How lenders decide what you can borrow

Guide · Published 8 August 2026 · Reviewed 8 August 2026

Income multiples are the starting point, not the answer

Almost every lender begins with a multiple of income, commonly somewhere between four and four and a half times, sometimes higher for larger deposits or higher earners. That figure is where the conversation starts. What happens next is where lenders differ enormously.

Two lenders looking at identical paperwork routinely arrive at figures tens of thousands of pounds apart. Neither is wrong. They simply weight things differently, and the weighting is commercial policy rather than arithmetic.

What counts as income, and what does not

This is the biggest source of variation between lenders, and the thing most likely to change your answer.

• Basic salary is counted in full by everyone. No disagreement here.
• Bonus and commission vary wildly. Some lenders count the full average of recent years, some count half, some ignore anything not guaranteed. If a meaningful share of your pay is variable, the lender you choose matters more than almost anything else.
• Overtime is treated similarly, and whether it is described as regular or occasional on your payslips can change the outcome.
• Self-employment usually needs two or three years of accounts or tax calculations. Lenders differ on whether they use the most recent year or an average, which matters a great deal if your income is growing.
• Benefits including child benefit and tax credits are counted by some lenders and not others.
• Second jobs, rental income and pensions may or may not count, and often only partially.

What comes off before the multiple is applied

Lenders reduce your borrowing capacity for ongoing financial commitments. Broadly, the more you are committed to paying every month, the less they will lend.

• Credit commitments: loans, car finance, credit card balances, buy now pay later arrangements.
• Childcare costs, which can reduce borrowing substantially and surprise people who had not thought of them as debt.
• Dependants, with most lenders assuming a cost per child regardless of what you actually spend.
• Maintenance payments and similar ongoing obligations.
• Student loan repayments, which some lenders treat as a commitment and others fold into general affordability.

Because commitments are deducted before the multiple is applied, clearing a monthly commitment frees up considerably more borrowing than the balance you cleared. Paying off £200 a month of car finance can increase what a lender will offer by well over ten thousand pounds.

The stress test

Lenders do not only check you can afford today's rate. They check the mortgage would remain affordable if rates rose substantially, which is why the rate used in their assessment is higher than the one you would actually pay.

This is the mechanism that stops people borrowing an amount that only works while rates stay low. It is also why a very cheap headline rate does not necessarily let you borrow more than a slightly more expensive one.

What they look at beyond the numbers

An affordability calculation gets you a figure. Whether you actually get the mortgage depends on more.

How to find out what you can actually borrow

A calculator gives you a range to plan with. A decision in principle gives you a figure a lender has actually put its name to, based on a soft credit check that does not harm your file, and it carries weight with estate agents that a calculator result does not.

The sensible order is: use a calculator to sanity-check your expectations, speak to a whole-of-market broker if your income is anything other than straightforward, then get a decision in principle before you start viewing seriously. Doing it in that order avoids both wasted viewings and unnecessary hard credit searches.

Borrowing the maximum is not the same as borrowing wisely

A lender's maximum is a limit, not a recommendation. It is calculated on your circumstances today and does not know about the career break you are considering, the car that will need replacing, or how you would feel about the payment if rates rose at the end of your fixed period.

Working out what payment you would be comfortable with, then borrowing to that rather than to the lender's ceiling, is a decision most people are glad of later.

This guide is general information, not financial advice. Lending criteria vary between lenders and change frequently. No calculator can predict a lending decision. Speak to a mortgage broker or lender for anything specific to your circumstances.