Find out how much you can borrow based on your income and expenses
Lenders typically use these criteria to determine how much you can borrow:
Related: Read our first-time buyer guide for more mortgage advice.
Mortgage affordability is the maximum amount you can realistically borrow for a home purchase, based on your income, expenses, and financial commitments. Unlike a simple mortgage calculator that shows monthly payments, an affordability calculator helps you understand your borrowing capacity before you start house hunting.
Lenders assess affordability using sophisticated algorithms that consider your entire financial picture. This includes not just your income, but also your spending patterns, existing debts, and potential future changes to interest rates.
Lenders consider all forms of regular income including salary, bonuses, commissions, rental income, and benefits. Self-employed applicants may need to provide 2-3 years of accounts.
Credit cards, loans, car finance, and other monthly commitments reduce your available income. Lenders typically want your total debt payments to be under 40% of your gross income.
Lenders assess your spending on essentials like food, utilities, transport, and childcare. They may use their own figures or ask for bank statements to verify your outgoings.
Your credit score affects both the amount you can borrow and the interest rates available to you. A higher score opens doors to better deals and higher loan amounts.
Typical Income Multiple: 4-4.5 times annual income
First-time buyers often benefit from government schemes like Help to Buy or Shared Ownership, which can increase affordability. However, they may face stricter stress testing due to lack of property ownership history.
Example: £40,000 annual income typically qualifies for £160,000-£180,000 mortgage (depending on deposit and other factors).
Income Assessment: Usually based on average of 2-3 years' net profit
Self-employed borrowers face additional scrutiny but can still access competitive rates. Lenders may require SA302 forms, business accounts, and accountant certification.
Tip: Consider specialist self-employed mortgage lenders who understand irregular income patterns.
Definition: Borrowing more than 85% of property value
High loan-to-value mortgages (90-95% LTV) require excellent credit scores and stable income. Affordability criteria become stricter, and rates are typically higher.
Strategy: Consider waiting to save a larger deposit if possible, as this significantly improves your options.
Since 2014, UK lenders must stress test your ability to afford mortgage payments if interest rates increase. This typically involves:
Testing affordability at your mortgage rate plus 3 percentage points
Testing affordability at the lender's standard variable rate
Impact: You might qualify for less than the basic income multiple suggests, particularly in low-rate environments.
While our calculator provides a good starting point, consider speaking to a mortgage advisor if you have:
A qualified mortgage advisor can assess your specific situation and may identify lenders with more flexible criteria.