Usable equity calculator · Figures checked 7 October 2026
How much of your equity could you use?
Usable equity is 80% of what the bank says your home is worth, less what you owe. Run the sum below, see what it could buy, then find out whether your income would carry a second loan.
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Usable equity calculator
Enter the value a bank would put on your home, not the agent's appraisal. A recent registered valuation or a bank e-valuation is closest. A council rating value usually sits lower, and a sale appraisal usually sits higher.
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One of the advice team will call you within one working day. We'll have your numbers in front of us, so the call starts with the answer rather than the questions.
Total equity and usable equity are different numbers
Total equity is what your home is worth less what you owe. It is the number people quote at barbecues. Usable equity is the part a bank will lend against, and it is smaller, because the bank insists you keep 20% of the home's value untouched as its buffer.
| How it's worked out | $850,000 home, $400,000 owing | |
|---|---|---|
| Total equity | Value less mortgage | $450,000 |
| Usable equity | 80% of value, less mortgage | $280,000 |
| Usable equity if this home becomes a rental | 70% of value, less mortgage | $195,000 |
The gap matters because the bank also uses its own valuation. If its e-valuation lands at $800,000 instead of $850,000, usable equity drops to $240,000. On a 30% deposit that is $130,000 less purchasing power from a $50,000 difference of opinion about the house.
How much equity you need for an investment property
The deposit depends on what you are buying and what happens to the home you already own.
| What you're buying | Deposit the bank wants | Where it can come from | Checked |
|---|---|---|---|
| An existing property to rent out | 30% (investor lending is capped at 70% of value) | Usable equity, savings, or both | 31 Aug 2026 |
| A new build to rent out | Usually 20%; some lenders will go lower | Usable equity, savings, or both | 31 Aug 2026 |
| A new home for you, keeping this one as the rental | 20% on the new home; the old home is re-tested as an investment at 70% | Usable equity in the old home | 31 Aug 2026 |
To turn usable equity into a price ceiling, divide by the deposit percentage. $280,000 of usable equity is a deposit on an existing rental of up to about $930,000, or a new build of up to $1.4 million. Those are the ceilings set by equity alone. Servicing usually sets a lower one, and you will want to keep some of the equity back for valuation, legal and settlement costs rather than spend it all on the deposit.
Equity gets you to the table. Servicing gets you the loan.
Having the equity is the first of three checks, and the easiest. The bank then asks what your home is worth on its numbers, what deposit the purchase needs, and whether your income carries both loans when rates move. Most declines happen at the third check.
Their valuation, not yours
Lenders work from a registered valuation or their own e-valuation, not the council CV, a Homes estimate or what the neighbours sold for. Two banks can put two different numbers on the same house. That gap alone can move your usable equity by tens of thousands, which is one reason the same application can be declined at one bank and approved at another.
The deposit rule for what you're buying
Thirty percent for an existing rental, around twenty for a new build, twenty for a new home with the old one kept and re-tested as an investment. The rule is set by the Reserve Bank's loan-to-value limits and the banks apply it with little room to move. New builds get easier treatment because they are exempt from the investor restriction.
Can you carry both loans at the test rate?
The bank re-runs your whole position. Both mortgages at its test rate, currently around 7%, not the rate you would pay. Living costs at its benchmark, not the figure you declare. The rent on the new property counted at about 75%, to allow for vacancies and costs. Then the ceiling. Investor lending sits under a debt-to-income cap of seven times gross income, and this is the line most Auckland second-property buyers hit first. Plenty of Kiwi have $300,000 of usable equity and no way to borrow against a dollar of it.
