How much a lender will actually advance
Affordability is capped twice: once by a multiple of income, and again by whether you could still afford the payments at a stressed interest rate. The lower cap wins.
What this calculator does
- Estimates the maximum mortgage from an income multiple and a stressed affordability test.
- Takes existing monthly debt commitments into account.
- Applies whichever of the two caps is lower, which is how lenders actually decide.
- Adds your deposit to give an indicative maximum purchase price.
How the calculation works
Lenders apply two separate ceilings and lend the lower of them. The first is a straightforward multiple of income, commonly around 4.5 times, which acts as a blunt cap on total borrowing. The second is an affordability test: the lender works out what monthly payment you could sustain — a proportion of your income, less existing debt commitments — and then asks how much could be borrowed at a stressed interest rate rather than the rate you are being offered. The stress matters because the FCA requires lenders to consider likely rates over at least five years and to assume a rise of at least one percentage point, unless the rate is fixed for five years or longer. Stressing the payment shrinks the sustainable loan considerably: the same monthly capacity buys much less borrowing at 8% than at 4.5%. Existing debt bites twice, because it reduces the payment you can sustain before the stressed calculation even begins.
The rule
Maximum mortgage = the lower of (income × multiple) and the loan whose payment at the stress rate equals (income × payment ratio ÷ 12) − monthly debt.
Step by step
- Multiply income by the income multiple to get the first cap.
- Take the payment-to-income ratio to find the monthly payment you could sustain.
- Subtract existing monthly debt commitments from that figure.
- Work out the loan whose monthly payment at the stress rate equals that remaining capacity.
- Take the lower of the two caps, and add the deposit to give a maximum purchase price.
Worked example
Someone earning £60,000 with a £50,000 deposit and £250 a month of existing debt, tested at an 8% stress rate over 25 years.
What was entered
| Primary annual income | £60,000 |
|---|---|
| Deposit amount | £50,000 |
| Stress test interest rate | 8% |
| Mortgage term | 25 years |
| Income multiple | 4.5 |
| Max payment-to-income ratio | 0.35 |
| Monthly debt commitments | £250 |
The arithmetic
- The income multiple cap is £60,000 × 4.5 = £270,000.
- A 35% payment-to-income ratio gives £60,000 × 0.35 ÷ 12 = £1,750 a month.
- Existing debt of £250 a month reduces sustainable capacity to £1,500.
- A £1,500 monthly payment at the stressed 8% over 25 years supports a loan of about £194,347.
- The stress test is the binding constraint, so the maximum mortgage is £194,347 rather than £270,000.
- Adding the £50,000 deposit gives an indicative maximum purchase price of about £244,347.
- Clearing the £250 of monthly debt would lift sustainable capacity back to £1,750 and raise the cap materially.
What the calculator returns
| Maximum mortgage | £194,346.78 |
|---|---|
| Indicative maximum purchase price | £244,346.78 |
| Sustainable monthly payment | £1,500.00 |
Key assumptions
- The income multiple and payment-to-income ratio you enter reflect the lender you intend to approach; both vary between lenders.
- The stress rate is the rate the lender tests against, not the rate you would pay.
- Income is treated as a single annual figure before tax.
Limitations
- This is an estimate, not a decision in principle. Lenders assess credit history, employment type, dependants, committed expenditure and the property itself, none of which appear here.
- Self-employed, contract, bonus and commission income are assessed differently and often more conservatively.
- Some lenders allow higher multiples above an income threshold, or for specific professions, and some apply a lower multiple at high loan-to-value.
- The calculator does not model the deposit's effect on the rate you would be offered, which itself affects affordability.
- Stamp duty, legal fees and moving costs come out of the same deposit, so the maximum purchase price is optimistic if the deposit is all you have.
Common questions
Why is the stress test lower than my income multiple?
Does clearing a credit card really increase what I can borrow?
Is 4.5 times income a hard limit?
Why do two lenders give me very different answers?
Related calculators
- UK Mortgage Calculator — Turn the maximum borrowing into an actual monthly payment at a real rate.
- Loan-to-Value (LTV) Calculator — Check what loan-to-value your deposit gives at the price you are considering.
- Stamp Duty Land Tax Calculator — Stamp duty comes out of the same cash as the deposit.
Official sources
Every figure in this guide was checked against the sources below. Where a source could not confirm a figure, it is marked as requiring verification rather than presented as settled.
- MCOB 11.6: Responsible lending, and responsible financing of home purchase plans — Financial Conduct AuthorityMCOB 11.6.18R: lenders must consider likely interest rates over at least five years and must assume a rise of at least 1% over that period, unless the rate is fixed for five years or more
- How much can I borrow for a mortgage? — MoneyHelperHow lenders assess borrowing capacity