Two ways lenders decide how much you can borrow
UK lenders use two checks, and the lower of the two usually wins.
- Income multiples. A cap on the loan as a multiple of gross income. Most lenders lend 4–4.5 times, some go to 5–5.5 times for higher incomes or professionals, and Bank of England rules limit how many loans each lender can make above 4.5 times.
- Affordability. Lenders model what’s left of your take-home pay after debts, childcare and living costs, then check you could still pay if rates rose. That’s the stress test.
The calculator works out both. It takes your take-home pay from our PAYE engine, takes off your monthly commitments, assumes a share of what’s left can go on the mortgage, and finds the largest loan that’s affordable at your rate plus the stress margin.
Worked example
A couple earning a combined £40,000 with no debts, borrowing over 30 years:
- 4.5× income gives a loan of £180,000.
- At the average 2-year fixed rate of 5.13%, that costs £981 a month.
- At the stress rate of 8.13%, it would be £1,337 a month. The lender wants to see you could manage that.
What reduces how much you can borrow
- Loans and car finance. A £300/month car payment can cut borrowing by tens of thousands of pounds.
- Credit cards. Lenders count the minimum payment, or 3% of the balance, even if you clear it monthly.
- Childcare and dependants.
- A shorter term. 25 years instead of 35 raises the monthly payment.
- Variable income. Bonus, overtime and self-employed income are often averaged or only partly counted.
Each £100 a month of commitments you clear frees up the borrowing shown in the calculator’s warning.
Loan-to-value and your rate
Loan-to-value (LTV) is the loan as a percentage of the property price. Rates step down at 95%, 90%, 85%, 75% and 60% LTV, so a slightly bigger deposit can move you into a cheaper band. The calculator shows the band you’d fall into.
Interest rates in the calculator
We pre-fill the interest rate with the latest Bank of England average 2-year fixed rate at 75% LTV and show its date. Rates for 90–95% LTV are usually higher, so check real deals and change the rate to match.
Next steps
Once you have a price range, see the monthly cost and full schedule in the mortgage repayment calculator. Check the stamp duty you’ll pay, and test whether buying beats renting with the rent vs buy calculator.
Important
This tool gives an estimate, not a mortgage offer. Lenders run their own credit checks and affordability models, and the result can be higher or lower. A whole-of-market mortgage broker can tell you what’s realistic for your circumstances.
Frequently asked questions
How much can I borrow on a £40,000 salary?
Typically 4 to 4.5 times income — £160,000 to £180,000 — if you have no other debts. Some lenders go to 5 or 5.5 times for higher earners or specific professions. Debts and childcare reduce it.
What is a mortgage stress test?
Lenders check you could still afford payments if rates rose, usually by testing at their reversion rate or 1–3 percentage points above the deal rate. We use your rate plus 3 points by default; change it under Lender assumptions.
Do lenders use gross or take-home pay?
Income multiples use gross pay. Affordability models look at what's left of your take-home pay after commitments and estimated living costs, which is why debts and childcare matter so much.
Does a bigger deposit let me borrow more?
It doesn't change the loan a lender will offer, but it raises the price you can pay, lowers your loan-to-value and usually gets you a cheaper rate — which improves affordability.
Is this a mortgage in principle?
No. It's an estimate to help you plan. A mortgage in principle needs a lender's credit check and their own affordability model.
How does a credit card affect affordability?
Lenders usually count 3–5% of the balance as a monthly commitment, even if you clear it in full. Paying it down before applying can help.
Can I include a partner’s income?
Yes. Choose With someone to add a second salary. Lenders combine incomes for joint mortgages.
What about self-employed income?
Lenders usually average two years of profits (sole traders) or salary plus dividends (company directors). Enter that average as your income.
Sources
Results are estimates for education and planning, not financial advice. They depend on the figures you enter and the assumptions shown above.