Debt-to-income ratio (DTI) has been around in lending for years, but it became headline news when APRA introduced a formal limit on high-DTI lending in February 2026. If you're a property investor or a high borrower, it's worth understanding.
What DTI means
Your DTI is your total debt divided by your gross annual income.
Total debt usually includes:
- Your proposed new home loan
- Existing home and investment loans
- Car and personal loans
- Credit card limits
- Sometimes HECS/HELP debt and BNPL, depending on the lender
Example: A couple earning $200,000 combined, buying with a $900,000 loan and with a $20,000 car loan and $10,000 in card limits, has total debt of $930,000. Their DTI is 4.65.
APRA's DTI limit
From February 2026, APRA limited banks so that loans with a DTI of 6 times or more can make up no more than 20% of each bank's new mortgage lending. The limit applies separately to owner-occupier and investor lending.
Some loans are exempt, including owner-occupier bridging loans and loans to purchase or construct new dwellings.
Who it affects
APRA said the limit is unlikely to restrict lending to owner-occupiers or first home buyers in the near term, because most have lower DTIs.
It's more relevant for:
- Investors with multiple properties
- High-income borrowers with large loans
- Borrowers with significant existing debts
If a bank is near its 20% limit, it may tighten its appetite for high-DTI loans, even if you'd otherwise qualify.
Many lenders already had DTI limits
Before APRA's limit, many lenders had internal DTI caps, often around 7 to 9 times income, and required extra checks above 6. The APRA limit adds a portfolio-level cap on top.
How to work out your DTI
- Add up all your debts, including credit card limits.
- Add your proposed new loan.
- Divide by your gross annual income.
If the result is close to 6 or above, it's worth talking to a broker about which lenders have capacity.
How to lower your DTI
- Reduce credit card limits. A $20,000 limit counts as $20,000 of debt.
- Pay off car or personal loans.
- Use a larger deposit to reduce the new loan.
- Include all eligible income, like rental income or regular overtime.
- Consider a new build if investing, since new dwelling loans are exempt from the APRA limit.
Non-bank lenders
APRA's DTI limit applies to authorised deposit-taking institutions (banks, credit unions and building societies). Non-bank lenders aren't subject to the same limit, though they apply their own responsible lending checks. For some borrowers, they may offer more room, usually at a higher rate.
Frequently asked questions
Is a DTI over 6 automatically declined?
No. Banks can still lend above 6 within their 20% allowance, and non-banks aren't bound by the APRA limit.
Does DTI affect my interest rate?
Not directly, but some lenders price high-DTI loans differently.
Are first home buyers affected?
Rarely. Most first home buyers have DTIs well under 6.
High DTI or a growing portfolio? Call Finfident on 0424 545 654. We'll find lenders with room for your application.
This article is general information only and doesn't take into account your objectives, financial situation or needs. Figures, rates and scheme rules are current as at October 2026 and can change. Finfident Finance Brokers (ABN 94 679 280 801) is Credit Representative 569374 of Outsource Financial Pty Ltd (ACN 131 090 705), Australian Credit Licence 384324.