Debt-to-Income Ratio

Plain-English definition. The debt-to-income (DTI) ratio is the multiple of your gross annual household income represented by your total debts, including the mortgage you're applying for. A DTI of 6 means total debts are six times annual gross income.

How it works in Australia. APRA monitors DTI as a macroprudential indicator and reports the share of new lending at DTI ≥ 6 in its quarterly ADI property exposures statistics. Most banks now treat DTI ≥ 6 as a "high-DTI" loan requiring additional credit assessment, with hard caps at DTI 7, 8 or 9 depending on policy. Total debts include the new mortgage, existing mortgages, credit card limits (not balances), HECS/HELP, personal loans and BNPL accounts. Income includes salary (gross), confirmed bonuses (often shaded 80%), rental income (shaded 70–80%), and dividends.

Concrete example. A couple earning $200,000 combined gross with $15,000 in credit card limits, $40,000 in HELP debt, applying for a $1.4m mortgage has total debts of $1,455,000 and DTI of 7.3. Most major banks decline outright or require manual approval. Reducing card limits to $5,000 and pre-paying $20,000 of HELP only marginally helps — the dominant debt is the mortgage itself.

Common confusion. DTI is not the same as serviceability. A high-income borrower may pass serviceability (cash flow at a stressed rate) but fail DTI policy because the loan is too large relative to income. Conversely, a low-DTI loan can fail serviceability if expenses or other commitments crowd out cash flow.