It is not a simple salary multiple
Online borrowing figures are often quoted as a multiple of income, but that is not how lenders actually assess you. A bank weighs your income against your regular spending, your existing debts, your credit card and buy-now-pay-later limits, and your dependants before it arrives at a figure.
That is why two people on the same salary can be offered very different amounts. Your expenses and commitments determine how much of your income is genuinely free to carry a mortgage repayment — and any calculator, including a bank's own, is only an estimate until a full assessment is done.
The test rate trims what a salary can support
Lenders do not test your affordability at the advertised rate you would actually pay. They use a higher internal servicing or stress-test rate, so they can be satisfied you would still keep meeting the repayments if interest rates rose.
Each lender sets and reviews its own test rate, and the figure differs between banks and moves over time. The effect is consistent, though: the same salary supports a smaller loan at the test rate than at the advertised rate, which is why an approved figure can come in lower than the online rule of thumb suggested.
Source: interest.co.nz: how New Zealand banks set their serviceability test rates
Debt-to-income limits also apply
The Reserve Bank sets debt-to-income (DTI) restrictions on bank home lending. Your DTI is your total debt — including the mortgage you are applying for — divided by your gross (before-tax) income. As a simple example, someone earning $100,000 with $500,000 of total debt has a DTI of 5.
The restrictions limit the share of new lending banks can provide to borrowers whose debt is already high relative to their income, so very high DTI borrowing is only possible within a capped share of each bank's new lending. Banks also run their own affordability assessments on top of the DTI rules.
Source: Reserve Bank of New Zealand: debt-to-income restrictions explained; BNZ: understanding debt-to-income ratios
Your deposit sets the other cap
Affordability is not the only limit. The loan-to-value ratio — the size of the loan compared with the property's value — is set by your deposit, and the Reserve Bank restricts how much high-LVR (low-deposit) lending banks can do.
So even on a strong salary, a small deposit can constrain the property price you can reach, because the loan amount still has to fit within the lending limits that apply to your LVR. Both caps matter: one comes from your income, the other from your deposit.
Source: Reserve Bank of New Zealand: loan-to-value ratio restrictions
Common questions
I earn $120k — what can I borrow?
There is no single answer, because the figure depends on your full household circumstances: whether you apply alone or with a partner, your regular spending, existing debts and credit card limits, dependants and your deposit. Any specific number quoted online would be a guess. The free borrowing check on this site (Start the borrowing check, above) applies these tests to your own details and shows your indicative borrowing power in a few minutes — an estimate, not pre-approval.
Does a higher salary always mean a bigger loan?
Usually, but not automatically. A pay rise increases the income the lender tests against, yet the result still depends on what is left after your spending, debts and dependants. Someone earning less with low outgoings can be assessed as able to carry a similar repayment to someone earning more with heavy commitments.
Why did a bank offer me less than an online calculator?
Calculators make assumptions. Banks assess at their own servicing test rate, apply their own living-cost allowances, count credit card limits rather than balances, and apply Reserve Bank DTI and LVR limits. If a lender's offer differs from an estimate, it is usually because of one of those settings rather than an error.