LVR and DTI RESTRICTIONS NZ: WHAT PROPERTY INVESTORS NEED TO KNOW

LVR(opens in new tab) and DTI restrictions(opens in new tab) NZ banks operate under decide two separate questions for every property investor: how big a deposit you need, and how much you can actually borrow against your income. Both rules apply at the same time, and for investors, the tighter one usually wins. This guide sets out exactly where both settings stand today, and how they interact. We also cover what they mean in practice if you’re planning your next purchase.

30-Second Read

• LVR (loan-to-value ratio) rules set minimum deposit requirements. Investors generally need a 30% deposit for an existing property; owner-occupiers generally need 20%.
• DTI (debt-to-income) rules cap how much you can borrow against your income. Investors are capped at 7 times gross income; owner-occupiers at 6 times.
• Both rules apply simultaneously. Whichever one produces the lower borrowing amount is the one that actually limits you.
• New builds are exempt from both LVR and DTI speed limits, for owner-occupiers and investors alike.
• DTI restrictions only apply to registered banks. Non-bank lenders aren’t bound by them, though they typically charge higher rates.

We work through both rules in detail, how they interact, two worked examples, and a checklist for your next purchase.

 

What Is LVR?

Loan-to-value ratio, or LVR, measures your mortgage as a percentage of the property’s value. Borrow $600,000 against an $800,000 property, and your LVR is 75%. The Reserve Bank sets LVR restrictions as a “speed limit” on how much high-LVR lending banks can do. It isn’t a blanket ban on low-deposit borrowing — just a cap on what share of a bank’s new lending can sit above the threshold.

Current LVR Rules

Since 1 December 2025, and confirmed unchanged in the Reserve Bank’s August 2026 review, the settings are:

• Owner-occupiers: banks can lend up to 25% of new owner-occupier lending above 80% LVR — meaning less than a 20% deposit.
• Investors: banks can lend up to 10% of new investor lending above 70% LVR. That means less than a 30% deposit.

In practice, most owner-occupiers need at least a 20% deposit. Most investors need at least 30%. Banks do have some room to lend outside those thresholds, but they ration it carefully. A low-deposit application can get harder to place late in a bank’s lending period, even if your income looks fine on paper.

New builds are exempt from LVR speed limits entirely, for both owner-occupiers and investors. This exemption exists specifically so LVR restrictions don’t discourage new housing supply.

What Is DTI?

Debt-to-income, or DTI, measures your total debt — including the new mortgage — against your gross annual income. DTI restrictions came into effect on 1 July 2024(opens in new tab), alongside the LVR easing that happened at the same time. LVR limits how big a mortgage you can take relative to the property’s value. DTI limits it relative to what you earn instead.

Current DTI Rules

The Reserve Bank reviewed DTI settings in October 2025 and kept them unchanged:

• Owner-occupiers: capped at 6 times gross annual income.
• Investors: capped at 7 times gross annual income.

Both come with a 20% speed limit allowance. Banks can lend above the cap for up to 20% of their new lending in each category. That allowance isn’t a guarantee for any individual borrower. It gives banks room to approve strong applications case by case. Availability shifts depending on how much of that allowance a bank has already used.

Construction loans and new builds are exempt from DTI restrictions too, mirroring the LVR exemption.

One detail that catches investors specifically: DTI counts your total debt, not just the new loan. Existing mortgages on other rental properties, personal loans, car finance, and student loans all add to the total. An investor with several properties can hit the DTI ceiling well before they’d hit any LVR constraint.

How LVR and DTI Work Together

You need to satisfy both rules, not just one. For borrowers with a smaller deposit, LVR is usually the binding constraint. For borrowers with plenty of equity but high existing debt, DTI often becomes the tighter limit instead.

Say your deposit clears the LVR threshold comfortably. Your income and existing debts, though, mean a DTI-capped loan comes in smaller than what the LVR rule alone would allow. The bank lends you the smaller of the two figures. This is exactly the situation many established property investors find themselves in. Plenty of equity across a portfolio, but DTI increasingly becomes the ceiling as each additional property adds more debt against the same income.

A Brief History

LVR restrictions date back to October 2013, when the Reserve Bank first restricted high-LVR lending to cool a fast-rising housing market. Settings have tightened and loosened repeatedly since. They were removed entirely for a year during the early COVID-19 response, then reinstated and progressively tightened through 2021, before easing again from 2023 onward.

DTI restrictions are much newer. The Reserve Bank had signalled them for years. It only activated them from 1 July 2024, deliberately timed alongside an LVR easing rather than stacking two tightening moves on top of each other.

