Updated: April 19, 2023
How Much Can You Borrow on a Mortgage?
Wondering how much you’ll be able to borrow on a mortgage? Find out how mortgage affordability works in our in-depth guide.
Author: Pete Mugleston - Mortgage Expert, MD
Updated: May 13, 2022
If you’re looking to buy your next home, having an idea of the amount you can borrow can give you an indication of the properties that are in your price range as well as an idea of your future repayments.
This guide will take you through everything you need to know about lenders’ affordability assessments, why debt-to-income ratios matter, and how you can stretch your budget to boost your mortgage prospects.
The following topics are covered below...
How maximum mortgage borrowing is calculated
Lenders will largely base their maximum mortgage calculations on your income and expenditure, scrutinising your bank statements to consider your essential and discretionary spending as well as your current debt repayments.
They need to be confident you’ll be able to afford the repayments and you’re not over-stretching yourself financially. It’s important to remember that it isn’t just about getting the biggest mortgage possible.
At the outset, the question you should ask yourself is how much mortgage you can afford – and crucially, be realistic with your answer. A broker can help you identify your mortgage affordability limits, as well as how much you’ll be able to borrow based on your income and fixed outgoings, including any existing credit commitments.
Try our mortgage affordability calculator below to get a rough idea of your maximum borrowing.
Mortgage Affordability Calculator
Our affordability calculator can tell you how much you can potentially borrow from a mortgage lender. Simply enter your total household income below and our calculator will do the rest.
You could borrow up to
Most lenders would consider letting you borrow
This is based on 4.5 times your household income, the standard calculation used by the majority of mortgage providers. To borrow more than this, you will need to use a mortgage broker to access specialist lenders.
Some lenders would consider letting you borrow
This is based on 5 times your household income, a salary multiple you might struggle to qualify for without the help of a broker. This income multiple is not widely available to customers who are applying directly with a lender.
A minority of lenders would consider letting you borrow
This is based on 6 times your household income, a salary multiple you will struggle to get without a broker. Six-times salary mortgages are usually only available under very specific circumstances.
Get Started with an expert broker to find out exactly how much you could borrow.
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Maximise your chance of approval with specialist advice from a mortgage expert.
How much mortgage can you get on your salary?
Most lenders will set an income multiple, based on your annual salary, to determine the maximum amount they’ll lend to you. So, if someone with an annual salary of £50,000 approaches a lender who uses a multiple of four times annual salary, then an estimate of what they can borrow would be roughly £200,000.
This criteria will vary from lender to lender, but it’s important to remember that even if you’ve got a low income, there are ways and means that you could still secure a mortgage.
Which income multiples will my lender use?
The most common income multiple is currently 4.5 (or thereabouts), though some lenders will increase this to 5 or above. Others have no maximum at all, and a few have tighter criteria with lower mortgage salary multipliers as a result.
Here’s an example of how different income multiples and annual earnings can impact the maximum mortgage you’ll be offered:
|Income||3x income||4.5x income||5x income||6x income|
What can affect income multiples?
The multiple your lender chooses can vary according to your circumstances and creditworthiness. Someone who works in a high-paid profession such as a doctor or lawyer might be offered a higher income multiple, and the same can be true of those with very large deposits.
Whether you’re buying jointly or individually will also have an impact, with some lenders applying different income multiples accordingly. If you’re buying with someone else you’ll normally be able to borrow more, as lenders will often apply the income multiple on your combined salary.
What other factors can have an impact?
Alongside your income and outgoings, mortgage general eligibility factors can have an indirect impact on the amount you can borrow by limiting or increasing the number of mortgage lenders and deals that you qualify for.
These factors include…
- The amount of deposit you’re able to put down
- The value of the property and your loan-to-value (LTV)
- Your debt-to-income ratio
- The property type.
- Your age and employment status.
- Your credit score.
These factors will be used to calculate your overall level of risk and the maximum amount a lender will offer. If you’re classed as low risk – for example, if you’re employed with a good salary, have a decent deposit and a high credit score – you’ll be viewed more favourably and will likely be offered a higher mortgage as a result.
How do you calculate debt-to-income ratio?
Your debt-to-income ratio is a measure of your monthly income versus your current debts. It’s used to determine how well you’re managing your current debt burden and whether you can take on any more, so it’s something that mortgage lenders will carefully scrutinise.
It’s calculated by dividing your monthly debts by your gross monthly income (your income before any deductions), and is expressed as a percentage. Your debts need to include:
- Personal loans or credit cards
- Current mortgage or rent payments
- Student loan
- Child or spousal support payments
- Any other monthly debt repayments (e.g. furniture accounts or store cards)
So for example, if your gross monthly income is £3,000 and your debt repayments total £1,000, your debt-to-income ratio would be 33% (1,000 / 3,000 = 0.33).
