
Two things in that table are worth sitting with. At $80,000 the constraint is servicing, so clearing debt and cutting fixed costs moves your number. At $180,000 the constraint is the DTI cap, so no amount of frugality helps and the lever is income or deposit instead. Most people assume they are in the first situation when they are in the second, or the reverse.
Neither of those is your situation. Send us yours and we will run it across the panel before you apply anywhere.
Check what you could borrow →Online calculators run one lender’s model on the numbers you type in. They do not know that your overtime has been running eight months rather than fourteen, that your KiwiSaver has a first home withdrawal restriction on it, or that one lender counts boarder income and the next one does not.
The spread between the most and least generous main bank on the same application is regularly 100,000 dollars or more. That is not a rounding difference. It is the whole reason it is worth checking more than one lender before you decide what you can afford.
Our calculators are useful for a starting shape. They are not a substitute for someone checking your file against actual lender policy.
Anything on this page set by government or the regulator is described as a rule rather than a fixed number, because the numbers change. Check the current position at the source.
The full guide from first conversation to keys.
How lenders treat existing debt, and when rolling it into a mortgage helps.
What lenders accept as income when you do not have payslips.
What is possible at 5% and 10%, and what it costs.
Repayments, borrowing power and deposit.
Send us your income, your debts and what you have saved. We will tell you what the panel supports and which lender is likely to give you the most, before you apply anywhere.