What this calculator does
Takes gross annual income (individual or combined), an interest rate, and a mortgage term. Returns three borrowing estimates based on standard income multiples (4×, 4.5×, 5×), the corresponding monthly repayments at the entered rate, and a stress-tested monthly repayment at the entered rate plus 3% — the standard affordability test lenders use.
The formula
Borrowing estimate = Gross annual income × income multiple Conservative: income × 4.0 (minimum most lenders will offer) Standard: income × 4.5 (most common for standard applications) High earner: income × 5.0 (specialist lenders, high earners, professionals) For joint applications: combined gross annual income × multiple
Capital repayment mortgage monthly payment: M = P × [r × (1 + r)^n] / [(1 + r)^n − 1] Where: M = monthly payment (£) P = loan amount (borrowing estimate) (£) r = monthly interest rate = annual rate / 12 n = term in months = years × 12 Stress test: same formula with r = (annual rate + 3%) / 12
Assumptions
- Capital repayment mortgage (not interest-only).
- A single interest rate for the full term — in practice, most borrowers remortgage every 2–5 years at the prevailing rate.
- The income multiple is applied to gross income before tax and NI.
- The stress test adds 3 percentage points to the entered interest rate — this is the standard buffer used by most UK lenders under FCA affordability rules.
- No fees (arrangement fees, valuation fees, broker fees) are added to the loan or payment calculation.
- No deposit or property value is assumed unless entered — the calculator estimates borrowing capacity, not maximum property price.
Data sources
| Figure | Value used | Source | Last checked |
|---|---|---|---|
| Income multiples (4×, 4.5×, 5×) | Industry standard | FCA Mortgage Conduct of Business Sourcebook (MCOB); typical lender criteria | May 2026 |
| Affordability stress test (+3%) | +3 percentage points | FCA MCOB 11.6 — lenders must test affordability at a stressed rate | May 2026 |
Income multiples are not set by HMRC or the government — they reflect typical lender criteria and vary by lender, credit profile, and loan-to-value. The figures shown (4×, 4.5×, 5×) represent the practical range across mainstream and specialist lenders.
Limitations
- Income multiples are indicative only. Actual lending decisions depend on credit score, existing debt, outgoings (childcare, loans, credit cards), employment type (self-employed applicants face stricter scrutiny), and LTV.
- Does not model interest-only mortgages.
- Does not account for deposit size, property valuation, or loan-to-value ratios beyond what the user enters.
- Does not calculate stamp duty, solicitor fees, or survey costs — use the Stamp Duty Calculator for the tax element.
- Self-employed borrowers are typically assessed on 2–3 years' average profit, not gross income. This calculator uses a salary-equivalent approach that may overstate borrowing capacity for self-employed applicants.
- Your home may be repossessed if you do not keep up repayments on your mortgage.
Worked example — £50,000 gross annual income, 4.5% interest rate, 25-year term
Borrowing estimates:
- 4×: £50,000 × 4.0 = £200,000
- 4.5×: £50,000 × 4.5 = £225,000
- 5×: £50,000 × 5.0 = £250,000
Monthly repayment on £225,000 at 4.5% over 25 years:
Monthly rate: r = 4.5% / 12 = 0.375% = 0.00375 Months: n = 25 × 12 = 300 M = 225,000 × [0.00375 × (1.00375)^300] / [(1.00375)^300 − 1] = 225,000 × [0.00375 × 3.074] / [3.074 − 1] = 225,000 × 0.01153 / 2.074 ≈ £1,251/month
Stress test at 7.5% (4.5% + 3%):
Monthly rate: r = 7.5% / 12 = 0.625% = 0.00625 M = 225,000 × [0.00625 × (1.00625)^300] / [(1.00625)^300 − 1] = 225,000 × [0.00625 × 6.483] / [6.483 − 1] = 225,000 × 0.04052 / 5.483 ≈ £1,664/month
The stress test result shows whether the borrower could afford the mortgage if rates rose by 3%.
Changelog
| Date | Change |
|---|---|
| May 2026 | Initial publication |