The figures banks apply right now
Indicative figures, each dated with when we last checked it. Every lender differs. A guide, not an offer, and not financial advice.
| What the bank checks | Figure estimate | Verified |
|---|---|---|
| Major bank test rate (stress test rate)The interest rate a bank uses to check you could still afford the mortgage if rates rose — not the rate you actually pay. A higher test rate means you can borrow less. Typically a couple of percent above advertised rates. | ||
| Major bank test rate | 7% p.a. | 31 Aug 2026 |
| Debt-to-income (DTI) limitsRBNZ caps on how much you can borrow as a multiple of gross income, in force since mid-2024. Banks may lend above the caps for a limited share of new lending (the 'speed limit'). | ||
| Owner-occupier cap | 6× gross income | 7 Oct 2026 |
| Investor cap | 7× gross income | 7 Oct 2026 |
| Speed limit | Banks may exceed the caps for up to 20% of new owner-occupier lending and 20% of new investor lending. | 7 Oct 2026 |
| Loan-to-value ratio (LVR) limitsMinimum deposit rules. LVR is the loan as a percentage of the property value — a 20% deposit is an 80% LVR. Banks can lend past these limits for a capped share of new lending: from 1 December 2025 the RBNZ 'speed limits' allow up to 25% of new owner-occupier lending above 80% LVR and 10% of new investor lending above 70%. | ||
| Owner-occupier max LVR | 80% | 31 Aug 2026 |
| Investor max LVR | 70% | 31 Aug 2026 |
| Low-deposit options | First Home Loan (Kāinga Ora) can allow as little as a 5% deposit for eligible buyers — confirm current eligibility. | 31 Aug 2026 |
| Servicing a second loanHow the bank treats the rent and your living costs when it tests both loans together. | ||
| Rental income counted | About 75% of the appraised rent | 7 Oct 2026 |
| Living-cost benchmark, couple, no dependants | $1850 a month | 22 Jun 2026 |
More benchmarks — living costs, vehicles, boarders, first-home support, rates and common questions
| What the bank checks | Figure estimate | Verified |
|---|---|---|
| Living cost benchmarksThe minimum essential living expenses a bank assumes when assessing affordability — used as a floor when your declared expenses are lower. These are the working benchmarks our advisers apply; individual banks use their own expense tables, which vary. | ||
| Single, no dependants | $1250/mo | 22 Jun 2026 |
| Single, 1 dependant | $1650/mo | 22 Jun 2026 |
| Couple, no dependants | $1850/mo | 22 Jun 2026 |
| Couple, 1 dependant | $2250/mo | 22 Jun 2026 |
| Couple, 2 dependants | $2650/mo | 22 Jun 2026 |
| Couple, 3 dependants | $3050/mo | 22 Jun 2026 |
| Vehicle running costs in affordabilityThe ongoing vehicle cost a bank assumes per car when assessing how much you can borrow, on top of any car loan repayments. | ||
| Assumed per vehicle | $3000/year — About $250/month per vehicle, on top of any car-loan repayment. | 22 Jun 2026 |
| Boarder incomeHow much income from a boarder (e.g. a flatmate) a bank will count toward your mortgage application. Varies by lender and number of boarders. | ||
| Typical per boarder | $250/week | 22 Jun 2026 |
| Max boarders counted | 2 — Counted at about 75% of the rent received. Up to 2 boarders are counted with a 20%+ deposit, or 1 boarder with less than a 20% deposit. | 22 Jun 2026 |
| First-home buyer supportGovernment and lender support specific to first-home buyers — deposit requirements, regional price caps, and KiwiSaver access. The First Home Grant was discontinued in 2024 and is deliberately not listed. | ||
| First Home Loan (Kāinga Ora) | From 5% deposit — Lets eligible buyers borrow with as little as a 5% deposit through participating lenders. Confirm current income caps and eligibility. | 22 Jun 2026 |
| KiwiSaver first-home withdrawal | Eligible members can withdraw most of their KiwiSaver toward a first home, leaving a minimum balance in the account. Confirm the current minimum-balance and 3-year membership rules. | 22 Jun 2026 |
| Kāinga Ora regional price caps | Caps vary by region and are set by Kāinga Ora. See Kāinga Ora → | 22 Jun 2026 |
| Current interest ratesWe don't republish live mortgage rates — interest.co.nz and the banks keep those current and comprehensive. For the OCR, see the Reserve Bank. | ||
| Where to look | Compare current mortgage rates (interest.co.nz) · Official Cash Rate — Reserve Bank of NZ | |
Common questions
What is a bank 'test rate' (stress test rate) in New Zealand?
