First Time Buyers
How Much Can I Borrow? A First-Time Buyer’s Guide
What you can borrow for a mortgage depends on more than your salary. As a rough starting point, lenders commonly cap borrowing at around 4 to 4.5 times annual household income, but many applicants are offered less and some may qualify for more.
Your income, regular spending, debts, deposit, credit history and mortgage term all affect the final figure.
For example, a household earning £40,000 might use £180,000 as a rough estimate based on 4.5 times income. That is not a promise of a £180,000 mortgage. A lender’s affordability assessment could produce a higher or lower result.
How do lenders calculate how much I can borrow?
Mortgage lenders use their own affordability calculations. Two lenders looking at the same household can reach different answers because their criteria and treatment of income and expenditure differ.
They will usually consider:
Basic salary and other acceptable income
Whether income is permanent, variable or self-employed
Loans, credit cards, car finance and other credit commitments
Childcare, maintenance and other regular costs
The number of financially dependent children or adults
Your deposit and the property’s value
Your credit history
The proposed mortgage term and your age
Whether repayments could remain affordable if interest rates changed
This is why a simple online calculator is useful for an initial estimate, but should not be treated as a lending decision.
Which types of income may count?
Lenders may consider basic salary, overtime, bonuses, commission, benefits, pension income and income from self-employment. However, they do not all accept the same sources or use the same proportion.
Regular overtime might be included, averaged or excluded. A self-employed applicant may be assessed using salary and dividends, company profit or taxable profit, depending on the business structure and lender.
Having evidence such as payslips, bank statements, P60s, tax calculations and accounts can make it easier to obtain a meaningful assessment.
How much can I borrow based on my salary?
The table below shows rough illustrations using income multiples. It is not a mortgage offer or an indication that a particular multiple will be available.
Annual household income | 4 times income | 4.5 times income |
|---|---|---|
£30,000 | £120,000 | £135,000 |
£40,000 | £160,000 | £180,000 |
£50,000 | £200,000 | £225,000 |
£60,000 | £240,000 | £270,000 |
Your potential purchase budget is broadly your available mortgage plus your deposit. With a £20,000 deposit and £180,000 mortgage, the headline figure is £200,000. Keep money for legal work, a survey, moving and any mortgage fees.
Why might I be able to borrow less than expected?
An income multiple can overlook commitments that materially reduce affordability. Common examples include:
High monthly car finance or loan payments
Significant credit-card balances
Childcare or school costs
Maintenance payments
A short mortgage term
Irregular income that a lender will not fully accept
Recent missed payments or other credit problems
Lenders treat unused credit limits differently. Avoid taking unnecessary new credit before applying and do not hide commitments. Lenders normally review your credit record and finances.
Housing is expensive: what are my options?
If the homes you want cost more than your current budget, the answer is not simply to borrow as much as possible. Start by checking whether your estimate is accurate, then consider the following options.
Increase your deposit
A larger deposit reduces the mortgage required and may provide access to a wider choice of products. First-time buyers will commonly need at least 5% to 10%, although requirements vary by lender, property and circumstances.
A Lifetime ISA may help eligible buyers save. Under the rules current in August 2026, you can contribute up to £4,000 each tax year and receive a 25% government bonus. To use it for a first-home purchase without a withdrawal charge, conditions include a property price of £450,000 or less and at least 12 months having passed since your first payment. Check the latest rules before relying on the money.
Review your commitments
Paying off debt can improve affordability, but using deposit savings may leave you worse off overall. Ask for calculations based on both scenarios first.
Cancel genuinely unused subscriptions and prepare an honest monthly budget. Normal spending should not be temporarily disguised to make an application look stronger.
Consider a longer mortgage term
A longer term can reduce monthly repayments and may improve affordability. The trade-off is that you will usually pay interest for longer and may pay substantially more overall. The term may also be restricted by your age and expected retirement income.
Buy jointly or consider family support
Buying with a partner can increase the income available for assessment, but both parties are normally jointly responsible for the whole mortgage. Some mortgages allow a family member’s income or savings to support an application without them sharing ownership. These arrangements can create legal, tax and financial risks for everyone involved, so independent legal advice may be appropriate.
Look at affordable home ownership schemes
In England, First Homes may offer eligible first-time buyers a property at 30% to 50% below market value. Eligibility rules, local priorities and availability apply, and the discount normally continues when the property is sold.
Shared ownership allows eligible buyers to purchase a share of a property and pay rent on the remainder. It can reduce the initial mortgage and deposit needed, but you must consider rent, service charges, restrictions, future increases and the cost of buying further shares. Schemes and rules differ across the UK, so check the arrangements where you intend to buy.
Adjust the property search
A smaller home or nearby area may be affordable. Check commuting costs, service charges and maintenance, not just the asking price.
How can I improve my position before applying?
Use this preparation checklist:
Check your credit reports and correct genuine errors.
List all income, debts and monthly commitments accurately.
Avoid new borrowing and missed payments where possible.
Keep evidence of your deposit and where it came from.
Prepare recent payslips and bank statements, or the relevant self-employed documents.
Build a separate fund for fees, moving costs and emergencies.
Obtain a tailored affordability assessment before making offers.
A mortgage agreement in principle can indicate what a lender may consider, but it is not a guarantee. The full application still depends on verification, underwriting, the property valuation and the lender’s criteria at that time.
Should I borrow the maximum available?
Not automatically. The lender’s maximum and your comfortable maximum are different numbers. Test the monthly payment against council tax, utilities, insurance, maintenance and your normal lifestyle. Consider how you would cope with a higher rate later, reduced income or an unexpected bill.
Keeping some savings after completion can be more valuable than stretching to the highest purchase price.
When can a mortgage adviser help?
An adviser can compare how suitable lenders assess your finances and explain realistic options. This is particularly useful with variable or self-employed income, family support, credit problems or a small deposit.
My Simple Mortgage can review your circumstances and give you a clearer idea of your potential borrowing and purchase budget before you start making offers. Any mortgage will remain subject to eligibility, affordability, lender criteria and a satisfactory property valuation.
Frequently asked questions
Does a bigger deposit mean I can borrow more?
Not necessarily. A bigger deposit lowers the loan-to-value ratio and may widen the product choice, but income and affordability can still limit the mortgage amount.
Can I get a mortgage with a 5% deposit?
Some mortgages may be available with a 5% deposit, subject to lender criteria and the property. A small deposit can mean fewer options, higher costs and a greater risk of negative equity if property prices fall.
Will clearing debt increase my mortgage borrowing?
It may do, particularly when it removes a significant monthly payment. The result depends on the lender’s calculation, so compare the figures before using deposit savings to repay debt.
Is an online borrowing calculator accurate?
It provides an estimate based on limited information. A lender or adviser assessment using your full income, spending and credit commitments should be more meaningful, but only a full application can produce a mortgage offer.
Your home may be repossessed if you do not keep up repayments on your mortgage.
My Simple Mortgage Ltd T/A My Simple Mortgage is an Appointed Representative of Stonebridge Mortgage Solutions Ltd, which is authorised and regulated by the Financial Conduct Authority. My Simple Mortgage Ltd is registered in England and Wales with company number 09275345. Registered office: The Mount, Etruria Road, Newcastle-under-Lyme, Staffordshire, ST5 0SU. The guidance and/or advice contained within this website is subject to the UK regulatory regime and is therefore targeted at consumers based in the UK. Your home may be repossessed if you do not keep up repayments on your mortgage. The Financial Conduct Authority does not regulate some forms of Buy To Lets.