How Much Mortgage Can I Afford?
Buying a home is one of the biggest financial decisions most of us make. The question of how much mortgage you can comfortably afford depends on income, debts, the interest rate you expect to pay and how long you want the mortgage to run.
This guide breaks down the most common UK affordability checks and shows you how to apply them to your own situation. You can plug your numbers into the free HouseBudget Calculator to see personalised estimates for both monthly payments and potential property price ranges.
The big three factors lenders consider
- Your disposable income. Lenders look at take-home pay minus regular commitments to see what is left for a mortgage.
- Existing debts and credit commitments. Loans, car finance and credit cards reduce the amount you can safely put toward a home loan.
- Interest rate and term. Higher rates increase monthly payments, while a longer term can lower payments but increase total interest paid.
Estimating a safe monthly payment
A common starting point is to keep housing costs to 25–35% of monthly take-home pay after other debts. If your household brings in £3,200 after tax and you choose 30%, that suggests £960 per month as a working mortgage budget.
The HouseBudget Calculator follows a similar approach. Enter your income and monthly debts, then choose a target percentage to see a suggested payment.
Translating payment into borrowing power
Once you have a monthly payment you are comfortable with, the next step is to work out how much borrowing that supports. The calculator converts your monthly payment into a mortgage size using your chosen interest rate and term.
For example, £960 per month at a 5% interest rate over 25 years could roughly support a mortgage of around £170,000. Add your deposit to see an estimated property price range.
Income multiples as a sense-check
Many UK lenders apply an income multiple cap such as 4.5x annual income. If your household take-home pay equates to £40,000 per year, 4.5x would be £180,000. The calculator lets you compare your payment-based figure against an income-multiple cap to highlight the tighter of the two.
Considering stress rates
Affordability tests often include a higher “stress rate” to check that you could cope if rates rise. Using a 7% stress rate, for example, might show that the same borrowing would mean a monthly payment of £1,200 instead of £960. If that feels too tight, consider lowering your target borrowing.
Practical steps to calculate your own limit
- Gather your numbers. Note monthly take-home income and regular debt payments.
- Pick a comfort percentage. Start around 30% of take-home pay and adjust up or down depending on your risk appetite.
- Use the calculator. Enter income, debts, interest rate, term and deposit into the HouseBudget Calculator to see a payment and borrowing estimate.
- Compare to income multiples. Check whether a typical lender cap would reduce your maximum borrowing.
- Apply a stress rate. Sense-check whether a higher rate would still be manageable for your budget.
FAQs
How big a deposit do I need?
In the UK, first-time buyers often need at least 5–10% of the property price as a deposit. A larger deposit can unlock better rates and reduce monthly payments.
Should I choose a longer mortgage term?
A longer term lowers the monthly cost but increases the total interest you pay. If cashflow is tight, a longer term can help you get started, but consider overpaying later if allowed.
What if my income or rates change?
Revisit your numbers whenever your income shifts significantly or when your fixed-rate period ends. A quick run through the HouseBudget Calculator can highlight whether you need to adjust your property search or renegotiation plans.