How much can you afford to borrow for a mortgage?

When buying a home, often the first step is understanding how much can you afford to borrow for a mortgage. Most people want to buy as much house as they can afford, without being overstretched or with too little money to pay the monthly bills.

How much can you afford to borrow for a mortgage?

When deciding how much can you afford to borrow for a mortgage, you’ll need to take a number of factors and costs into account, including:

• Your income – how much you earn, job security and prospects for pay rises
• How much you expect moving and any renovation costs to be
• How much money you need a month for your living costs
• What your expectations are in terms of house prices and mortgage rates
• How much house you want. Are you happy being “house poor”, with a big house but little disposable cash? Or would you prefer a more modest house with more cash in your bank account?
• What safety net you have in terms of savings – or family support?
• Your appetite for risk – how much debt you are comfortable with

Understanding these points will help you calculate what additional costs you’ll incur when you move, consider how much money you need to maintain your desired lifestyle, and how comfortable you are to stretch yourself financially.

Mortgage calculators

Our how much can I borrow for a mortgage calculator is a good place to start to see how much you can afford to borrow for a mortgage.  It looks at how much you are likely to be able to borrow and afford based on your income.  Our mortgage cost calculator will also give you an idea of what your monthly mortgage costs are likely to be.

Use our calculators to see how much you can afford, how much the mortgage will cost you monthly and more

How much mortgage can I get?

Lenders usually let you borrow up to between 4.5 and 5.5 times your salary. But lenders must also assess the monthly payment you can afford, after considering your outgoings as well as your income. This is called an affordability assessment.

How much can you afford to borrow for a mortgage: What lenders take into account

1. Your income: Including your basic income, any other income such as overtime, bonus payments or a second job, income from your pension or investments, any child maintenance or financial support from ex-partners. You’ll need to give evidence of your income in the form of payslips and bank statements. If you’re self-employed you’ll usually need to provide two- or three-years’ worth of tax returns and business accounts. 
2. Your outgoings: The lender will also consider your household spending each month, such as your council tax and bills for gas and electricity, water, broadband, loan or credit cards, car payments, childcare costs, any school fees and insurance. They’ll also take into account your every day expenses such as spending on food, holidays and leisure.
3. Your credit score: They’ll also check your credit score too. Read our guide on 11 tips to improve your credit score for a mortgage.

Lenders will also assess whether you could keep up with your repayments if things change, such as if interest rates increase or if your income changes.

To find out how much different mortgage lenders may be able to offer you on a mortgage, speak to our partners at fee-free mortgage brokers L&C.

How much deposit do I need to get a mortgage?

In terms of how much deposit you need, you’ll usually need at least a 5% deposit. But the bigger the deposit you have, the bigger the choice of mortgages you will have and you’ll usually get access to better first time buyer mortgage rates.

To work out the size of deposit you’ll be able to save, the first step is to draw up a household budget so that you’ll understand how much money you have at your disposal to pay for everything.

The size of deposit you’ll be able to save depends on:

• What savings you have. If you are saving to buy a house, you may want to consider a Lifetime ISA
• What support you get from your family. See our guides on gifted deposits and how to help your child buy a home
• What capital you can raise from selling an existing home, or extending a mortgage on a property you are not selling

Once you’ve added these amounts together, you need to deduct any costs of buying a home, moving and improving, as well as the savings safety-net you want to keep (you will need to have some savings after you move, in case of emergencies). The final sum is the amount you have available as a deposit that you feel you can afford to put down towards the cost of your home.

Can I get a mortgage without a deposit?

Typically, most lenders offer mortgage deals which require at least a 5% deposit to buy a house. A 5% deposit means you’ll need to get a 95% loan to value mortgage. A lot of lenders prefer a 10% deposit and having a larger deposit means you can access lower mortgage rates, making your monthly payments more affordable.

However, it’s possible to buy your first home with no deposit by taking out a 100% mortgage, such as Skipton Building Society’s 100% Track Record mortgage or by taking out a guarantor mortgage with help from your parents or a relative. We explain all your options and what to consider in our guide on how to get a mortgage with no deposit.

To find out about all your mortgage options as a first time buyer, get fee-free mortgage advice from our partners at L&C.

How much mortgage can I afford?

Once you’ve calculated how big your deposit is, you’ll be able to work out how much are able to borrow for your mortgage depending on:

• The size of your deposit. 100% mortgages do exist and with the government mortgage guarantee scheme, there are 95% mortgages out there and Deposit Unlock if you are buying a new build, but ideally, your deposit would be at least 10% of the value of the property. Put simply, the bigger your deposit, the more you can borrow.
• How much outstanding debt you have from other lenders (e.g. bank loans, credit card debts). To improve your chances of getting a mortgage, see our guide on how to improve your credit rating before getting a mortgage.
• Your income. Some banks can lend up to five times salary, although these are maximum figures. Lenders all have slightly different ratios, taking into account joint incomes, bonuses etc.
• The stability of your income. If you are freelance, have just set up a new business, or have unpredictable income, then mortgage lenders will usually only be prepared to offer you smaller mortgages
• The mortgage term. 25 years is the most common term chosen for mortgages but more people are opting for 30 year mortgages to lower their monthly repayments. Bear in mind, the mortgage can cost you more over the long term as you will pay interest for longer.

How much can you borrow for a mortgage if you’re self-employed?

