How lenders work out what you can borrow
Many UK lenders start with a multiple of your income, often around 4 to 4.5 times, and some lend more to some borrowers. They then check your outgoings, debts and credit history, and test whether you could still afford the payments if interest rates rose.
The Bank of England also limits how much lending each lender can do at 4.5 times income or more, so higher multiples are harder to get.
Worked example
On a £50,000 income at 4.5 times, you could borrow about £225,000. With a £30,000 deposit, that's a property price of about £255,000, and the monthly payment at 4.5% over 25 years would be £1,250.62. At 4 times income, the loan would be £200,000.
Before you apply
Check that the monthly payment fits your budget, not just the maximum a lender will offer. Lenders look at your outgoings and debts as well as your income.
Check that the monthly payment fits your budget, not just the maximum a lender will offer. A mortgage broker or an agreement in principle can give you a firmer figure.
How the result is worked out
The loan is your annual income multiplied by the income multiple you choose. The property price is that loan plus your deposit, and the monthly payment is the repayment on the loan at your rate and term.
Lenders usually cap lending at around 4.5 times income, but most people are offered less, according to MoneyHelper.
Inputs for the mortgage affordability calculator
Annual income
Your gross annual income before tax.
Income multiple
How many times your income a lender might lend. 4.5 is common; some lenders go higher for some borrowers.
Deposit
The money you're putting down, which adds to the price you can afford.
Interest rate (per year)
The annual interest rate on your mortgage. The rate shown is only an example, so enter the rate from your quote.
Term
How many years you'll repay over. A longer term means paying interest for longer.
CALCULATOR QUESTIONS
Mortgage affordability calculator questions
How much can I borrow for a mortgage?
Many lenders lend around 4 to 4.5 times your income, depending on your outgoings and credit history. Enter your details above for an estimate.
Can I borrow 5 times my salary?
Some lenders do for some borrowers, often those with higher incomes, but it's less common.
What else do lenders check?
Your outgoings, debts, credit history and whether you could still pay if rates rose.
Is this a guarantee?
No. It's an estimate; only a lender can confirm what you can borrow.