What is Debt to Income ratio?
What is Debt to Income ratio?
Section titled “What is Debt to Income ratio?”Debt-to-Income (DTI) compares your total debt — across every property and personal loan, not just the one you’re applying for — to your gross annual income:
DTI = Total Debt / Gross Annual IncomeA borrower with $2.4m in total debt and $300,000 combined gross income has a DTI of 8x.
How it differs from LVR
Section titled “How it differs from LVR”LVR looks at a single loan against a single property’s value. DTI looks at your whole borrowing picture against your income — it’s the metric that catches an investor who looks fine on LVR for each individual property, but is carrying more total debt than their income can realistically service if circumstances change (rates rise, a tenant leaves, income drops).
Why lenders and regulators watch it
Section titled “Why lenders and regulators watch it”Since the early 2020s, Australian and New Zealand regulators (APRA, the RBNZ) have pushed banks to treat high DTI as a macroprudential risk signal, separate from serviceability calculators. Many lenders now apply a hard or soft cap — commonly cited around 6x gross income — above which a loan needs extra scrutiny or is declined regardless of how comfortably the cashflow otherwise stacks up.
Where you’ll see it
Section titled “Where you’ll see it”The Dashboard’s Debt/Income widget divides your total portfolio debt by your salary plus annual rental income, so you can see where you sit before a lender’s own calculator does.