Rental income and borrowing: how NZ banks count rent

Rent can raise what you can borrow, but banks do not count all of it. In the affordability (serviceability) test, lenders apply a haircut to allow for vacancies and costs: two secondary sources in our research agree on counting roughly 70% to 80% of rent, and Sorted notes that some lenders count none of the money from flatmates or boarders. For the Reserve Bank’s debt-to-income rule, Kiwibank says gross income includes rental income. In our worked example, a single buyer on $80,000 who takes a boarder at $250 a week could see the estimate rise from about $447,653 to $553,000, if the bank counts the boarder at all. Banks decide; this is general information, not financial advice.

Rent is counted twice, in two different ways

Your borrowing is the lowest of three limits, and rent feeds two of them differently.

Why a haircut? A rental is not always let, and the owner pays rates, insurance, maintenance and sometimes a property manager. A flatmate can move out at short notice. So a bank assumes less than the full figure will reliably reach your account. Calculate.co.nz puts it as “overtime, bonus and rental income are often discounted by 20 to 30%”. A report that BNZ shades investment rent by about 30% comes from a single secondary source and is UNVERIFIED. No bank page we read publishes its exact figure.

Our calculator counts 75% of rent for serviceability by default, with a slider from 70% to 80%, and counts all of it as income for DTI, as Kiwibank describes.

Boarders and flatmates in your own home

Taking in a boarder or flatmate is one way first home buyers stretch their borrowing. Sorted says some lenders count 70% to 80% of the rent from flatmates or boarders, and others count none of it. So the first question to ask a bank or adviser is whether it counts boarder income at all, and on what evidence.

We found no bank page that sets out the evidence needed for boarder income, so ask the bank what it wants to see before you rely on it. A written agreement and a record of the payments reaching your account are the obvious starting points.

The worked example below shows how much difference it can make when the bank does count it.

Worked example: a boarder at $250 a week

A single buyer earns $80,000 a year before tax and takes home about $4,960 a month (2026/27 tax, ACC and 3.5% KiwiSaver). Living costs are $2,000 a month, card limits $5,000, and the deposit $150,000. A boarder will pay $250 a week, which is $13,000 a year. We test at the 6.94% average of the five banks’ test rates over 30 years.

Three things stand out. First, a boarder counted at 75% adds $812.50 a month to the surplus, which at the test rate supports over $120,000 more serviceability. Second, once rent is counted, the DTI rule binds instead: gross income becomes $93,000 (salary plus all the rent), times 6 is $558,000, less $5,000 of card limits gives $553,000. Third, because DTI binds, the exact haircut stops mattering in this case. The deposit limit is $600,000 ($150,000 at 80%), so it does not bind either.

Whether the boarder counts at all is the big question: the gap between the first row and the others is about $105,000. If you are relying on a boarder, check with the bank before you house hunt. Living costs here are the buyer’s own figure, above our $1,600 floor for one adult, which is our assumption and not a bank figure.

What different rents are worth to a bank

As a rough guide, here is what a weekly rent adds to each limit for an owner-occupier, at our 75% default share and the 6.94% average test rate over 30 years. These figures apply only if the bank counts the rent, and only to the limit that binds.

Notice that rent adds more to serviceability than to the DTI limit. That is why, in the example above, counting a boarder moves the binding limit from serviceability to DTI: the extra affordability outruns the extra DTI room. For an investor, the DTI column would use 7 times the rent instead of 6.

Rent from an investment property

For a rental you are buying, the rent is usually central to the application. BNZ asks for a copy of the existing tenancy agreement, or a rental appraisal from a local REINZ real estate agency. The same haircut applies in serviceability, and the full rent counts as income for DTI, where the investor threshold is 7 times income rather than 6.

Using our investor calculator defaults (a household on $180,000, taking home $11,200 a month, $3,800 of living costs, $10,000 of card limits, and a rental earning $650 a week), here is how the haircut moves the serviceability limit at the 6.94% average test rate:

Each 5 points of haircut moves this household’s serviceability by about $21,300. In practice, the 30% investor deposit rule usually binds first: with $300,000 to put down, the loan is capped at $700,000. Our investor lending rules guide goes through that case.

Other income that may be discounted

Rent is not the only income a bank may shade. Calculate.co.nz says overtime and bonuses are often discounted by 20% to 30% too, which is one secondary source (UNVERIFIED). Self-employed income has its own rules; see our self-employed guide. If you are buying with someone else, both incomes count, and so do both people’s debts; see buying with family or friends.

Our guide to how banks assess your application covers the whole picture, and the DTI guide explains why rent can tip the binding limit from serviceability to DTI.

Rates as at 10 November 2026; test rates confirmed July 2026.

Questions people ask

Do banks count boarder income for a mortgage in NZ?

Some do and some do not. Sorted says some lenders count 70% to 80% of the rent from flatmates or boarders, while others count none. Ask your bank before relying on it.

What percentage of rental income do banks use?

For affordability, two secondary sources in our research say roughly 70% to 80%; we use 75% by default. No bank page we read publishes its exact figure. For the DTI rule, rental income counts as part of gross income.

Does rental income help with the DTI limit?

Yes. Kiwibank says gross income for DTI includes rental income, so rent raises the DTI limit by 6 times the rent for owner-occupiers, or 7 times for investors.

How much more can I borrow with a flatmate?

In our example, a buyer on $80,000 with a $250-a-week boarder goes from about $447,653 to $553,000 if the bank counts the rent. If it does not, nothing changes. Banks decide.

Does rental income reduce the deposit I need?

No. The deposit (LVR) rules depend only on the loan and the value of the property. Rent can raise your serviceability and DTI limits, but if the deposit is the limit that binds, rent will not lift the answer. Owner-occupiers usually need 20% and investors 30% for standard lending.