Most lenders would consider a debt-to-income ratio below 30% as being low risk, with anything higher than 50% as high-risk and in between would be looked at on a case-by-case basis.
Try our debt-to-income calculator below to work out what yours is.
Debt to Income Ratio Calculator
You can use our debt-to-income (DTI) ratio calculator to work out how much of your income is going towards your fixed outgoings, expressed as a percentage. Based on that percentage, this tool will tell you whether mortgage lenders will class your DTI as low, medium or high.
Your Debt to Income Ratio is %
Good news! Most mortgage lenders will class your debt-to-income ratio as low. You’re unlikely to be declined for a mortgage based on your outgoings, but speaking to a mortgage broker before applying is still recommended as they can improve your chances of getting the best deal.
Most mortgage lenders will class your debt-to-income ratio as moderate, which means some of them might view your application with caution. Some lenders are much more strict than others when it comes to affordability and debt, so it’s important for you to find a lender who’s more lenient. You should speak to a mortgage broker before you apply to ensure you’re matched with a lender whose criteria you fit.
Most mortgage lenders will class your debt-to-income ratio as high. But that’s where we can help! With so much of your monthly income going towards debt repayments, you could struggle to get approved for a mortgage without the help of a mortgage broker. We can help you find a lender who’s more lenient on debt and affordability, and could still secure a mortgage approval.
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How a broker can help maximise your borrowing
A broker can be invaluable when it comes to determining your affordability and potential mortgage options, with their knowledge of the market and the lenders within it offering a vital level of support. Here are just a few ways that they can help:
- They’ll go through your budget so you know exactly where you stand, and subsequently, the maximum mortgage you’ll be able to afford.
- They’ll know the maximum income multiples offered by lenders, which can be particularly helpful for those on a lower income and who will therefore need a higher multiple to ensure they can borrow the necessary amount.
- They’ll know who typically offers the lowest rates, ensuring your budget can be stretched as far as possible.
- They’ll work with you throughout the application process to increase your chances of being approved.
Ultimately, a broker can make it more likely you’ll get the mortgage that’s right for you. Make an enquiry to see for yourself.
How much can you borrow if you’re self-employed?
It can be a little more difficult for the self-employed to work out how much they can borrow, largely because they’re unlikely to have a fixed income. Instead, lenders will normally take an average of the previous three years’ net earnings as a baseline, before applying the usual income multiple to calculate the borrowing limit.
You’ll need to provide evidence in the form of certified accounts and SA302 forms or tax year overviews, and you’ll need at least two or three years’ worth of accounts. If you’ve only been self-employed for a year or less, it can be more difficult to secure a mortgage, but not impossible, which makes it even more important to seek a specialist broker to help.
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How mortgage repayments are calculated
Mortgage repayments are calculated by dividing the amount you want to borrow by the term of the mortgage, while applying an interest rate and term length to the calculation.
The mortgage fee can be factored in as well (unless you pay it upfront), and the calculation will be different depending on whether you’re seeking a full repayment mortgage or an interest-only deal.
Try our mortgage repayments calculator below to work out what your mortgage payments could look like.
Mortgage Repayment Calculator
Our mortgage repayment calculator can tell you how much your mortgage will cost you each month and overall. Enter the amount you’re borrowing, the term length and interest rate, and our calculator will do the rest.
Total amount paid at end of term:
Get started with an expert broker to find out how much they could help you save on your mortgage repayments.
Get matched with a mortgage affordability expert
Having a broker on your side who knows the intricacies of mortgage affordability can make all the difference when it comes to the success of your application, and your confidence in being able to afford the mortgage itself. That’s where we come in.
Our unique broker matching service can put you in touch with your ideal advisor – we’ll simply take a few details and pair you with one of the brokers in our network that will perfectly suit your circumstances. Your initial consultation will be free and there’s no obligation, just the chance to find the support you need. Call us now on 0808 189 0463 or make an enquiry to get started.
The salary required for a mortgage will largely depend on how much you want to borrow, with the vast majority of lenders not having a minimum income requirement. Of the few that do, the minimum is often low – relatively speaking – with most in the region of £15,000 and only one lender going as high as £25,000.
This applies when you’re hoping to get a joint mortgage too, with income requirements typically the same as if you were applying on your own. Yet the benefit of buying jointly is that you may be able to borrow more thanks to your combined earnings being higher, offering greater scope for your property purchase.
No. An affordability check will take a look at all aspects of your finances and potential property purchase to determine your eligibility for a mortgage, and crucially, will apply a “stress test” to ensure you can still afford it if interest rates were higher. That said, a credit check will comprise a core part of that affordability calculation, but it’s still a different part of the process.
There’s no set formula for what makes a good affordability score, as every lender will have different criteria. Yet a lot of it will be based on your credit score and your ability to pass the lenders’ affordability stress tests, which means the higher the better.
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Mortgage Expert, MD
About the author
Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.
Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for OMA of course!