The four things that set your borrowing limit
Every main bank in New Zealand runs a version of the same assessment. The inputs change from lender to lender, but the structure does not.
- Assessable income — salary, wages, and a discounted portion of overtime, bonuses, commission, rental and self-employed income.
- Living costs — a household expense figure, floored at the bank's own minimum benchmark even if you genuinely spend less.
- Existing commitments — personal loans, car finance, buy-now-pay-later, student loan repayments and a percentage of every credit card limit, used or not.
- Deposit and LVR — how much you have contributed decides the maximum loan against the property value.
Why banks use a test rate, not the advertised rate
Lenders assess your repayments at a servicing test rate that sits several percentage points above current fixed rates. It is a buffer: if rates rise during your loan, you should still be able to pay.
This is the single biggest reason people are surprised by their assessed borrowing power. A loan that feels comfortable at today's rate can fail servicing when it is tested at a much higher one. Our calculator applies a test rate in line with current main-bank practice rather than the rate you would be offered.
How your deposit changes the answer
Deposit works two ways. It reduces the amount you need to borrow, and it decides which lending tier you fall into. With less than a 20 percent deposit you are in low-equity territory, which usually means a low-equity margin or fee, a smaller pool of lenders, and tighter assessment.
Banks operate under Reserve Bank loan-to-value restrictions that limit how much low-deposit lending they can write, so low-deposit applications compete for a restricted allocation.
Commitments that quietly reduce your limit
A $10,000 credit card limit you never use is still assessed as a commitment, typically at around three percent of the limit per month. Closing or reducing unused facilities before you apply is one of the fastest ways to lift borrowing power.
Buy-now-pay-later accounts, vehicle finance and undrawn overdrafts are treated the same way. Student loan repayments are assessed as an ongoing deduction while a balance remains.
What an estimate can and cannot tell you
An online estimate models the mechanics. It cannot see your bank statements, your credit file, the structure of your self-employed income, or a particular lender's appetite for your situation on the day you apply.
Treat the range as a planning tool. A licensed adviser can compare your position across lenders, because the same application can produce materially different answers at different banks.
Common questions
How much can I borrow on a $100,000 income in New Zealand?
As a rough guide, a single applicant earning $100,000 with no debts, a 20 percent deposit and average living costs is often assessed in the region of five to six times income. The exact figure depends on the lender's test rate, its living-cost benchmark and your commitments, so the realistic answer is a range rather than a number.
Does a bigger deposit increase how much I can borrow?
It increases how much you can spend and improves your terms, but income servicing still caps the loan itself. A large deposit with limited income will be capped by servicing; strong income with a small deposit will be capped by loan-to-value limits.
Do banks count all of my income?
No. Base salary is usually taken in full, while overtime, bonuses, commission and rental income are typically discounted, often to between 70 and 80 percent, and usually need a two-year history.
Will checking my borrowing power affect my credit score?
No. Estimating your borrowing power involves no credit enquiry. Only a formal application to a lender creates a credit check.