How Much Can I Borrow For A Mortgage? | On The Ladder Ep. 5

It’s the number one question we get asked: “How much can I borrow on a mortgage?” And honestly, we wish we could hand you a simple calculator, pop in your salary, multiply by a number, and you’re done. But the reality is a little more nuanced than that. And here’s the good news: that’s not always a bad thing. You might actually be able to borrow more than you think.

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As mortgage advisers, we’re like financial detectives,  pulling together every piece of your picture to maximise what lenders will offer you. In this guide, we’re going to break down exactly how it works, step by step.

In This Guide

1. How Lenders Calculate Affordability
2. Income Multiples Explained
3. What Counts as Income?
4. Your Outgoings & Spending Habits
5. Buying With Someone Else
6. If You’re Self-Employed
7. How Your Deposit Affects Borrowing
8. Top Tips to Maximise Your Mortgage

1. How Lenders Calculate Affordability

When you apply for a mortgage, lenders aren’t just looking at your salary. They’re weighing up something called affordability,  a broader picture of your financial life that covers both what you earn and what you spend.

Here’s what typically goes into the assessment:

The better your overall financial picture, the more flexibility lenders are likely to give you.

2. Income Multiples Explained

Most UK mortgage lenders use an income multiple as a starting point, typically 4 to 4.5 times your annual salary. But some lenders will go as high as 5 or even 6 or 7 times your income, depending on your circumstances.

That’s a £100,000 difference between lenders, which is why working with a mortgage adviser who knows the market is so valuable. We know which lenders are most generous for your particular situation, and we make it our job to match you with the right one.

3. What Counts as Income?

Good news: it’s not just your basic salary. Lenders will often consider a wide range of income sources.

Employed income

Your basic salary is the starting point, but lenders can also factor in bonuses, overtime, and commission — usually averaged over the last 3 to 12 months. So if you regularly earn more than your base pay, make sure your adviser knows.

Benefits and tax credits

Many lenders will consider benefit income including child benefit, tax credits, Universal Credit, and disability benefits. Each lender has different rules about how much of this income they’ll include, so specialist advice really pays off here.

Side hustles and freelance income

These days, more and more people have multiple income streams — freelancing, content creation, tutoring, or a small business on the side. The key is proving consistency. If you can show at least 6 to 12 months of regular payments into your account, some lenders will count it.

Investment and pension income

If you receive pension income or regular returns from investments, these can also be factored in. Your mortgage adviser will help identify which lenders recognise these income types.

4. Your Outgoings & Spending Habits

Your income is only half the story. Lenders will also look carefully at what you spend, and the months before you apply really matter. Here’s how to put your best foot forward:

• ✓ Reduce credit card balances and pay off short-term loans where possible
• ✓ Avoid taking on new financial commitments like car finance or buy-now-pay-later  schemes
• ✓ Keep your overdraft under control,  ideally avoid using it altogether
• ✓ Be aware that frequent gambling transactions or multiple BNPL payments can raise red flags

At The Mortgage Mum, one of the first things we do with every new client is go through a monthly budget planner. We work out how much of your income will go on outgoings,  including your future mortgage repayments, life insurance, council tax, utilities, and home insurance, alongside the things you want to keep enjoying, like holidays, eating out, and new clothes. We want the mortgage to be truly affordable for your lifestyle, not just on paper.

5. Buying With Someone Else

If you’re applying for a mortgage jointly, lenders will combine your incomes, which often means you can borrow significantly more. But it’s not quite as simple as “double the income, double the mortgage.”

Lenders will also combine your financial responsibilities. If your partner has debts, childcare costs, or a lower credit score, it can affect your total borrowing power. And once you apply together, you become financially linked,  meaning their credit behaviour could influence your ability to borrow in future, even for unrelated purchases.

6. If You’re Self-Employed

We hear the horror stories, and we’re here to tell you: being self-employed absolutely does not mean you can’t get a mortgage. Lenders simply need clear proof of income.

Typically, they’ll look at your last two years of accounts or SA302 tax returns and take an average. If your income has grown recently, some lenders will use the most recent year’s figures instead, which can work in your favour.

Having a good accountant on your side makes a big difference. Let them know you’re planning a mortgage application so they can present your finances in the best possible way. And as always, the right mortgage adviser will know exactly which lenders are most comfortable with self-employed applicants.

7. How Your Deposit Affects How Much You Can Borrow

The size of your deposit has a bigger impact than many first-time buyers realise. The larger your deposit, the lower the risk you represent to a lender, and the more willing they may be to stretch your income multiple.

