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APRA Implements New Cap on High Debt-to-Income Home Loans

Exploring the Impact of APRA's Lending Restrictions on Borrowers and the Housing Market

APRA Implements New Cap on High Debt-to-Income Home Loans?w=400

The information on this website is general in nature and does not take into account your objectives, financial situation, or needs. Consider seeking personal advice from a licensed adviser before acting on any information.

The Australian Prudential Regulation Authority (APRA) has announced a significant policy change aimed at mitigating risks in the housing market.
Effective February 2026, APRA will implement a cap on high debt-to-income (DTI) home loans, limiting banks to issuing no more than 20% of new home loans with DTI ratios of six times or higher.
This measure applies to both owner-occupier and investor loans, excluding new housing developments.
Find out now if you qualify and compare rates, offers and options from multiple lenders - without a credit check!

This policy is designed to curb the growth of highly leveraged lending practices that could pose systemic risks to the financial system. By restricting the proportion of high DTI loans, APRA aims to promote more sustainable lending standards and protect borrowers from potential financial distress.

For prospective homebuyers and investors, this change underscores the importance of maintaining a healthy balance between income and debt obligations. It's advisable to assess financial positions carefully and consider strategies to improve DTI ratios, such as increasing income or reducing existing debts, to enhance loan eligibility under the new guidelines.


Published:Wednesday, 24th Dec 2025
Source: Paige Estritori

Please Note: If this information affects you, seek advice from a licensed professional.

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APRA Implements New Cap on High Debt-to-Income Home Loans
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The Australian Prudential Regulation Authority (APRA) has announced a significant policy change aimed at mitigating risks in the housing market. Effective February 2026, APRA will implement a cap on high debt-to-income (DTI) home loans, limiting banks to issuing no more than 20% of new home loans with DTI ratios of six times or higher. This measure applies to both owner-occupier and investor loans, excluding new housing developments. - read more
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Mortgagor:
A person who offers to assign an asset as security (e.g. real estate) under a mortgage loan contract. The lender (mortgagee) holds the legal ownership of the security until the loan is repaid and the mortgage is discharged.