APRA’s New Lending Changes: What Australians Need to Know (Starting 1 February 2026)

APRA has confirmed that new rules on high debt-to-income (DTI) home loans will start on 1 February 2026.

These rules are designed to reduce risk in the housing and banking system, at a time when household debt is already high and investor borrowing has been rising again.

This article explains the changes in simple language so that everyday Australians can understand what is happening and what it might mean for their borrowing plans.

What is changing?

From 1 February 2026, banks will face limits on how many borrowers they can approve if their debt-to-income ratio (DTI) is 6 or higher.

A DTI of 6 means: Your total debt equals six times your gross (before-tax) annual income.

The new rule in plain English

From February 2026, banks cannot let too many people borrow more than six times their income. They must keep these “high-DTI loans” to no more than 20% of the new loans they write.

Banks must also measure this separately for:
• people buying a home to live in
• investors buying a rental property

This means there are two separate 20% limits. It does not mean that owner-occupiers are exempt.

Does this apply to existing home loans?

No. The rule applies only to new loans written from 1 February 2026 onward. Existing mortgages will not be reassessed and will not be affected.

What types of loans are exempt?

Some loans will not count toward the 20% DTI cap. These include:
• Loans to build a new home
• Loans to buy a newly built home
• Bridging loans (when you are selling one home and buying another)

These exemptions exist because APRA does not want to slow down new housing supply or disrupt people who are moving home.

How to calculate your DTI (simple example)

Your DTI = Total Debt ÷ Annual Income (before tax). Banks always use gross income, not take-home pay.

Example:
Let us say your situation looks like this:
• Annual income (before tax): $120,000
• Home loan you want: $650,000
• Car loan balance: $20,000
• Credit card limit: $10,000 (banks count the limit, not the balance)

Step 1: Add up all debts
$650,000 + $20,000 + $10,000 = $680,000 total debt
Step 2: Divide by your income
$680,000 ÷ $120,000 = 5.67
Your DTI = 5.67

This is below 6, so it is not considered a “high-DTI loan” under APRA’s new rule.

Why is APRA doing this now?

APRA has been monitoring lending patterns closely and has noticed a clear shift over the past few years. High debt-to-income loans, especially those taken out by property investors, have begun rising again.

In simple terms, more borrowers are taking on debts that are very large compared to their incomes. This trend has been increasing since around 2023, and larger banks have been responsible for a growing share of these higher-risk loans.
APRA believes that if this continues unchecked, households could become more financially stretched, especially if interest rates change or the economy slows.
By setting limits now, APRA wants to prevent these risks from building up rather than waiting until they become a serious problem.

Will this make it harder to get a home loan?

For most people, no. APRA has said the limit is not currently binding, which means most banks are nowhere near their 20% allowance for high-DTI loans. However, over time, the rule may matter more for certain groups:

Most likely to be affected:
• Investors who often take on higher debt levels
• Buyers in expensive cities, where loan sizes are naturally larger
• Borrowers with lower incomes who are borrowing near their maximum capacity

Least likely to be affected:
• First-home buyers with moderate borrowing
• Households with stable incomes and low existing debt
• Anyone with a DTI well below 6

What this means for you

This change is a reminder to think carefully about:
• How much you borrow
• Whether you can manage repayments if interest rates change
• Your overall level of household debt

The rule is aimed at banks, but it indirectly protects borrowers by reducing the number of people who take on more debt than they can safely manage. Knowing your own DTI gives you a clearer picture of how a bank views your loan application and whether the level of borrowing you are considering is safe for your financial situation.