A bigger deposit can also unlock better interest rates, which means lower monthly repayments and less paid back overall. It’s worth speaking to an adviser early to find out exactly how much you need to save to unlock the mortgage you’re aiming for.

We have a whole separate guide dedicated to deposits, how they work and how to build one. Check it out if you’re at the early stages of saving.

8. Top Tips to Maximise Your Mortgage

• 1 Pay off or reduce debts before applying. Outstanding debts directly reduce how much lenders are willing to offer you.
• 2 Keep your credit score healthy. A good score opens doors to better lenders and better rates.
• 3 Use your overdraft sparingly — ideally not at all in the months before you apply.
• 4 Declare all of your income — including benefits, pension income, and consistent side hustles.
• 5 Work with a mortgage adviser who knows which lenders are most generous for your situation. At The Mortgage Mum, that advice is completely free.

The Bottom Line

How much you can borrow isn’t just about your salary,  it’s about your full financial story. Your spending, your side income, your benefits, your credit score, and your deposit all play a part. Two people earning exactly the same amount can be offered very different mortgage amounts, depending on their individual circumstances.

So before you start house hunting, speak to an expert and find out your true number. When you know what you can borrow, you can start looking with confidence,  and excitement. This is on the ladder, and you just took the next step.

Video Transcript:
It’s the number one question we get asked and I know you just want to know how much can I borrow on a mortgage and I wish I could just get a calculator and say, “Yep, put in how much you earn, times it by X, and woohoo, that’s how much you can borrow.” Yeah, doesn’t work like that. But that’s not necessarily a bad thing. You might be able to borrow more than you thought. And as mortgage advisers, we’re like little detectives pulling in all the tricks of the trade to be able to maximize how much you can borrow with a mortgage lender.

Hi everyone. So, if you’ve been with me so far this series, you’ve started saving for your deposit. You’ve checked your credit score. And now you’re probably wondering, “How much can I actually borrow?” It’s one of the most common questions we get asked because it affects everything else, right? whether you’re going to be able to buy, what kind of place you can afford. And the answer depends on a few key things. Your income, your spending, your debt, and the type of mortgage you apply for. So, let’s break it down. We’re going to start with how mortgage lenders actually work out the amount they’re going to offer to you. Because this number is not picked at random, but it’s also not a simple case of, okay, you earn X, so you’ll be entitled to Y. I know some of you are already thinking, “What about my side hustle? Can I use that as income or how are my benefit payments going to impact this?” Don’t worry. We’re going to cover all of that in the next section. But right now, what I need you to know is that when you apply for a mortgage, the lenders are not just looking at your salary. They’re weighing up more broadly something called affordability. That means they don’t just look at what you earn, they look at what you spend. So we’re talking about your salary from work and any other regular income that you receive versus your outgoings. So things like child care, car finance, credit cards or loans, your credit report and how you manage your money, the size of the deposit you’ve saved, and sometimes even your day-to-day spending patterns.

It’s true that most UK mortgage lenders will offer an average of four to four and a half times your annual income as a rough guide. So get your calculator. Let’s do this together. If you were earning £40,000 a year, 4 times that would be £160,000, and 4.5 times that would be £180,000 on a mortgage. But some lenders might go up to 7 times your income and that’s £280,000. So obviously that is a huge difference between lenders and we as advisers want you to understand the how and the why. It all comes down to that word I just mentioned, affordability. And the bigger picture of this is that it can have a significant impact on the loan you’re likely to be offered. But as always, there are positive steps we can do together to improve your likelihood of getting the mortgage you’re dreaming of.

Coming up, I’m going to go through each of the categories one by one and break down in as much detail as I can cover how they contribute to your affordability. You’re going to find time codes in the descriptions if you want to check which ones are most relevant to you. At this point, I’m going to hand on over to our resident mortgage advisor, Gemma. First up, we’ll get into the nitty-gritty of income because it’s not just your salary. Lenders will usually consider basic salary, bonuses, overtime, or commission, often averaged over the last 3 to 12 months. Self-employed income is often based on your latest 2 years accounts or SA302s. They’ll look at pension or investment income. In many cases, certain benefit income, too. And that can include things like child benefit, tax credits, universal credit, or disability benefit. But each lender has different rules about how much of that income they’ll include. And a good adviser can tell you exactly which lenders are most flexible for your situation.