Lenders typically lend up to 4.5 times your income, although this will depend on your circumstances. You may find it harder to get a self-employed mortgage in the UK if your income fluctuates a lot, you don’t have two years of business accounts, a lender has doubts about your business’s long-term viability or if you approach the wrong lender. Speaking to a fee-free mortgage broker means you’ll know which lender is most likely to accept your application.

Additional house-buying costs to budget for

There are other costs involved with buying a house that you need to make sure you can afford. They include:

• The total purchase cost. On top of the house price, you may have to pay for Stamp Duty, conveyancing fees, surveying, mortgage fees etc, which can all add up to 7% onto the house price.
• Don’t forget the estate agent fees you have to pay if you are selling your existing home
• There are also the costs of furnishing your home. On average, home movers spend £5,000 on new goods.
• The cost of building works. What are the emergency works you have to do that can’t be put off – such as getting the boiler to work?

So, how much house can I afford?

The amount you can afford to spend on a house will take into account how much capital you have to play with and how much you can borrow from a mortgage lender (both being your total home-buying budget). The total amount of money available to you needs to cover the total cost of buying your home. If not,  you will need to scale back your ambitions – or find some more money. But being able to afford to buy your new home is only the first step – to avoid repossession or mounting debts, you need to be able to afford to live in it.

Compare today’s best mortgage deals

Will I be able to afford to pay my mortgage and other household bills?

Once you have decided the rough size of the mortgage you are going for, you should find out what the rough monthly costs would be, which will depend on the type of mortgage. It’s important to ask yourself:

• Is the monthly mortgage a payment you can easily afford? A good rule of thumb is that no more than 35 per cent of post-tax income should go on mortgage payments.
• Will the mortgage be more or less than your current rent? If it you are struggling to pay your rent, and the mortgage is more – think again
• Will there be bills – such as council tax, water or insurance – that you are currently not paying? These can add up to thousands of pounds a year (out of your post-tax income)
• What happens if interest rates go up, by 1, 2 or 3%? You need to stress test the mortgage for different scenarios. If you can’t afford an increase in interest rates, you need to get a fixed rate mortgage, which will normally increase your monthly mortgage costs
• What happens if you lose your job, or suffer a fall in income because you have children and go on maternity leave? If you are planning kids, you can’t plan on the basis of dual-income-no-kids lifestyle
• Can you cover the basic maintenance costs of a house? Many new homeowners struggle to pay the always surprisingly large wear and repair costs that go with owning a home (but not renting one)

How do I get a mortgage?

Getting your agreement in principle

Once you have shopped around for the best mortgage offer, see if you will qualify by getting a mortgage in principle, sometimes called an agreement in principle (AiP) or decision in principle (DiP). It’s a statement from a lender on how much they would lend you ‘in principle’ based on information you have provided about your income and outgoings. 

You can get a Mortgage in Principle in just a few minutes with our Mortgage Finder powered by the mortgage experts at L&C. This allows you to check your eligibility against a wide range of lenders’ criteria to see which deals you qualify for, how much you can borrow and what it will cost. You can then click ‘submit’ to receive an online Decision in Principle certificate, which will typically last up to 90 days.

Making a full mortgage application

When you make an offer on a house and it is accepted you need to make your full mortgage application. Read our guide How to make a successful mortgage application.

We’ve partnered with award winning L&C mortgage brokers. They’ll search the market to find you the best deal and won’t charge you a penny for their expert advice. Find a mortgage online or speak to an advisor

What if the lender refuses to give me a big enough mortgage?

If a lender has refused to give you a big enough mortgage or you’ve had an application for a mortgage declined, don’t just apply for another mortgage elsewhere – if you get declined again this will leave a mark on your credit file.

Start by asking the lender why they declined your application. Then speak to a fee-free mortgage broker; they know the mortgage market and may be able to match you to a lender that will lend you the right amount. And if the lender who declined your application doesn’t give a reason why they rejected you, a mortgage broker can assess your previous application and work out where you went wrong.

If the broker advises you that it’s unlikely that you’ll be able to borrow as big a mortgage as you’d hoped, while this may be frustrating, it’s in your best interest to ensure that you’re not financially overstretched because you don’t want to have your home repossessed in the future.

What percentage income should go to your mortgage?

Homeowners with mortgages paid approximately 17.8% of their income on mortgage in 2023, according to research by Statista. But don’t get hung up on what percentage of your income should go on your mortgage as this will be different for everyone. The key thing to consider is that your mortgage must be affordable for you.

What salary do you need to afford a house?

The salary you need to afford a house depends on the price of the house you want to buy. As lenders generally offer up to 4.5 to 5.5 times your annual salary, if you earn £50,000, you may be able to borrow up to £275,000 on a mortgage. If you’re buying with someone else their income will also be taken into account.

How much can you afford to borrow for a mortgage if you have bad credit?

If you have bad credit you may need a bigger deposit and you may not be able to borrow as much. But this will depend on your circumstances including what your credit issues were and how recent they were. Find out more in our guide on Bad credit mortgages.

Is it better to use a mortgage broker or go directly to my bank?

Don’t just go to your bank for a lender, always shop around so that you know you’ve got the best mortgage deal. The easiest way to do this is by using a fee-free mortgage broker. Not only will they scour the market for the best mortgage deal for you but they’ll also match you with a lender that’s most likely to accept your application.

3 steps to get a mortgage: video