Published 21st December 2019 · Updated 1st July 2024 by Martin Alexander
Try our mortgage affordability calculator and check whether you can afford a mortgage.
How is mortgage affordability calculated?
Mortgage affordability is based on your annual income and your monthly outgoings. Lenders can then decide whether the mortgage you’ve applied for is affordable.
How many times my salary can I borrow for a mortgage?
Depending on the lender you’ve applied with, you may be able to borrow between three and five times your annual salary, also known as a loan-to-income ratio. Under special circumstances, you may even be able to borrow six times your annual income.
What is a mortgage stress test?
Due to FCA guidance, lenders must also carry out stress tests during a mortgage affordability assessment. This is to check whether a mortgage would be affordable even if circumstances changed, such as being made redundant or if interest rates were to increase.
What can be used as income for a mortgage?
Most lenders will use your annual salary to assess your affordability. Some lenders will also include bonuses and overtime and may allow income from a pension, child maintenance, and income investments, such as buy-to-let.
How many payslips will I need to show my income?
You’ll often require three months’ payslips as a minimum, although some lenders will request six months. That being said, a work contract and P60, along with bank statements, can also outline your salary and can be enough to prove your income.
How much can I borrow if I’m self-employed?
Lenders will use your filed accounts to calculate your mortgage affordability if you’re self-employed. This will usually be between three and five times your net profit amount. You’ll need to have filed at least one set of accounts to be considered for a mortgage, but some lenders will require three years’ accounts.
Will my credit score affect the amount I can borrow?
Having a great credit score can certainly give lenders confidence in your application. A strong credit file shows that you’re reliable with credit and haven’t had any past issues. In comparison, you may struggle to borrow the maximum amount if you have bad credit.