And let’s not overlook the side hustles. These days, more and more people have multiple income streams, whether it’s freelancing, content creation, tutoring, or a small business on the side. And the key with these is proving consistency. If your side hustle income is regular and you can show at least 6 to 12 months of payments into your account, some lenders will consider it as part of your affordability. If it’s new, occasional, or cash-based, lenders might need to ignore it for now. But keep records. The longer and more stable your side income looks, the more likely it is to count in the future.

Next up, your outgoings, because these matter, too. Lenders will check your regular expenses, so it’s worth tidying up your spending a few months before you apply for a mortgage. That means reducing credit card balances, paying off short-term loans if possible, avoiding large new commitments like car finance or buy now pay later purchases, and keeping your overdraft under control. Even things like frequent gambling transactions or multiple buy now pay later payments can raise questions. So keep your bank statements as clean and consistent as possible.

So whenever we’re working with a new client at the Mortgage Mum, one of the first things we’ll do with you is go through a monthly budget planner and we’ll work out how much of your income is likely to be spent on your monthly outgoings. It includes your future potential mortgage repayments, life insurance, really important to factor that in, and things that you’ll need to budget for like council tax, electricity, water, energy, I know the list is long, and home insurance alongside things you’ll want to budget for like new clothes, eating out, food and holidays, life, all the fun stuff. We’ll work with you to make sure this mortgage you’re applying for is actually affordable to you in your everyday lifestyle, as well as the bigger picture, because that is important.

Moving on now to joint applications. If you’re buying with someone else, lenders will combine your incomes to calculate what you can borrow, which sounds great, right? You’re probably thinking, “Oh, brilliant. Double the income, double the eligibility.” But hold up, because they’ll also combine your financial responsibilities. So that means if your partner has debts, child care costs, or a lower credit score, it can affect how much you can borrow overall. And remember, we covered this in more detail in our credit score episode. Once you apply together, you become what’s known as financially linked and their credit behavior could influence your ability to borrow in the future, even for things unrelated to the mortgage. So, your positive action point here is have that open conversation. Get both of your credit scores checked and up to a healthy position and have a clear financial plan for moving forward in your mortgage journey together.

So, now for a big one. What do you do when you’re self-employed? We’ve all heard the horror stories of freelancers finding it tough to get on the ladder. Please don’t panic. If you’re self-employed or have a limited company, you can absolutely get a mortgage. Lenders just need proof of income. They’ll usually look at your last two years of accounts or tax returns and take an average. If your income has grown recently, some lenders will base it on the most recent year instead. Having clear documentation and a qualified accountant makes a big difference. Ask them what they can do to prioritize a mortgage application when they’re working on your accounts. They’ll have seen this many times before. And again, remember that a good adviser will help you find the lenders most comfortable with your setup. So, reach out to the experts and get their advice on how best to move forward.

Next question. How does my deposit size affect how much I’ll be able to borrow? The answer, significantly. The bigger your deposit, the more flexibility you’ll have because lenders will see you as lower risk. It could, as we covered earlier in this video, encourage them to stretch your income multiplier even further. So, if you haven’t already, now would be the perfect time to speak to a mortgage advisor. They can tell you how much you need to save to get the mortgage you’re looking for. Lots of people think you’ve got to pay for that conversation and that information, but at the Mortgage Mum, that advice is completely free. So, it’s never too soon to get in touch with someone and start talking this stuff through. If you want to get in touch with us, you can see in the description how to do that. And after chatting to us, you’re going to have greater clarity on the deposit that you need to afford the mortgage you’re looking for. And once you know what that is, let’s start saving, however small, and start to build that deposit pot. We’ve got a whole video dedicated to your deposit, what it is and how to work out how much you need. So, check that out if you need extra support on where to start.

Before we wrap, here are my top tips to maximize how much you can borrow. Number one, pay off or reduce debts before applying because this can really affect affordability. Number two, keep your credit score healthy. Number three, use your overdraft sparingly. Number four, declare all of your income, including benefits and consistent side hustles. And number five, work with a mortgage advisor — hi, that’s us — who knows which lenders are most generous with income multiples.

So to recap, how much can I borrow is not just about your salary. It’s about your full financial story. Your spending, your side income, your benefits, your credit score, and your deposit will all play a part. So before you start house hunting, speak to an expert and find out your true number. Because when you know what you can borrow, you can start looking with confidence and excitement. This is on the ladder and you just took the next step. Make sure you subscribe to follow the rest of the series on your path to your first home. And if you’ve got any burning questions, pop them in the comments and we’ll get back to you. See you next time.