APRA Debt-to-Income Limits on Home Loans 2026

APRA’s debt-to-income limits on home loans allow banks to fund some loans at six times income or above, within separate 20% lending limits. The Australian Prudential Regulation Authority (APRA) introduced the limits on 1 February 2026 for owner-occupier and investor lending. Six times income is a high-debt classification, not an automatic rejection for each borrower.

Debt-to-income (DTI) compares total debt with annual gross income. A broker needs both that ratio and a separate repayment assessment before deciding which lender fits a highly leveraged client.

Calculate DTI From Complete Debts

Calculate DTI by dividing the borrowers’ total reportable debt by their verified annual income before tax. Use the proposed loan and retained debts across all lenders.

APRA’s current reporting standard, applicable from the September 2025 reporting quarter, uses credit limits and income before servicing discounts. Compulsory superannuation is excluded from income. Mortgage debt is measured gross of offset balances, and revolving facilities use their limits.

Include personal loans, credit cards and consumer finance, plus margin lending and buy now pay later debt. Higher Education Loan Program (HELP) debt is excluded. APRA changed that treatment in 2025, so older calculations that add HELP balances don’t match the current regulatory measure.

A Fictional Joint Application

Alex and Jo apply together for an $850,000 owner-occupied loan. They retain a jointly held investment mortgage and have these verified inputs. All figures are Australian dollars, and the existing term debts have no redraw available.

Input	Amount	DTI treatment
Alex’s gross salary, excluding compulsory superannuation	$120,000 a year	Income
Jo’s gross salary, excluding compulsory superannuation	$80,000 a year	Income
Verified gross rent from their retained investment property	$20,000 a year	Income before servicing discounts
Proposed home loan	$850,000	Debt
Retained joint investment mortgage	$450,000	Debt, counted once across this joint application
Jo’s personal loan	$20,000	Debt
Alex’s credit card, with a $2,000 balance	$15,000 limit	Debt at the limit
Jo’s credit card, with a $0 balance	$10,000 limit	Debt at the limit
Buy now pay later facility	$5,000 limit	Debt
Alex’s HELP balance	$30,000	Excluded from regulatory DTI

Total debt is $1,350,000. Gross annual income is $220,000. Divide $1,350,000 by $220,000 to get a DTI of about 6.14 times.

The joint mortgage is one $450,000 facility. Adding it once under Alex and again under Jo would wrongly increase this example’s debt to $1,800,000 and DTI to 8.18. If a borrower shares debt with someone outside the application, establish that liability and the lender’s treatment before using an apportioned figure.

Limits and Annual Income Can Move the Result

Paying both credit cards down to zero leaves the $25,000 of limits in this calculation. Closing those facilities reduces total debt to $1,325,000, giving a DTI of about 6.02. Even after those closures, this example remains in the six-times-or-above category.

Reducing the proposed loan by another $10,000 brings total debt to $1,315,000 and DTI to about 5.98. Exactly six times still counts as high DTI. Keep the unrounded calculation when classifying a borderline file.

Match each income period to a year. A verified ongoing gross wage of $2,000 a fortnight annualises to $52,000 over 26 fortnights. Treating it as twice-monthly pay would produce $48,000 and overstate DTI.

Annualisation must reflect verified ongoing income. A short period with unusually high overtime doesn’t establish a full year’s earnings at that level. If a lender uses shaded income or different debt inputs for an internal DTI test, label that calculation separately from regulatory DTI.

Apply the High-DTI Limit

From 1 February 2026, each relevant bank can fund up to 20% of new owner-occupied lending at DTI of six or above. A separate 20% limit applies to new investor lending. APRA’s commencement letter applies the policy to authorised deposit-taking institutions (ADIs) conducting residential mortgage lending in Australia.

ADIs include banks and deposit-taking credit unions and building societies. The scope is new funded housing lending secured by Australian residential property. This announcement doesn’t impose the same limit on every non-bank lender.

The limit measures loan value, not the number of borrowers. Under APRA’s November 2025 implementation details, significant financial institutions use a quarterly measure. Other ADIs use a rolling four-quarter measure.

Exempt Loans and Refinancing

The implementation document identifies exemptions for construction of new dwellings, purchase of newly erected dwellings and qualifying owner-occupied bridging finance. The new-dwelling categories use APRA’s reporting definitions. Calling a purchase a new home doesn’t itself establish the exemption.