What This Means for Property Investors

The 30% deposit and 7x income cap sit noticeably tighter than the settings owner-occupiers face — 20% deposit and 6x income. That gap is deliberate. The Reserve Bank treats investment lending as higher risk in a downturn. Investors are statistically more likely to sell, or be forced to sell, than an owner-occupier with a strong incentive to hold on through a rough patch.

For an investor building a portfolio, DTI tends to bite harder than LVR over time. Each new property adds debt to the DTI calculation. That’s true even if the equity position across the whole portfolio still looks comfortable. Rental income does help — it offsets some of the servicing burden. That’s part of why investors get a higher multiple (7x) than owner-occupiers (6x) in the first place. It doesn’t remove the constraint entirely, though.

Non-Bank Lenders: A Different Pathway

DTI restrictions apply specifically to registered banks regulated by the Reserve Bank. Non-bank lenders — names like Resimac, Bluestone, and Liberty — aren’t bound by the same DTI cap. That can offer a path forward for a borrower who can genuinely service a loan, but doesn’t fit within a bank’s DTI ceiling. It usually comes at a cost, though: non-bank lending typically carries a higher interest rate than an equivalent bank loan.

Worked Examples

Lara buys her first rental with a 32% deposit. Priya has more than enough deposit to clear the 30% LVR threshold for investors. Her income, though, is modest, and she already has a mortgage on her own home. Once the bank adds her existing mortgage to her new rental lending, it compares the total against her gross income. She comes in at a DTI of 7.4 — just above the 7x investor cap. Her deposit alone doesn’t get her across the line. She either needs to borrow less, or pay down existing debt first. Or she could find a bank with remaining headroom in its 20% speed limit allowance.

George buys a new build with a 15% deposit. Daniel’s purchase qualifies as a new build, so both the LVR and DTI speed limits don’t apply to his loan. His deposit sits below the standard 30% investor threshold. His income wouldn’t otherwise support the loan size under the standard 7x DTI cap, either. The new-build exemption removes both constraints for this specific purchase. That’s exactly the outcome the exemption is designed to encourage.

Checklist Before You Apply

• ✅ Confirm your deposit against the current LVR threshold — generally 30% for an existing property, 20% for owner-occupiers
• ✅ Add up your total existing debt, not just the new loan, before estimating your DTI position
• ✅ Check whether your purchase qualifies as a new build, which exempts you from both LVR and DTI speed limits
• ✅ Remember rental income offsets some, but not all, of your DTI calculation
• ✅ If you’re near either threshold, ask your bank about their current speed limit headroom before committing to a purchase
• ✅ Consider a non-bank lender if you can service the loan but don’t fit within DTI, understanding the likely rate trade-off

Common Questions

Do LVR and DTI apply to refinancing, not just new purchases? DTI restrictions generally apply to new lending, including increasing an existing loan, releasing equity, or consolidating debt — but not to a same-balance refinance in most cases. Confirm the specifics with your lender.

Does rental income help with my DTI calculation? Yes. Banks generally factor in rental income when assessing an investor’s DTI position, which is part of why investors get a higher multiple than owner-occupiers. It offsets some of the debt burden, but doesn’t eliminate the cap.

Can I still get a loan above the LVR or DTI thresholds? Sometimes, within a bank’s speed limit allowance. It isn’t guaranteed for any individual borrower, though, and depends on the bank’s remaining headroom at the time you apply.

Do these restrictions apply to all lenders? LVR restrictions and DTI restrictions both apply to registered banks. Non-bank lenders aren’t bound by the DTI cap specifically, though most still apply their own lending criteria.

Summary

LVR and DTI restrictions NZ investors face today work together, not separately: a 30% deposit under LVR, and a 7-times-income cap under DTI, with whichever rule bites hardest actually deciding your borrowing power. New builds sidestep both. Existing-property investors, especially those building a multi-property portfolio, tend to find DTI becomes the tighter constraint over time — even with strong equity. Both settings have shifted before and will likely shift again — the Reserve Bank reviews them periodically. It’s worth checking current settings before you commit to a purchase, rather than assuming last year’s rules still apply.

Talk to EpsomTax.com Before Your Next Purchase

Getting your finance position right before you make an offer saves a lot of stress — and sometimes a lost deposit — compared to finding out about a DTI or LVR constraint partway through a purchase.

Contact EpsomTax.com to talk through how these restrictions apply to your situation, especially if you’re weighing up your next purchase against an existing portfolio. We work with New Zealand property investors every day. We can help you understand your borrowing position before you start looking.