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Investment Property Mortgages

LVR restrictions, rental income assessment, DTI thresholds, and portfolio structuring — how investment property lending works in New Zealand.

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Key numbers at a glance

30–35%+

Investor deposit

Typical minimum — lender varies

65–80%

Rental income shading

Of gross rent assessed

7×

DTI threshold

Gross annual income

Yes

Interest-only

Available for investment

LVR restrictions and DTI thresholds are set by the RBNZ and may change. These figures are indicative as at mid-2026. Individual lender policies may vary.

LVR restrictions for investors

The Reserve Bank of New Zealand (RBNZ) uses loan-to-value ratio (LVR) restrictions as a macroprudential tool. Rather than an absolute lending prohibition, the RBNZ limits the proportion of high-LVR investor loans that banks can write. In practice, most major lenders apply a minimum 30–35% deposit for residential investment properties (LVR of 65–70%), though individual bank policies vary and may be tighter than the RBNZ speed-limit. LVR rules have changed several times and may change again — Jeremy can confirm current requirements from each lender for your situation.

New builds may qualify for different treatment

New build properties are often exempt from LVR restrictions or subject to more favourable rules. Some lenders will lend at up to 80% LVR on new builds for investors. Check with your adviser whether the property you are considering qualifies.

Rental income assessment

Banks do not count 100% of rental income in their affordability calculations. They apply a "shading" factor to account for potential vacancy periods, maintenance costs, and letting management fees. Most lenders use 65–80% of the gross weekly rent as the assessed income contribution.

If you have multiple investment properties, each rental income figure is shaded individually. The total assessed rental income across your portfolio is then added to your other income sources for the DTI and affordability calculation.

Example: A property renting at $600/week. At 75% shading, the bank assesses $450/week ($23,400/year) as income rather than the full $31,200/year. This is why rental yield alone does not tell the full borrowing story.

Interest-only vs principal-and-interest

Interest-only (IO)

  • ✓ Lower monthly payments — improves cash flow
  • ✓ Available for investment properties
  • ✗ Loan balance does not reduce
  • ✗ Lenders assess affordability at P&I repayment
  • ✗ Typically limited to 5-year IO terms

Principal and interest (P&I)

  • ✓ Loan reduces over time
  • ✓ Required after IO period ends
  • ✓ May attract slightly better rates
  • ✗ Higher monthly repayment
  • ✗ More cash flow pressure on low-yield investments

Portfolio lending and using equity

As you build a property portfolio, each new purchase becomes progressively more complex. Key considerations:

Using existing equity

Equity in your owner-occupied home or existing investment properties can be used as part of the deposit for a new purchase. This is done through a top-up or revolving credit on an existing property.

Cross-securitisation

Some lenders use multiple properties as security for a single loan ('cross-securitise'). This gives the bank more security, but reduces your flexibility to sell or refinance individual properties. Where possible, keeping properties on separate lending structures preserves more options.

DTI thresholds across the portfolio

RBNZ DTI thresholds apply to your total lending position — not just each individual loan. With multiple properties, managing DTI becomes a key consideration for your next purchase. An adviser can model your total DTI and advise on structuring.

Tax note: Tax rules for investment properties — including mortgage interest deductibility — have changed in recent years. This page provides general mortgage information only and is not tax advice. Get specific advice from an accountant before purchasing an investment property.

Planning an investment property purchase?

Jeremy works with investors at every stage — from first investment property through to portfolio structuring. Free consultation, no obligation.

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Common questions

How much deposit do I need for an investment property?
The Reserve Bank of New Zealand (RBNZ) uses LVR restrictions to limit the proportion of high-LVR investor lending that banks can write. Under the current framework, most major lenders require a minimum 30–35% deposit for residential investment properties (LVR of 65–70%). Individual lenders may apply tighter standards than the RBNZ speed limit. Some exemptions apply — for example, new builds are often treated more favourably. LVR policy can change; Jeremy can advise on current requirements from each lender.
How do banks assess rental income?
Lenders do not count 100% of your rental income. They shade it — typically using 65–80% of the gross rental income as the assessed income figure. This shading accounts for vacancy periods, maintenance costs, and letting agent fees. If you have an existing tenancy, banks will usually want to see the current lease. If the property is not yet rented, they use a market rental assessment.
What are DTI limits for investors?
The RBNZ implemented debt-to-income (DTI) restrictions from June 2024. These set a high-DTI threshold — not an absolute borrowing cap — by limiting the proportion of new investor lending that banks can write above 7× gross annual income. In practice, most major lenders apply a 7× DTI as a working limit, but individual policies vary and some lending above that level is still possible. DTI applies across your total portfolio, not just the new loan, so existing debt positions matter. Jeremy can assess your specific situation.
What is interest-only lending and can I get it for an investment?
Interest-only (IO) means you pay only the interest on the loan each month — you do not reduce the principal. This improves cash flow from an investment property (lower monthly payments) but means the loan balance does not decrease over time. Interest-only is generally available for investment properties but not for owner-occupied properties. IO terms are typically limited to 5 years, after which the loan reverts to principal-and-interest. Lenders assess affordability on the P&I repayment, not the IO repayment, so it does not give you more borrowing power.
Can I use equity in my existing home to buy an investment property?
Yes. If you have built up equity in your existing property (the difference between its current value and your outstanding mortgage), you may be able to use that equity as part of your deposit for an investment property. This is commonly done through a top-up of your existing mortgage or by restructuring into a revolving credit facility. An adviser can help you model how much equity is available and the most tax-efficient structure.
Are there tax implications for investment property mortgages?
Tax rules for investment property have changed in recent years in New Zealand. The deductibility of mortgage interest on investment properties is subject to specific rules. You should obtain specific tax and accounting advice from an accountant or tax adviser before purchasing an investment property. Jeremy provides mortgage advice only and does not provide tax advice.

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