How this calculation works
We add the incomes entered, deduct your committed monthly outgoings on an annualised basis, then apply indicative income multiples to produce a borrowing range. A second check limits borrowing so that total housing plus debt costs stay within a set share of gross income at your assumed interest rate — whichever gives the lower figure is used.
Your property budget is the estimated mortgage plus the deposit left after the upfront costs you entered. The monthly repayment uses the standard capital-and-interest formula.
adjusted income = (income₁ + income₂) − (monthly commitments × 12)
borrowing (typical) = min(adjusted income × 4.5, payment ceiling)
payment ceiling = principal supported by ((gross income × 0.45) ÷ 12 − commitments)
monthly payment M = P · r ÷ (1 − (1 + r)^−n) where r = annual rate ÷ 12, n = term in months
Assumptions
- •Income multiples of 4× to 4.75× income after commitments.
- •Total housing and debt costs capped at 45% of gross income.
- •Default interest rate assumption of 5% and term of 25 years, both editable.
- •A sensitivity view at 7.5% to show how payments change if rates rise.
- •Capital-and-interest (repayment) basis throughout.
Limitations
- •Lenders assess income types differently — bonus, commission, self-employment and benefits may be treated in whole, in part, or not at all.
- •Credit history, account conduct, dependants, job stability and property type all affect real decisions and are not modelled here.
- •No allowance is made for lender-specific stress rates, product fees or maximum age at end of term.
- •The result is not an offer, an agreement in principle, or an indication that you would be accepted.
Last reviewed: 1 September 2026 · Calculation version 1.0.0
Turning a borrowing range into a buying decision
Why the top number is not a spending target
A household earning £50,000 with no credit commitments produces income-multiple figures of £200,000, £225,000 and £237,500 under our model. The separate payment ceiling can reduce these figures. These are not three lender offers: lenders use different assessments, and some income may not count. Start a property search from a payment you can sustain, not from the largest number on the screen. Childcare, maintenance, insurance and council tax still need room in your real household budget.
Keep buying costs out of the deposit
Suppose you have £30,000 in savings but need £5,000 for legal work, tax and moving, and want to retain £3,000 as a reserve. Only £22,000 is then available as a deposit. Adding all £30,000 to an illustrative £200,000 loan would overstate the available buying budget by £8,000. Check the buying-cost calculator for your nation, replace the estimates with quotes, then return here with the deposit actually available.
What to check before a lender application
Run a lower-income scenario if overtime or bonus is uncertain and try a higher interest rate. A longer term may lower the monthly payment but normally increases lifetime interest. A mortgage in principle is a useful next check, not permission to exchange contracts. Self-employment, variable income, debts and unusual properties need lender-specific assessment; this model cannot reproduce it.
Further reading: MoneyHelper — how to apply for a mortgage. Examples are illustrations using stated inputs, not quotes or personal recommendations.
See our method and limitations or report a correction.