How this affordability calculator works
Calculator combines illustrative gross-income multiples with monthly repayment capacity. Lower, central, and higher estimates use 4.0×, 4.5×, and 5.0× household gross annual income, each capped by principal supported by entered monthly budget, assumed rate, and term.
These are site-model assumptions, not FCA formula, lender underwriting, eligibility assessment, decision in principle, mortgage offer, or official estimate.
Household income and monthly budget
Gross annual income supports illustrative loan-to-income bands. Entered combined monthly take-home pay supports cash-flow calculation without estimating UK tax, National Insurance, pension, salary sacrifice, student-loan, or other payroll deductions.
Continuing commitments include contractual payments remaining after purchase. Essential expenditure includes food, utilities, council tax or rates, communications, essential travel, childcare, essential insurance, service charges, clothing, and other hard-to-reduce household needs.
Model retains 20% of positive surplus after these outgoings and allocates 80% to illustrative mortgage payment capacity. This buffer is Mortgage Cost Checker policy, not FCA guidance or lender practice.
Repayment conversion and rate sensitivity
Payment capacity converts to capital-and-interest repayment principal using entered whole-year term and quoted nominal annual rate divided into equal monthly periods. Zero rate uses payment multiplied by month count.
Default 5.0% is editable static assumption, not current Bank Rate, market average, or lender quote. Illustrative +1 and +2 percentage-point scenarios show payment sensitivity on central mortgage. They do not change headline estimate and are not FCA-prescribed stress rates.
Deposit, property budget, and LTV
Deposit adds to central mortgage to show indicative property budget; it does not increase mortgage borrowing. Loan-to-value is contextual only. Lender and product limits, valuation, purchase costs, fees, insurance, eligibility, credit history, employment, dependants, age, and retirement can reduce available amount.
Regulatory context and limitations
Method is informed by FCA mortgage affordability principles covering net income, committed and essential expenditure, capital-and-interest repayment, and likely future rate increases. FCA does not approve or supply this formula, multipliers, buffer, or scenario rates.
Bank of England and FCA high loan-to-income framework gives 4.5× regulatory and macroeconomic significance. It is not automatic individual borrowing cap. Lenders choose assessment details and may accept, discount, or exclude income differently.
Excludes lender matching, credit scoring, age and retirement underwriting, employment rules, benefits rules, tax calculation, live rates, property search, interest-only, buy-to-let, shared ownership, stamp duty, fees, insurance pricing, and persistence.
Sources and review
Last reviewed: 12 Aug 2026. Review date must change when assumptions or sources change.
- FCA Handbook MCOB 11.6
- FCA FG25/4 high loan-to-income guidance
- Bank of England July 2026 Financial Stability Report
- MoneyHelper mortgage affordability calculator guidance
Repayment-product calculations use separate assumptions. Read repayment mortgage methodology.