Debt to income ratio

What Is a Debt to Income Ratio (DTI) and Why Does It Matter?

Your debt to income ratio (DTI) is your total debt divided by your total gross annual income. Lenders use it to limit how much they'll lend.

Since 1 February 2026, APRA limits banks to making no more than 20% of new owner-occupier loans and 20% of new investor loans at a DTI of six or more.

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How to calculate your DTI

Add up the limits on all your debts, including the new home loan you're applying for, then divide by your total gross (before tax) annual income.

For example, if you earn $80,000 a year and have a $6,000 credit card limit and a $400,000 home loan, your total debt is $406,000. Your DTI is $406,000 ÷ $80,000 = 5.075 (about 5.1), so your total debt is just over five times your gross annual income.

What counts

Debt: home loans (existing and new), car, personal and business loans, credit card and overdraft limits, HECS-HELP and buy now pay later accounts (lender policies vary)
Income: all household income, including PAYG and self-employed income, rental income, bonuses, commissions and government payments

Does DTI affect how much I can borrow?

Yes. Many lenders cap DTI, and some won't lend at all above a set level. Even if you can afford the repayments on paper, a high DTI can mean a smaller loan, a lower maximum LVR or a declined application. APRA's limit means lenders are making fewer high-DTI loans, so those loans are harder to get.

Are lenders flexible on DTI?

Some apply hard limits; others allow a little leeway with strong mitigating factors. We know how different lenders combine DTI with their income and security policies, so we can steer you to lenders that fit your situation. See the borrowing power calculator, how serviceability works and how HECS affects a home loan.

Frequently asked questions

Do credit card limits count even if I pay them off?

Yes. Lenders count the full limit, not the balance, because you could draw on it at any time. Reducing or closing unused cards is one of the quickest ways to lower your DTI.

How can I lower my DTI before applying?

Reduce credit card limits, pay off small loans, avoid new debt and, if possible, increase your deposit so you borrow less.

What DTI is considered high?

APRA treats a DTI of six or more as high. Since 1 February 2026, banks can make no more than 20% of their new owner-occupier and investor loans at that level.

Worried your DTI is too high?

We'll work out your DTI and find lenders whose limits suit you.

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