It's the interest rate a bank uses to check you could still afford your mortgage if rates rose — not the rate you actually pay. It's usually a couple of percent above advertised rates, and a higher test rate means you can borrow less.
What is the debt-to-income (DTI) limit in NZ?
Since mid-2024 the Reserve Bank has capped how much most buyers can borrow as a multiple of gross income, with separate caps for owner-occupiers and investors. Banks can still lend above the caps for a small share of their new lending — the 'speed limit'.
How much deposit do I need to buy a home in NZ?
Most owner-occupiers need at least a 20% deposit (an 80% LVR). Banks can do a limited amount of low-deposit lending, and eligible first-home buyers may access lower-deposit options such as the First Home Loan.
Does boarder or flatmate income count towards a mortgage?
Some lenders count a portion of boarder income towards your application — usually up to a set amount per boarder per week and a maximum number of boarders. Policies vary by bank.
What living costs do banks assume when assessing affordability?
Banks apply minimum living-expense benchmarks based on your household type, used as a floor if your declared expenses are lower. They sit on top of your mortgage, rates, insurance and other commitments.
How often is this lending data updated?
Each section shows the date its figures were last checked, so you can judge how current they are. They're indicative and vary by lender — always confirm current criteria with a licensed adviser.
Indicative figures only. They vary by lender and change frequently. This is general information, not financial advice — always confirm current criteria with a licensed financial adviser.
A worked example: buying your first investment property with equity
A couple in Auckland earning $180,000 between them. Home valued by the bank at $1.1 million, $600,000 owing. They are looking at a $700,000 existing rental that would earn $650 a week.
| Test | Working | Result |
|---|---|---|
| Usable equity | 80% × $1,100,000, less $600,000 | $280,000 |
| Deposit needed on the rental | 30% × $700,000 | $210,000 |
| Equity left after the deposit | $280,000 less $210,000 | $70,000 buffer |
| Total lending after purchase | $600,000 + $700,000 | $1,300,000 |
| Debt-to-income check | $1,300,000 ÷ ($180,000 + 75% of $33,800 rent) | 6.3×, inside the 7× investor cap |
| Servicing check | $1,300,000 at the 7% test rate over 30 years | About $8,650 a month, against roughly $11,350 take-home plus about $2,100 of shaded rent |
On paper this purchase works, with a thin servicing margin and a $70,000 buffer for costs and for a valuation that comes in lower than hoped. The same couple earning $140,000 would fail the debt-to-income cap at about 7.9× and would need a cheaper property, a new build, or a different structure. That is the conversation an adviser has before you make an offer, because an auction purchase is unconditional and the structure is set at approval.
Figures are illustrative and use our published benchmarks as at 7 October 2026.
How to structure it: top-up or separate loan
The easy way, and the way many banks offer first, is one loan secured over both houses. It is quick to set up. It also means neither property can be sold or refinanced without the bank re-assessing the other, and a problem with the rental can reach your home.
The cleaner structure is two loans. A top-up on your home funds the deposit. A separate loan on the rental covers the rest. Each loan is secured only on its own property.
Cross-secured
Separate loans
The three advantages: a clear line between deductible investment debt and personal debt, the freedom to move one property to another lender later, and no path for the bank to call on your home if the rental goes wrong.
Interest-only on the investment lending and principal-and-interest on your own home is the usual pairing. Interest on lending used to buy a rental has been fully deductible again since 1 April 2025. Your accountant should confirm how that applies to you, and how the top-up is documented so the deductible portion is clear.
What it costs to use your equity
- A registered valuation on your home if the bank's e-valuation won't do, and sometimes one on the rental as well.
