Debt-to-Income Above 6: The Wrong Side

Key takeaways

• DTI counts TOTAL debt against gross income, not just the new loan.
• The cap is on the lender's portfolio share, not on you individually.
• Quota pressure varies through the quarter and between lenders.
• Reducing other debt is usually the fastest way under the line.

How is DTI calculated?

Total debt divided by total gross annual income. Both halves are broader than borrowers expect.

Debt includes the new loan, all existing mortgages including investment properties, credit card limits (not balances), personal loans, car finance, HECS-HELP in many lenders' calculations, and buy-now-pay-later facilities.

Income is gross, before tax, and variable income may be shaded before it counts.

A household earning $180,000 gross with a $900,000 new loan, a $250,000 investment mortgage, a $30,000 car loan and $20,000 of card limits has $1.2 million of debt against $180,000 - a DTI of about 6.7, comfortably on the wrong side of the line even though the new loan alone would be 5.0.

What does the cap actually restrict?

The practical consequence is timing and lender selection. A lender comfortably within its quota may write your loan without difficulty; the same file at a lender running close to its limit may be declined or heavily conditioned.

How do you get under the line?

Attack the numerator, since income is harder to change quickly.

• Reduce credit card limits - limits count in full whether or not you use them. This is the fastest single improvement available to most applicants.
• Pay out or refinance small debts - a car loan or personal loan removes its full balance from the calculation.
• Close buy-now-pay-later accounts.
• Increase the deposit - a smaller loan directly reduces total debt.
• Consider a longer HECS repayment position - treatment varies by lender, so this is a lender-selection question rather than something you change.
• Buy at a lower price point. Unwelcome, but it is the lever that always works.

If you are close to the line, timing and lender choice genuinely matter, and this is a case where a broker with visibility across a panel adds real value - they can see which lenders currently have appetite.

Frequently asked questions

What is a debt-to-income ratio?

Total debt divided by total gross annual income. It counts all debt including existing mortgages, credit card limits, personal and car loans, and in many cases HECS-HELP - not just the loan you are applying for.

Can I still get a loan with a DTI above 6?

Yes. APRA limits high-DTI lending to 20% of a lender's new lending rather than prohibiting it, so such loans are written - but they face tighter scrutiny and appetite varies between lenders and over time.

Do credit card limits count even if the balance is zero?

Yes. Lenders count the approved limit, not the balance, because you could draw the full amount at any time. Reducing or closing unused card limits is one of the fastest ways to improve your DTI.

Does HECS count in debt-to-income?

Treatment varies between lenders - some include the full balance, others treat it as a repayment obligation affecting serviceability instead. Because policy differs, lender selection matters for borrowers with a large HECS debt.

Related reading

• APRA's DTI Cap Explained: The 20% Rule That Started February 2026
• Debt-to-Income Ratio: Calculating Yours Before the Bank Does
• HECS-HELP Debt and Your Borrowing Power

Sources

• Prudential Practice Guide APG 223 Residential Mortgage Lending — APRA
• Quarterly authorised deposit-taking institution property exposures — APRA