Before you start viewing properties or speaking to estate agents, it helps to understand how much you can realistically borrow. The amount a lender will offer can vary widely between banks and building societies, even when your income is the same. This guide explains how affordability is calculated, what affects your maximum borrowing, and how to get a clear idea of your budget before you apply for a residential mortgage.
We’ll look at income multiples, monthly outgoings, credit history, deposit size and how different lenders assess risk. By the end, you’ll have a much clearer picture of what you may be able to borrow and what steps could help increase that figure.
How Lenders Work Out Your Borrowing Capacity
Lenders use affordability models to work out how much you can safely afford each month, even if interest rates rise. They don’t just look at your salary — they take a full view of your finances.
Typical factors include:
- ✔️ Your gross annual income (PAYE or self-employed)
- ✔️ Any bonuses, commission, overtime or allowances
- ✔️ Existing credit commitments (loans, credit cards, car finance)
- ✔️ Regular household bills and essential spending
- ✔️ Childcare costs and financial dependants
- ✔️ Your credit score and repayment history
- ✔️ Deposit size and target property price
- ✔️ Mortgage term and product type
These inputs help the lender decide the maximum monthly payment they are comfortable with and, from there, the total mortgage amount.
Income Multiples – The Standard Benchmark
Most lenders start with an income multiple. As a rough guide, many will offer between 4 and 5 times your annual income, depending on the rest of your profile.
Example income multiple calculations:
- £30,000 income → roughly £120,000 to £150,000 borrowing
- £45,000 income → roughly £180,000 to £225,000 borrowing
- £60,000 income → roughly £240,000 to £300,000 borrowing
These are only illustrations. Affordability checks and your overall situation can push figures up or down.
Worked Examples – What Borrowing Looks Like in Practice
Example 1: Single Applicant (PAYE)
- Income: £38,000
- Debts: £150 per month car finance
- Deposit: 10%
Typical borrowing range: around £150,000 to £175,000, depending on the lender, product and mortgage term.
Example 2: Couple (Joint Application)
- Applicant 1: £33,000
- Applicant 2: £29,000
- Debts: £100 per month credit card payment
- Deposit: 15%
Typical borrowing range: around £240,000 to £270,000 with many mainstream lenders.
Example 3: Limited Company Director (Self-Employed)
- Salary: £12,000
- Dividends: £35,000
- Retained profit: £52,000
Typical borrowing range: around £180,000 to £230,000 depending on whether a lender will consider retained profits in addition to salary and dividends.
When You May Be Able to Borrow More (5.5x Income or Higher)
Some lenders offer higher income multiples for applicants with strong overall profiles. You might access up to around 5.5 times income if:
- ✔️ Your income is above a certain threshold (often £75,000+)
- ✔️ Your credit history is clean and well-established
- ✔️ Your disposable income is high relative to your outgoings
- ✔️ You have a stronger deposit or lower LTV
- ✔️ You work in a profession some lenders view as lower risk
These higher multiples are not guaranteed and are assessed on a case-by-case basis.
What Can Reduce How Much You Can Borrow?
Even with a good income, certain factors can reduce your maximum borrowing:
- ❌ High credit card balances or store cards
- ❌ Personal loans or car finance agreements
- ❌ Regular overdraft usage
- ❌ Significant childcare or school fees
- ❌ Shorter mortgage terms (e.g. aiming for 20 years instead of 30)
- ❌ Recent missed payments or adverse credit
Every monthly commitment you have reduces the surplus income lenders use in their calculations. Managing down debts and outgoings can make a noticeable difference to your borrowing power.
How Deposit Size and LTV Affect Borrowing
Your deposit plays a key role in your Loan-to-Value (LTV) ratio. While affordability is driven mainly by income and outgoings, a larger deposit can:
- ✔️ Unlock lower interest rates
- ✔️ Improve your credit score with lenders
- ✔️ Make an application more attractive if your profile is marginal
If you want a deeper breakdown of deposit bands and how they work, see our dedicated guide on mortgage deposit requirements and our explainer on Loan-to-Value (LTV) ratios.
Self-Employed Borrowing – How Lenders View Your Income
If you’re self-employed, a contractor or a company director, lenders assess income differently. Instead of payslips, they look at overall business performance and declared income.
They will typically consider:
- ✔️ 2–3 years’ accounts or SA302s and tax year overviews
- ✔️ Trends in profit (steady, rising or falling)
- ✔️ Whether income is salary and dividends, or share of profit
- ✔️ The stability of your trading history
Some lenders are more flexible than others, particularly for contractors or limited company directors. A number of them have specific products for first-time buyers and growing businesses.
Joint Applications and Combining Income
Applying with a partner or another family member can increase borrowing because the lender combines your incomes.
Example:
- Applicant 1: £32,000
- Applicant 2: £28,000
- Total income: £60,000
Many lenders might offer in the region of £240,000 to £300,000 depending on your overall profile and other commitments.
If you’re planning a joint purchase, you may also find our homebuyer guide useful for understanding the full process from offer to completion.
How to Improve Your Borrowing Power
There are several practical steps that can help maximise the amount you may be able to borrow:
- ✔️ Reduce credit card balances and overdraft use
- ✔️ Clear smaller loans where possible
- ✔️ Avoid new finance agreements in the months before applying
- ✔️ Consider a slightly longer mortgage term to lower monthly payments
- ✔️ Build a slightly larger deposit if you are near the next LTV band
Using Calculators vs Getting a Tailored Assessment
Online tools are useful for a quick indication, but they cannot capture every detail of your situation. An affordability calculator may use a simple income multiple or basic assumptions that differ from what lenders actually use.
To get a rough idea today, you can try the tools on our mortgage calculators page. For a more accurate figure and to understand how different lenders might view your circumstances, it often helps to speak with a professional.
What’s the Next Step If You’re Ready to Explore Options?
If you’re starting to plan a purchase or remortgage and want a clearer view of your borrowing potential, you can:
- ✔️ Read related guides such as our deposit guide or remortgage timeline
- ✔️ Review the main residential mortgage page for an overview of how applications run
- ✔️ Get in touch to be connected with an FCA-regulated adviser who can run detailed affordability checks tailored to your situation
If you’d like to talk through figures or next steps, you can reach out via our contact page and we’ll help you take it from there.
All mortgage advice is provided by FCA-regulated advisers. Your home may be repossessed if you do not keep up repayments on your mortgage.
FAQs
How accurate are online mortgage calculators?
They provide a useful estimate but do not use the full affordability checks lenders apply. They are best used as a starting point rather than a final figure.
Do lenders use bonus or overtime income?
Many do, but often only a percentage and only when it is consistent and well evidenced. Some lenders are more generous with variable income than others.
Can I get a mortgage if I have existing debt?
Yes, but your maximum borrowing may be lower depending on how much you pay each month towards loans, cards and finance agreements.
Does a bigger deposit always mean I can borrow more?
It doesn’t automatically increase the amount you can borrow, but it can improve your interest rate and overall profile, which may indirectly help.
Can extending the mortgage term increase how much I can borrow?
Yes. A longer term generally reduces monthly payments, which can increase the maximum loan amount that passes a lender’s affordability checks.