How Do Banks Calculate Mortgage Affordability?

What is the income-multiple step?

Every UK lender starts with a loan-to-income cap. The regulator limits how much of a lender's new lending can sit at 4.5 times income or more, so 4.5x is the common ceiling; above it, lenders ration the higher multiples to borrowers they consider lower-risk — typically higher earners, professionals, or applicants with a bigger deposit. The result is a range, not a number. On a £35,000 salary the ceiling alone runs from about £157,200 at the most cautious lender to £192,500 at the most generous (June 2026 figures from our lender panel). The lender income multiples table shows who sits where.

What is the affordability-model step?

The second step is the one most people have not seen. The bank converts your gross income to net monthly pay, then subtracts:

• Committed outgoings — loan and card payments, car finance, childcare, maintenance, student loan deductions. Some lenders count a card balance at 3% a month, others at 5%.
• A living-cost allowance — an ONS-derived figure for a household of your size, applied whether or not you spend that much. This is why a bank asks how many dependants you have.
• The stressed mortgage payment — the repayment on the proposed loan at a rate several points above the product rate. Five-year (or longer) fixes are often stressed at a lower rate, which is why a longer fix can raise your maximum.

If what is left after those deductions is positive, the loan passes. The bank then searches for the largest loan that still passes; if that is lower than the income-multiple ceiling, it becomes your maximum.

Why does every bank get a different answer?

Because each of the inputs above is a policy choice. One bank uses 4.49x below £45,000 of income and 5.5x above £100,000; another uses a flat 4.75x. One counts 100% of overtime, another 50%. One stresses at 6.5%, another at 8%. One deducts pension contributions, another adds them back. Stack those choices together and the same applicant can be offered figures £50,000 or more apart — why lenders offer different amounts walks through the mechanics, and the Lender Lottery study puts numbers on the spread.

What does a worked example look like?

Take a single applicant on £35,000 with a £250 monthly car finance payment and no children. Step one: at 4.5x the ceiling is £157,500. Step two: net pay of roughly £2,400 a month, less £250 finance, less a single-person living-cost allowance, leaves a surplus that has to cover the stressed payment. If the stressed payment on £157,500 is more than that surplus, the bank trims the loan until it fits — so the car finance, not the salary, ends up setting the maximum. Clear the finance before applying and step two stops binding; the ceiling returns to £157,500.

What else does a bank check before approving?

Affordability is one of four gates. The others are your credit file (missed payments, defaults, CCJs and how recent they are), the lender's eligibility criteria (employment type and length, visa or residency status, property construction, age at the end of the term) and the surveyor's valuation, which fixes the loan-to-value the bank will actually lend against. A case can clear affordability comfortably and still fall at any of the other three — the declined on affordability guide covers what to do when the numbers, rather than the rules, are the problem.

How can I see what each bank would calculate for me?

Every lender publishes an affordability calculator for brokers, and they all take the same inputs. Our check enters your details into 58 of them at once and returns each lender's maximum side by side — no credit search, and the how it works page explains what happens to your data. If you would rather see the theory in more depth first, the full guide to how mortgage affordability is calculated covers the 2026 rules, stress tests and what counts as income.