How Much Can I Borrow? Demystifying Bank Calculations
Let’s be real - “How much can I borrow?” is the question every first home buyer in New Zealand asks first. (Usually right before: “How much do I actually need for a deposit?” and “Why does the bank need to know how much I spend on flat whites?” ☕)
Buying a home can feel like trying to solve a puzzle with half the pieces missing - except the puzzle is your finances, and the missing pieces are things like KiwiSaver, student loans, Netflix subscriptions, and how the bank’s calculator works.
So, let’s cut the jargon and get a bit of clarity from your friendly mortgage adviser (hi, that’s me 👋).
The Big Question: How Much Can I Borrow?
When you ask a bank or mortgage adviser “how much can I borrow,” what you’re really asking is: how much are the banks willing to lend me based on what I earn, spend, and save?
Each bank in New Zealand has its own secret recipe — but here’s the basic blend:
Income + Deposit – Expenses + Bank Risk Tolerance = Borrowing Power
Simple, right? Well, sort of. Let’s unpack each bit.
1️⃣ Income – Your Borrowing Superpower
Banks love consistency. They want to see steady, reliable income that shows you can comfortably repay your mortgage.
✅ Salary or wages: The easiest to calculate - the bank takes your gross annual income and applies their internal formulas.
✅ Self-employed? Generally, the banks want to see two year’s financials (sometimes we can provide less). Bonus points for tidy accounts.
✅ Side hustle income, or boarder or rental income? Great! It can count - but usually at a reduced rate (because banks assume a few quiet months).
Pro tip: Banks don’t care about your potential promotion next year - they assess right now. So, if you’re planning a pay rise, it won’t be included right now, but we can work out if you can still reach your goals on your current pay rate before you decide to put those dreams on hold.
2️⃣ Deposit – Your Ticket to the Game
Your deposit is what shows the bank you’re invested (literally). The bigger it is, the better your borrowing position.
Here’s what counts as a deposit in New Zealand:
💰 KiwiSaver funds (for first home buyers - huge help!)
💸 Cash savings
🎁 Gifts from family (make sure it’s a gift, not a loan - banks will ask)
🏡 Equity if you already own a property
Reality check:
20% deposit = standard home loan with better rates.
10–15% deposit = still possible! But it might come with a low-equity margin (fancy talk for slightly higher interest rates).
Pro tip: If you’re wondering how to make up your deposit, speak to a mortgage adviser early - it’s never “too soon.” I can help you create a plan that fits your situation and goals.
3️⃣ Expenses – The Part That Makes Everyone Sweat
Here’s the part that surprises most first home buyers: banks don’t just look at what you earn - they look at what you spend. However what they are most concerned about is what of your spending will continue once you have purchased your home. They’ll look at the ‘necessities’ as opposed to the ‘nice to haves’.
Think of necessities at:
Utility bills
Debt repayments
Groceries and transport
Childcare (if you have kids)
Rates and insurance for the home you wish to buy
Then, they apply their own “living cost” formulas based on your household size and location.
Pro tip: Don’t panic. Banks know everyone spends money. If your spending feels high, a mortgage adviser can show you what tweaks could help - sometimes small changes make a big difference to your “how much can I borrow” result.
4️⃣ Interest Rates – The Game Changer
When interest rates rise, borrowing power drops (because repayments cost more).
When rates fall, your borrowing power increases - meaning you can borrow more, and therefore have a higher purchase price.
Banks “stress test” your loan meaning they calculate your repayments as if rates were higher than they actually are (usually around 1.5-2% higher than actual rates). It’s their way of making sure you can handle bumps in the road.
5️⃣ Bank Risk Tolerance – The Secret Sauce
Every bank in New Zealand has a different risk appetite. Some are cautious, others are flexible, and this can change depending on the state of the market and forecasted trends.
That’s where working with a mortgage adviser makes a world of difference.
Instead of applying at one bank and crossing your fingers, I compare multiple lenders to find where you’ll qualify for the best outcome.
Translation: you’ll get the most out of your income and deposit.
So… How Much Can I Borrow?
Here’s a rough ballpark (because who doesn’t love numbers):
Let’s say you’re a first home buyer earning $90,000 per year with a $100,000 deposit. Depending on your expenses, a New Zealand bank might lend you between $550,000 and $700,000.
But there’s no “one size fits all.” Every borrower is unique - and that’s where I come in. My job is to crunch the numbers, check your affordability across lenders, and create a plan that fits you.
How to Boost Your Borrowing Power
If your “how much can I borrow” number isn’t where you want it, here’s how to nudge it higher:
💡 Pay down short-term debt – clear the credit cards or personal loans
💡 Reduce expenses – review recurring payments and subscriptions
💡 Increase income – second income or boarder income helps
💡 Grow your deposit – top up KiwiSaver or use savings windfalls
Small, smart moves now = a much stronger application later.
Why Talk to a Mortgage Adviser?
Because let’s face it - banks speak in formulas, but you need real-life answers.
As your mortgage adviser, I’ll:
Translate the bank jargon into plain English
Compare lending options across multiple banks
Help you understand what you can borrow right now
Create a plan if you’re not quite ready yet
And I’ll do it with a smile, zero judgment, and maybe a cheeky iced coffee in hand ☕😉
Bottom Line: Knowledge = Confidence
If you’re wondering how much you can borrow to buy a home in New Zealand — don’t guess.
Get the facts, make a plan, and take that first step. Whether you’re a first home buyer, an investor, or upsizing for more backyard space, I’m here to help you make it happen.
Ready to find out your number?
👉 Let’s chat — contact me today.
Jenna x