Qualifying bridging finance covers borrowers moving their principal residence while they still have an existing owner-occupied loan. APRA expects that temporary arrangement to end within 12 months of origination.

The exemption reporting choice also matters. Smaller ADIs can choose to retain exempt categories in their limit calculation, or remove them through the supplementary reporting process. An exempt loan still faces the lender’s credit assessment.

Refinancing isn’t a listed blanket exemption. The reporting standard includes externally refinanced loans within new funded lending and specifies reporting the full value for internal refinances. For a refinance, identify the debt being replaced so the proposed replacement and discharged loan aren’t both left in the ongoing debt schedule.

Separate DTI From Serviceability

DTI measures debt relative to income, while serviceability tests whether the borrower can afford repayments under the lender’s assessment rules. Neither result replaces the other. The loan serviceability guide explains that separate repayment test.

Consider two fictional outcomes using the same verified $220,000 gross annual income from Alex and Jo’s example. These are illustrative assessment outcomes, not results from a bank calculator.

Scenario	Total reportable debt	DTI	Separate repayment assessment	Consequence
Alex and Jo’s retained-debt application	$1,350,000	6.14	Assume the lender’s stressed repayment test passes	High-DTI treatment still applies unless a supported exemption applies
A lower-debt variant of the same application	$1,100,000	5.00	Assume higher ongoing household expenses leave a shortfall at the assessment rate	Lower DTI doesn’t make the loan pass servicing

A loan can therefore sit below six times and still be unaffordable under the assessment. A loan above six times can pass servicing and still need a lender willing to accept high-DTI lending.

HELP shows the distinction too. As at October 2026, APRA’s residential mortgage guidance expects lenders to consider HELP obligations in borrowing capacity. Excluding the HELP balance from regulatory DTI doesn’t automatically remove repayments from servicing.

What Is a Good Debt-to-Income Ratio?

There is no DTI figure that guarantees a home loan. Below six times avoids this high-DTI category, while a lower ratio means less debt per dollar of gross income. Approval still depends on serviceability and the lender’s other credit rules.

APRA’s policy explanation leaves banks discretion to accept creditworthy high-DTI borrowers within the limit. Their internal risk appetite can be tighter. Remaining portfolio capacity can also affect acceptance, but an aggregate market statistic doesn’t establish a particular lender’s capacity for your file.

Prepare a High-DTI Scenario

Give the lender an itemised debt schedule and a separate servicing result when presenting a high-DTI scenario. Use this checklist to keep the regulatory calculation distinct from the lender’s credit policy.

1. Verify annual gross income for every applicant. Record the evidence period and annualisation method, with compulsory superannuation excluded.
2. List every retained debt and revolving limit. Identify jointly held facilities once, name all liable borrowers and keep HELP obligations available for the separate servicing review.
3. Record the proposed loan amount and purpose. Identify the intended occupancy and any supported new-dwelling or bridging category.
4. For refinancing, identify each discharged facility and any cash-out. Reconcile the debt schedule to what remains after settlement.
5. Calculate regulatory DTI without rounding across the threshold. Run the lender’s internal DTI calculation separately if its inputs differ.
6. Complete the lender’s servicing assessment. Retain the outcome and the inputs used, without treating a pass as approval of high DTI.
7. Send the lender the specific policy question and facts needed to answer it. Ask who must approve any policy exception and what conditions apply to this application.

For Alex and Jo, ask the lender: Can you consider this owner-occupied application at regulatory DTI 6.14, with $1,350,000 total debt and $220,000 verified gross income? Add the servicing result and ask whether the lender’s internal DTI test changes the classification. For a possible exemption, name its precise basis and request confirmation of the lender’s treatment.

Compare lender DTI policies before choosing where to submit. Bulma’s Policy Advisor quotes lender policy wording, which you can retain with the calculation in your file notes. The lender decides whether it will accept the application.

Record the calculation date and the source version. Keep the lender’s response with the name of the person or team giving it, plus any conditions and approval reference.

A changed loan amount or debt limit needs a fresh calculation. Reassess both DTI and serviceability when income changes or a borrower joins or leaves the application. Before lodgement, match the final application to the version the lender considered and resolve any changed condition.