How Overseas Income Is Assessed for NZ Mortgages

But while NZ banks do accept foreign income, they don’t treat it the same as local earnings. They convert, scale, and test it through strict risk filters before deciding how much you can actually borrow. Understanding these rules can help you prepare properly and avoid rejection.

Why Banks Treat Overseas Income Differently

New Zealand lenders assess overseas income conservatively because it carries additional risks: currency volatility, documentation complexity, and reduced visibility into foreign employers or tax systems. Even high earners abroad can find their assessed income reduced once banks apply conversion and scaling rules.

How Banks Convert and “Scale” Foreign Income

When you apply for a NZ mortgage with foreign income, the first step is conversion — the bank converts your earnings to NZD equivalent using either current or averaged exchange rates.

Then comes scaling: lenders apply a discount to account for exchange rate risk and economic uncertainty. Most banks use 80–90% of your converted income for servicing calculations, meaning they’ll effectively reduce your usable income by 10–20%. For example, if you earn $100,000 USD, converted to $160,000 NZD, the bank might only count $128,000 NZD (80%) for lending purposes. Currencies seen as less stable can face steeper discounts — up to 30–40% in extreme cases.

Some banks also exclude variable income like bonuses, commission, or overtime unless it’s consistent and well-documented.

Documentation Requirements

To use foreign income, you must prove it thoroughly. Expect to provide: recent payslips (typically three consecutive months), an employment contract, and bank statements showing salary deposits.

You may also need tax returns or audited accounts if you’re self-employed. Banks often ask for employer reference letters confirming your position, salary, and allowances.

All overseas documents must be translated and notarised if not in English. You’ll also need to document the source of any deposit funds under NZ’s anti-money-laundering (AML) laws, and provide foreign credit reports where available.

If you’re planning to relocate to NZ soon, having a signed NZ employment contract strengthens your case significantly.

How Different Income Types Are Treated

PAYE / salaried income: The simplest case. Income from stable economies such as Australia, the UK, or Canada is usually converted and scaled at 80–90%. If your employer supports relocation or you’ll continue working remotely under a NZ contract, that helps.
Self-employed or contractor income: Treated more cautiously. You’ll need at least two years of financial statements, profit-and-loss reports, and overseas tax filings. Because self-employment adds volatility, banks may scale income more aggressively — sometimes accepting only 70–80% of net profit.
Mixed or multiple incomes: If you combine NZ income, rental income, and foreign salary, lenders will convert and scale each component separately. Local income carries more weight.
Foreign rental income: This is discounted twice — once for exchange rate risk, and again (typically 20–25%) for maintenance, tax, and vacancy risk.

Example: How Scaling Changes Borrowing Power

Example A: You earn USD 100,000. Converted at 1.6 = NZD 160,000. The bank applies 85% scaling → assessed income = NZD 136,000.
Example B: You earn GBP 80,000. Converted at 2.0 = NZD 160,000. The bank scales to 80% → NZD 128,000.
Example C: You’re self-employed overseas with net profit equivalent to NZD 120,000. After conversion and additional risk adjustment, the bank may accept only NZD 84,000–96,000 (70–80%).

Servicing & Debt-to-Income Testing

Once your scaled income is established, banks apply normal servicing tests — checking expenses, debts, and applying a “stress” interest rate to ensure you can afford repayments even if rates rise. If you earn entirely offshore, lenders may use more conservative thresholds or higher buffers. In some cases, they’ll request a larger deposit or a NZ-based guarantor to offset uncertainty.

Common Risks & Pitfalls

• Currency fluctuations: Exchange rate drops can reduce your assessed income mid-application.

• Insufficient documentation: Missing or uncertified records are a top reason for delays or declines.

• Country risk: Income from volatile economies may be heavily discounted.

• Variable income exclusion: Banks may ignore bonuses or overtime unless proven consistent.

• Self-employed instability: New or fluctuating businesses face stricter scrutiny.

• Deposit shortfalls: Weaker assessed income may force you to provide a bigger deposit.

• Exchange timing: If your deposit is held in foreign currency, its NZD value can change before settlement.

• Translation issues: Poorly translated or uncertified documents won’t be accepted.

Best Practices for Using Overseas Income Successfully

• Use stable currencies (AUD, USD, GBP, EUR) where possible.

• Convert or hold some funds in NZD before applying to show preparedness.

• Ensure all documents are certified and translated early.

• Show at least 6–12 months of consistent income history.

• If you plan to relocate, secure a NZ job offer to strengthen servicing.

• Work with a mortgage broker experienced in foreign income — they can match you with lenders who specialise in expat or offshore applicants.

• Be transparent: banks dislike surprises or unexplained income sources.

• Finally, ask your broker how much scaling each bank applies — sometimes they can negotiate less discount if your case is strong.

Summary & Key Takeaways

You can absolutely use overseas income to qualify for a NZ mortgage — but expect your usable income to be reduced through conversion and scaling. Lenders are cautious with foreign earnings due to exchange and verification risks. Consistent, well-documented income from stable countries is viewed most favourably; self-employed or variable income is harder to use. The stronger your paperwork and the earlier you prepare, the higher your approval odds.

Talk to a New Zealand Mortgages adviser to find out how your foreign income could be assessed — and which lenders offer the most flexibility for overseas borrowers.