How Much Can I Borrow for a Mortgage in NZ? Income Limits and Lender Secrets

• by Corbin Fairweather
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Picture this: you’re watching a house auction, and the auctioneer rattles off numbers that sound like Monopoly money. Someone nabs a four-bedroom in Mount Eden for $1.6 million. You stare at your phone calculator, trying to figure out if your own payslip would get you anywhere close. Mortgage borrowing in New Zealand feels like some kind of witchcraft. But it isn’t. Behind the bank-speak, there’s logic you can follow—if you know where to look.

What Lenders Really Look For (It’s More Than Just Your Paycheck)

This will shock some people: your salary isn’t the be-all and end-all for home loan approval in NZ. Yes, the banks glance at your income first. But anyone who thinks that’s the whole story hasn’t read through a lender’s 17-page checklist. Income is the launchpad, but before they type anything into their calculators, banks go three rounds on your living expenses, debts, and even your Netflix subscription—seriously, these things count. Plenty of Kiwis earning $100k+ get denied their ‘dream’ home simply because their other outgoings gobble up what looks like a healthy salary.

The general rule of thumb? Most New Zealand lenders let you borrow up to about 5 to 6 times your gross annual income. If you’re earning $90,000 a year, you might get an upper limit of $540k. But that’s just the ballpark. Some lenders get more adventurous, stretching to 7x for squeaky clean applicants with no kids and no debt. Others pull back to 4x if you’ve got loans, a young family, or uncertain job history. The absolute number depends on how much they think you can chuck at home loan repayments after covering real life. That’s why a $90k household with zero kids and no car loan will get a way bigger limit than a $90k household with two toddlers in daycare and a new SUV.

Fun fact: Stuff published data in April 2025 showing that as of this year, the average first home buyer in Auckland needed to show combined income of $140,000 to have a fair shot at houses in the $900k-$1m bracket—even when pooling salaries. But you also need to show where your deposit came from (hello, mum and dad?), and commit to an intense budget reality check.

Slicing the Pie: How Income and Expenses Shape Your Borrowing Number

The amount you can borrow is heavily shaped by what banks call your ‘serviceability’. Think of it as their way of asking: can you honestly pay back a whopper mortgage once life’s little costs hit? Instead of just plugging your salary into their calculators, they’ll run through a full financial health audit. Gone are the days they’d just make assumptions about your costs based on national averages. In 2024, most major banks kicked off ‘line by line’ expense reviews. That means they’ll ask for three to six months’ bank statements and go through them with a highlighter, drawing circles around gym fees, UberEats orders, AfterPay, and even your Lotto habit.

Let’s get nitty-gritty. Here’s what they look at:

• Debt repayments (credit cards—even if you don’t use them, car loans, buy now pay later)
• Children and family costs (daycare, child support, school fees)
• Insurance payments (health, car, life, pets)
• Subscriptions and memberships (yes, Netflix counts!)
• Regular living costs (food, transport, power, internet, clothing, entertainment)

Now, here’s the twist: Lenders ‘stress test’ your budget as if mortgage rates shoot to 8-9%, even when the real rates are lower. Why? So if rates go up, you don’t default after two years. If you scrape by at 5.9% (today’s average fixed rate, according to NZ Reserve Bank data for July 2025), they want to know you'll survive at much higher rates. A few bucks shaved here can bump up your borrowing by thousands.

Look at this table below for a real example. Say, you and your partner both earn $60k (so $120k combined), with $20k deposit and no debt. Here’s how your serviceability—and borrowing power—might play out at different scenarios.

That drop is brutal. One car lease too many, or extra childcare, and suddenly you’re $200k lower. The upshot? Before you scan Trade Me’s listings, do a real audit of your expenses—and, if needed, start cutting them months ahead if planning to apply.

Deposit Size, KiwiSaver, and the Low-Deposit Trap

People get tripped up thinking borrowing power is 90% about income. But the size of your deposit is a huge deal, too. Most big banks want you to have a 20% deposit saved up, which in Auckland could easily mean $160,000 for an $800,000 home. Yes, ouch. But first home buyers often use KiwiSaver lump sums, government grants (like the First Home Grant, capped at $10k per person in 2025), or help from family to bulk up their deposit.

Here’s where a twist sneaks in: If you try for a home loan with less than 20% deposit (so-called 'high LVR' lending), banks get twitchy. You might cop higher interest rates, extra fees, or a flat-out no from some lenders. Back in May 2025, only 15% of new owner-occupier loans were given to buyers with less than 20% deposit, according to Reserve Bank stats. And those approvals usually go to people with rock-solid incomes and no other debts. Some second-tier lenders and non-bank outfits (like Resimac or Bluestone) fill in for tougher cases, but you’ll often pay higher rates or need to jump through extra hoops.

One more pitfall: If you get money from parents (the so-called ‘bank of mum and dad’), banks still want a clear paper trail. No under-the-table deals. They want letters declaring it a non-repayable gift, not a loan, or they’ll deduct it from your borrowing power.

For most, every $10,000 you can add to your deposit shaves hundreds off your repayments and boosts your chances with mainstream lenders.

Boosting Your Borrowing Power: Tips, Tricks, and Common Pitfalls

Let’s cut to it—everyone who’s looked at houses in 2025 wants to know how to squeeze out a little more borrowing power. There are some tricks you can pull that actually work.

• Trim your debts: Even unused credit cards with high limits can smash your borrowing potential. Lower your card limits or ditch cards entirely before you apply.
• Review your living expenses for patterns. Are you spending $300 a month on takeaways or subscriptions? Cutting this for three months pre-application has a real impact.
• Consolidate loans. Multiple small debts (car loan, personal loan, BNPL) can erode your max loan far more than a single, lower-interest loan with the same total balance.
• If you have kids, track every regular expense. Some get overlooked but show up in the bank statement check.
• Build your deposit with every advantage: tap into KiwiSaver for the max allowed, apply for the First Home Grant if eligible, and if you’re tapping family, get the paperwork right.
• Compare lenders. While most banks play by similar rules, non-bank lenders might squeeze more from your income (at a price). But read the fine print—sometimes an extra $25,000 is not worth higher fees or rates.
• Self-employed? You’ll need to show two years of steady income, business accounts, and maybe GST returns. Don’t fudge the numbers—a lender will check.

Stuff ran a poll this year asking first-home buyers what they wish they’d known before applying. Most common answer? That lenders look at account conduct—so multiple dishonours, overdrafts, or even gambling can torpedo an application. Run your accounts clean for at least three months before applying.

Here’s another non-obvious trap—getting ‘pre-approval’ from a major bank then making a high offer at auction. Pre-approval isn’t set in stone. If anything changes (big expense, new loan, income drop) before settlement, banks can (and will) withdraw the offer. Don’t risk it.

If you want to get precise about your numbers, try this rule of thumb used by several major brokers in Auckland: Work out your after-tax income. Deduct monthly fixed bills (schools, insurance, regular costs). Assume repayments should be no more than 30-35% of household take-home pay, at 7-8% interest. Plug the leftover figure into any major bank’s online mortgage calculator, and see the borrowing power. Not happy with it? Now you know what to cut.

Getting approved for a mortgage in NZ can feel like you’re running a financial obstacle course. But once you know how banks think—looking well beyond your salary—you’ll figure out the moves you need to get that borrowing number working in your favour. The best part? These are changes you can start today, before you even set foot in another open home.