Debt To Income Ratio Calculator NZ

DTI Formula:

\[ DTI = \frac{Debt}{Income} \times 100 \]

Debt To Income Ratio (%):

Definition: DTI is a personal finance measure that compares an individual's monthly debt payments to their monthly gross income.

Purpose: Lenders in New Zealand use DTI to assess a borrower's ability to manage monthly payments and repay debts.

The calculator uses the formula:

\[ DTI = \frac{Debt}{Income} \times 100 \]

Where:

Explanation: The ratio shows what percentage of your income goes toward debt payments each month.

Details: Many NZ lenders prefer a DTI below 40%, with some banks having stricter limits. A lower DTI improves loan approval chances.

Tips: Include all monthly debt obligations (mortgage, loans, credit cards) and gross income (before tax) from all sources.

Q1: What's a good DTI ratio in NZ?
A: Generally under 40% is acceptable, under 30% is good, and under 20% is excellent for most lenders.

Q2: Does DTI include living expenses?
A: No, DTI only includes debt obligations, not expenses like groceries or utilities.

Q3: How do NZ banks use DTI?
A: Banks use DTI to assess loan serviceability and set borrowing limits under responsible lending laws.

Q4: What if my DTI is too high?
A: Consider paying down debts, increasing income, or reducing new debt applications to improve your ratio.

Q5: Does DTI affect mortgage applications?
A: Yes, DTI is a key factor in NZ mortgage approvals alongside credit score and deposit amount.