High-debt lending now capped

New debt-to-income (DTI) limits have taken effect as of 1 February, creating a guardrail around the riskiest home loans.

From this month, APRA, the banking regulator, will ensure that authorised deposit-taking institutions keep high-DTI loans to no more than 20% of their new mortgage lending in both owner-occupier and investor segments. A ‘high-DTI’ loan is one where your total debts are six times your annual income or more.

This isn’t a ban – but a cap. Lenders can still write high-DTI mortgages, just not above the set limit.

Where borrowers may feel the impact

These limits aim to contain emerging financial risks as housing credit and prices climb from already high levels. APRA has observed a modest rise in higher-geared lending, especially from investors, and wants to ensure vulnerabilities don’t build up across the system.

Limits like this don’t change your credit score or eligibility by themselves – but they can influence how lenders assess applications under different risk appetites.

If you’re planning a purchase this year, understanding how lenders assess your income and debt together can help you position your application for a more competitive outcome.