How Much Can You Borrow for a Mortgage, and Should You?
By The Bureau of Wealth Team 1148 words
This article is general information, not financial advice. Consider your own circumstances or speak to a qualified adviser before acting on it.
A lender's maximum tells you what passed its affordability model. Whether you can live with the payment when your fixed rate ends is a separate question, and only you can answer it.
The most a lender will offer is the amount that passed its affordability model on the day you applied. What you can comfortably afford is a different figure: the monthly payment that still fits your take-home pay if rates are higher when your deal ends. For many buyers that means borrowing less than the maximum. This guide is for first-time buyers in the UK who want to set their own borrowing limit before a broker or lender sets one for them.
What lenders must check, and what they don't
The Financial Conduct Authority's responsible lending rules, in MCOB 11.6, say a lender must not go ahead unless it can show the mortgage is affordable for you. When it assesses that, it must take full account of your income net of income tax and National Insurance, your committed spending such as loan and credit card payments, and your household's basic essential spending. It must also take account of the impact of likely future interest rate rises. It is not allowed to rely on the equity in the property or on house prices going up.
There is no legal income multiple. The FCA rules say a lender may choose to cap borrowing at a multiple of your income, but it must still be able to show the loan is affordable. So "4.5 times salary" is a lender's policy, not a regulation, and different lenders set different limits.
What the model can't see is your plans. It doesn't know you want to start a family, change career, or keep paying into a pension above the workplace minimum. That's why the lender's answer is a ceiling.
The rules also shape how your income is counted. Under MCOB 11.6.8 a lender must get evidence of the income you declare, from a source independent of you, and it must not accept self-certification. If you're self-employed or rely on bonuses, a lender may count less of your income than you would, and you should be ready for more paperwork. That can lower the maximum, but it doesn't change what you can afford.
A worked example: the maximum versus a comfortable limit
Take a single buyer in England earning £45,000, with a £25,000 deposit, no other borrowing, a 4.5% mortgage rate over 30 years, and a test of what happens if the rate rises by 3 percentage points. Our mortgage affordability calculator works out take-home pay at £2,993 a month for 2026/27 and gives these results:
| 4.5 times income | 3.5 times income | |
|---|---|---|
| Borrowing | £202,500 | £157,500 |
| Price with deposit | £227,500 | £182,500 |
| Loan to value | 89% | 86% |
| Monthly repayment at 4.5% | £1,026 | £798 |
| Share of take-home pay | 34% | 27% |
| Monthly repayment at 7.5% | £1,416 | £1,101 |
| Share of take-home pay at 7.5% | 47% | 37% |
At 4.5 times income, a 3-point rise takes almost half of this buyer's take-home pay before council tax, energy or food. At 3.5 times, the stressed payment is roughly what the bigger loan costs today. For context, the Office for National Statistics put the average house price in England at £293,000 in June 2026, so the pressure to stretch is real.
Existing debts bite hard. Add £250 a month of car finance to the same 4.5 times example and the calculator shows the repayment plus that commitment taking 43% of take-home pay now, and 56% if rates rise 3 points. Check your ratio with the debt-to-income ratio calculator, and see how quickly you could clear a loan first with the loan repayment calculator.
The five-year fix and the stress test
Here's a detail most affordability articles skip. Under MCOB 11.6.18, a lender must consider likely future interest rates over at least five years from the start of the mortgage, unless your rate is fixed for five years or more. That's one reason a longer fix can sometimes let you borrow more.
It doesn't remove the risk. It moves it to the day the fix ends, when you'll remortgage at whatever rates apply then, possibly with less equity than you hoped. If a longer fix is the only way the numbers work, treat that as a warning sign, not a solution. Run your own test at 3 points above today's rate whatever product you choose.
Your deposit and loan to value
Loan to value (LTV) is the mortgage as a share of the price. Lenders commonly price their deals in LTV bands, so a bigger deposit can cut the rate as well as the loan. In the example, the 3.5 times buyer's LTV is 86%, not 89%, because the same £25,000 is a bigger share of a smaller price.
Don't count your whole savings as deposit. Stamp duty, legal fees, surveys and moving costs all come from the same pot, and GOV.UK's guide to preparing to buy lists them alongside mortgage and land registration fees. First-time buyers in England and Northern Ireland pay no Stamp Duty Land Tax up to £300,000 in 2026/27; check your figure with the stamp duty calculator before you decide how much goes into the deposit.
How to set your own limit
- Start from take-home pay, not salary. List your essential bills, your savings and pension contributions, and any debts.
- Stress the payment yourself. Enter a rate 3 points higher than the deal you're looking at. The stressed payment, plus your bills, should still leave room to save something each month.
- Pick the multiple that passes, then turn it into a maximum price by adding the deposit you'll have left after buying costs.
- Tell your broker that figure before they tell you theirs.
Borrowing close to the maximum can be a reasonable decision. If you're buying with a partner on two secure incomes, have no other debt, will keep an emergency fund after completion, and one income alone could cover the stressed payment, the lender's number may be fine. Go lower if your income is self-employed or variable, if the mortgage needs both incomes and one of you may take time out for children, or if a long term would run into retirement. The FCA rules expect lenders to take account of the drop in income that retirement can bring when a term runs past it. For a decision this large, a regulated mortgage adviser can compare lenders' criteria for you.
Next 10 minutes: run the calculator at 4.5, 4 and 3.5 times your income. Today: write down your stressed payment and your monthly bills side by side. This week: take off your buying costs from your savings and set the maximum price you'll view.
Sources
- Financial Conduct Authority: FCA Handbook MCOB 11.6: Responsible lending and financing
- GOV.UK: Buying a home: preparing to buy
- Office for National Statistics: Private rent and house prices, UK: August 2026
