Financial Glossary
Debt-to-Income (DTI) Ratio
The debt-to-income (DTI) ratio is the percentage of your gross monthly income that goes toward debt payments, including mortgages, credit cards, student loans, auto loans, and other debts. Lenders use DTI to assess your ability to manage monthly payments and repay borrowed money. A lower DTI indicates better financial health.
Example
If your gross monthly income is $6,000 and your total monthly debt payments are $2,100 (mortgage: $1,500, car loan: $400, credit cards: $200), your DTI ratio is 35%. Most lenders prefer DTI ratios below 43% for mortgage approval, and below 36% for optimal rates.
Frequently Asked Questions
What is a good debt-to-income ratio?
A DTI ratio below 36% is considered good, with no more than 28% going toward housing costs. Ratios between 36% and 43% may still qualify for loans but with less favorable terms. Above 43%, mortgage approval becomes difficult.
How can I improve my DTI ratio?
Pay down existing debts, increase your income, avoid taking on new debt before applying for a mortgage, and consider consolidating high-interest debts. Our mortgage calculator can help you determine an affordable home price based on your DTI.
Related Resources
Official Sources
New Zealand calculators use data from the following official government agencies:
- Inland Revenue (IRD) — Income tax brackets, KiwiSaver rules, and ACC levies.
- Stats NZ — Wage data, employment statistics, and cost of living indices.
- Reserve Bank of New Zealand (RBNZ) — Official cash rate and monetary policy data.
Methodology
Our New Zealand calculators follow tax brackets, KiwiSaver contribution rates, and ACC levies published by Inland Revenue (IRD). Economic data is sourced from Stats NZ. Mortgage calculations use RBNZ official cash rate and market averages. All figures are for educational purposes.
Data Sources
All tax brackets, contribution rates, and economic data used in our calculators are sourced from the official government publications listed above. Rates are updated at least annually to reflect the latest tax year and regulatory changes. Users should verify critical figures with official sources or qualified professionals.
Last updated: June 2026. Information may change; always verify with official sources.
Last Updated: June 2026 — Reviewed Against Official Sources