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How much do I need to earn to get a mortgage?

MPO breaks down some of the myths surrounding mortgages and income to make things easier for you

A photo of Grace Lynch, the author

By Grace Lynch

Published on: 11 March 2023

4 min read

How much do I need to earn to get a mortgage?

Mortgages will usually be essential when trying to buy a home, as most buyers won’t be able to afford to buy a property outright with their own funds.

Many people, particularly first-time buyers, may be worried they simply don’t make enough money each year to be accepted for a mortgage. This is not necessarily true, and in this guide we will be breaking down some of the myths surrounding mortgages and income.

Minimum income for mortgage UK

Many UK lenders will say they want you to have a minimum income of £20,000 per year and above. This will help give them reassurance that you will be able to afford your monthly repayments long term.

However, in the UK mortgage market there isn’t one set minimum gross monthly income for getting a mortgage. How much you can borrow from a lender and if you can borrow will depend on a variety of different factors. These include:

  • Which lender you apply to (some may have stricter income requirements than others)
  • Your credit history/credit score and any debts (a poor credit history can affect the mortgages available to you and in some cases a specialist lender will be your best option)
  • The type of mortgage you need (you will normally need a higher income/higher deposit amount for interest only mortgages or buy to let mortgages)

Remember as well, certain lenders can accept other forms of income when assessing your affordability for a mortgage and how much you can potentially borrow. They may accept things such as:

  • Investments
  • Commission
  • Bonuses
  • Overtime

Note: It can be a good idea to try and save a bigger deposit if possible. This can increase the amount of mortgage options available to you and can help you get your application approved if you are trying to get a mortgage on a low income.

How many times income for mortgages?

When applying for a mortgage, you will likely see the phrase ‘income multiple’ come up. An income multiple is what a lender uses to decide how much they will allow you to borrow for your mortgage.

The lender multiplies your average annual income by a set amount (e.g. 4 times, 5 times etc) and this determines how much they will lend to you. Generally, the higher the income multiple you want, the more you will need to save for your deposit.

Income multiples for mortgages

Below we have some examples of the best income multiples available from some of the UK’s top mortgage providers:

Mortgage lenderIncome multiples
HalifaxHighest income multiple available is 5.5 times your annual income (with an income of £75,000 per year and a deposit of 75%)
BarclaysHighest income multiple available is 5.5 times your annual income for repayment mortgages only (with an income of £75,000 per year and a deposit of 85% or more)
SantanderHighest income multiple available is 5.5 times your annual income (with an income of £100,000 per year and a deposit of at least 25%)
NatWestHighest income multiple available is 5.5 times your annual income (with a sole income of £75,000 or joint income of £100,000 per year and a deposit of at least 25%)
Accord MortgagesHighest income multiple available is 5.5 times your annual income for repayment mortgages only (with an income of £70,000 per year)

What is a debt-to-income ratio for a mortgage?

Another term you may hear during a mortgage application is ‘debt to income ratio’ or ‘DTI’. Put simply, this is how much you earn each month vs how much you pay out for expenses like:

  • Personal loans (secured or unsecured)
  • Finance agreements (e.g. car finance)
  • Credit cards

Mortgage lenders prefer your debt-to-income ratio to be low (less than 20% of your income being used to repay debts is ideal). If you have a high DTI, it can be harder to get a mortgage with many high street lenders. You may need to get a higher deposit together or speak to a more specialist lender to improve your change of approval.

If you have a lot of debts to repay, it is worth trying to reduce this amount before applying for a mortgage. This will make it easier to get a mortgage approved with most mainstream lenders.

How can I borrow more for a mortgage?

If you are struggling to find a lender willing to let you borrow the amount you need, there are a few things you can do to help yourself.

  1. Try and save more for your deposit (this should allow you to borrow a higher amount)
  2. Compare available mortgages across lenders (some lenders will use higher income multiples and so will be able to lend you more)
  3. Speak to an independent mortgage broker for help (a broker will be able to advise you on which lenders are best suited to your financial history and how much you need to borrow)

Resources

Statista – Mortgage to income ratio for different buyer types UK

Financial Conduct Authority – Mortgage lending statistics – March 2023

Office for National Statistics – Mortgage repayment affordability

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