- Legal work on two loans and two securities, not one.
- A low-equity premium or margin if the lending on your own home goes above 80%.
- Break costs if a fixed loan has to be restructured to release the equity.
- A higher rate on investor lending at some banks, and interest-only usually priced above principal-and-interest.
- The equity itself. Every dollar you borrow against is a dollar of buffer you no longer have if values fall.
Allow roughly 5% of the purchase price for costs and keep it out of the deposit calculation.
When to leave your equity where it is
- The servicing margin only works if you count the full rent and the current advertised rate.
- Your fixed rate rolls off within the next year and you haven't tested the position at a higher rate.
- The only way the bank will do it is cross-secured, and you would rather keep your home out of it.
- You are within ten years of retirement and the plan depends on capital gain rather than cash flow.
- A valuation 5% lower than you expect would wipe out the buffer.
An adviser who tells you to wait is worth more than one who finds a way.
Prefer to do it yourself?
1. Use the spreadsheets our advisers use. The Calculator Stack is eleven Excel sheets, in your inbox within minutes. Start with the Usable Equity sheet, then Equity to Your First Rental, which runs the servicing test with the test rate and the shaded rent.
2. Put our numbers in front of your AI. Paste the figures above into ChatGPT or Claude, or point it at our lending-numbers skill and JSON feed, and ask it to run your situation as a rough guide. It will land in the right ballpark. It still won't know which bank will say yes.
3. If you'd rather use an online calculator, use Sorted's mortgage calculator. It's run by Te Ara Ahunga Ora Retirement Commission, it's independent, and it has nothing to sell you. For today's advertised rates, interest.co.nz keeps them current.
Questions people ask about usable equity
Take 80% of your home's value and subtract your mortgage. On an $850,000 home with $400,000 owing that is $680,000 less $400,000, or $280,000. Banks use their own valuation, so the real figure can be higher or lower than the one you get from a council CV or an online estimate.
Up to the amount above the bank's 20% buffer, if your income supports the extra lending. The deposit on the next property has to fit inside it: 30% of the price for an existing rental, around 20% for a new build or a new home.
No. The bank keeps 20% of your home's value locked in as its security buffer, and 30% if the home is or becomes a rental. What sits above the buffer is what you can borrow against.
Thirty percent for an existing property, because investor lending is capped at 70% of value. New builds are exempt from that cap and usually need 20%, sometimes less. The deposit can be equity, savings or both.
Home equity, or total equity, is value less mortgage. Usable equity is 80% of value less mortgage, the part a bank will lend against. On most homes the difference is 20% of the value, which is a six-figure sum in Auckland.
Yes, but shaded. Most lenders count about 75% of the appraised rent to allow for vacancies and costs. It helps servicing. It rarely carries the purchase on its own.
No. Equity is the first check. The bank also tests whether your income services both loans at its test rate, inside its debt-to-income cap and after its assumed living costs. Most declines happen on servicing.
No. The KiwiSaver first-home withdrawal is for a first home you will live in. A second property is funded from equity, savings or both.
It depends on the servicing margin, the structure and your horizon. It works well when the rent and your income carry both loans at the test rate with room to spare, and the loans are kept separate. It works badly when the margin relies on the full rent and today's rates. See the section above on when to leave your equity where it is.
Often yes, if the equity and servicing work, because you avoid selling costs and keep a property you know. The catch is that the old home is re-tested as an investment at 70% LVR, and the interest on its loan is only deductible to the extent the lending relates to the rental. Worth a review before you decide.
The calculator shows what might be there. A review shows what you can do with it.
Your real numbers across 20+ lenders, with a plain recommendation. Lenders pay us when a loan settles.
Madhav Bhandari, Director, Mortgage & Investment Adviser. Figures on this page were checked on 7 October 2026 against the Reserve Bank's published settings and the bank policies we work with. Blueprint Finance is a licensed financial advice provider; our disclosure statement explains how we are paid.