APRA’s New Debt-to-Income Limits Explained: What They Mean for Your Home Loan
APRA switched on a new lending rule in February 2026, capping how much banks can lend to borrowers with a high debt-to-income ratio. Most people have never heard of it, but it could affect how much you can borrow.
What is a debt-to-income limit, and could it affect you?
What is debt-to-income ratio?
Your debt-to-income ratio, or DTI, is simply your total debt divided by your gross annual income.
Say you earn $100,000 a year and want to borrow $600,000. Your DTI is six times your income, or 6x. Add any other debts, like a car loan or a credit card limit, and that number climbs further.
Lenders have used DTI as one input in loan assessments for years. What's new is that APRA, the regulator that oversees Australian banks, now caps how much high-DTI lending each bank can do.
What actually changed in February 2026
From February 2026, each bank can only write a limited share of new home loans to borrowers with a DTI of six times or more.
Specifically:
Banks can lend no more than 20% of new owner-occupier loans to borrowers at 6x DTI or above
The same 20% cap applies separately to new investor loans
The limit is measured every quarter, not per loan
Bridging loans for owner-occupiers and loans for buying or building a new dwelling are exempt
This is what's known as a macroprudential tool. Rather than banning high-DTI lending outright, APRA is putting a speed limit on it to keep overall risk in the banking system in check.
Who does this actually affect?
For most borrowers, not much changes. Only around 5.5% of new loans currently sit at 6x DTI or higher, well under the new 20% cap, so at an aggregate level the limit isn't binding yet.
Investors are more likely to feel it than owner-occupiers. Roughly 10% of investor loans are already above 6x DTI, compared to about 4% of owner-occupier loans. If you're a first-home buyer borrowing a modest amount relative to your income, you're almost certainly sitting well clear of the threshold.
Where it can bite is timing. Because the cap is measured per bank per quarter, a lender that's already used up most of its high-DTI allocation early in the quarter may become more cautious, or say no, to a borrower it would have approved a few weeks earlier. Two people with identical financial situations could get different answers depending purely on when they applied and which bank they asked.
How to work out your own DTI
The formula is straightforward:
Add up all your debts: your proposed mortgage, credit card limits (not just balances), car loans, personal loans, and HECS or HELP debt
Divide that total by your gross annual income, before tax
The result is your DTI multiple
A DTI under 4 is generally considered comfortable. Above 6 is where lenders, and now APRA's cap, start paying closer attention.
If your DTI is on the higher side
A few things can bring your DTI down before you apply:
Cancel or reduce credit cards you rarely use. Lenders count your full limit, not your balance, so a $10,000 limit sitting unused still counts against you
Pay down or consolidate existing debts, starting with whichever has the highest repayment
Document any extra income properly, such as rental income, bonuses or a second job, so lenders can count it
Consider a larger deposit, which reduces the loan amount and therefore your DTI
For a deeper look at the factors lenders weigh up, our guide on how to increase your borrowing capacity covers this in more detail. If your borrowing power has come back lower than you expected, our guide on why your borrowing capacity may be lower than expected walks through the most common reasons.
Why this is where a broker earns their keep
Every bank manages its high-DTI quota differently, and none of them publish how much of it they've used at any given time. One lender might be well under its cap and happy to approve your loan. Another might be close to full for the quarter and knock you back for the exact same application.
This is exactly the kind of thing a broker tracks day to day. Rather than applying with one bank and hoping for the best, we compare your situation against lenders who still have room under their DTI allocation, so you're not caught out by a cap you didn't know existed.
It's also worth remembering that responsible lending goes both ways. A rule like this exists to stop households taking on more debt than they can comfortably manage, which is a good thing for borrowers even when it feels like an extra hurdle. We think the same principle applies more broadly: building wealth through property should never come at the cost of overextending yourself, just as we believe growing our business shouldn't come at the cost of the environment, which is why a share of our profits goes to the Australian Wildlife Conservancy on every loan we settle.
Ready to find out where you stand?
If you're not sure what your DTI looks like or which lenders still have room under their cap, get in touch and we'll run the numbers with you, free of charge.