How much do you need to earn to get a home loan?

photo: RNZ/Nate McKinnon

First-time homebuyers typically need an annual income of at least $100,000 to Entering the real estate market.

CoreLogic data shows the average home price paid by first-time buyers in April and May was $688,000.

To borrow 80 per cent of that amount, a person with a car and few other expenses would typically need to earn about $100,000, according to the mortgages.co.nz calculator.

If a couple has two cars and no children, they’ll need about $124,000.

A couple with two cars and two children, but no child care expenses, would need to make nearly $140,000 a year.

An individual looking to borrow $800,000 might need an income of nearly $150,000, while a couple with two children might need closer to $180,000.

Squirrel chief executive David Cunningham said while individual circumstances would affect the final amount borrowed, the figures were approximate.

Jeremy Andrews of Key Mortgages said the maximum loan amounts approved by different lenders could sometimes vary by tens or even hundreds of thousands of dollars, depending on the type of income a borrower had, their expenses and the type of property they were buying.

He said if someone bought a three-bedroom property, some banks would allow the borrower to Include the income of two boarding students to prove they can repay the loan.

He said he had a single client who earned $85,000 a year and had a host family who was approved for a mortgage of more than $500,000.

A couple might need to make twice as much to come up with the same amount, especially if they have childcare expenses or other debts, he said.

Cunningham said banks test applications against a test rate, which is often significantly higher than the rate they are actually charged.

Glen McLeod of Edge Mortgages said couples often had less borrowing capacity than individuals on the same annual income because they had more expenses to pay for – for example, twice as much food, and more electricity and transport costs.

Factors such as consumer debt and credit cards can also limit how much people can borrow on a given income, he said.

New Debt-to-Income Ratio There is also a cap on the ratio of debt to household income. Owner-occupiers are limited to debts of no more than six times their household income, including other debts such as student loans.

McLeod said that doesn’t limit any deals he tries to make, but it will become increasingly considered.

Mr Andrews said one of the most attractive options for first-home buyers was whether they could qualify for the First Home Loan, which was available to single buyers earning up to $95,000 and couples or single parents earning up to $150,000.

Mr Cunningham said interest from banks to lend was “quite strong” at the moment.

The weak market has given borrowers with smaller deposits the ability to trade.

“We’re getting good offers – first-time buyers are a big part of the market.

“Interest rates may start to fall. Now is a good time to look, and if you can afford it now, things are likely to get better.”