How Much Can I Borrow on a Buy-to-Let Mortgage?

Understanding buy-to-let mortgage borrowing is essential for both new and experienced landlords.

Unlike residential mortgages, buy-to-let (BTL) lending rules focus on rental income rather than personal salary. Knowing how lenders calculate borrowing limits and what affects them helps investors plan their property portfolio efficiently.

How Buy-to-Let Affordability Works

Lenders assess borrowing based on rental income, though minimum personal income thresholds often apply. Stress testing ensures investors can meet repayments even if interest rates rise.

The Key Formula Lenders Use (Interest Coverage Ratio)

The Interest Coverage Ratio (ICR) is central to BTL lending:

Typically, lenders require an ICR of 125%–145%.
This means projected rental income must cover 125–145% of mortgage interest payments at a stressed rate.

Example:
For a property with £1,000 monthly rent and an interest rate of 6%, the maximum loan may be calculated around £200,000, depending on lender criteria.

Typical Borrowing Range for BTL Investors

Most lenders offer up to 75% Loan-to-Value (LTV), with some offering 80% under stricter conditions. Deposit size directly influences borrowing power and portfolio growth potential.

What Affects How Much You Can Borrow?

Several factors determine BTL mortgage borrowing:

Rental income – Higher rental yields allow for larger loans.
Property type – New builds, HMOs, and multi-unit blocks have different stress-testing rules.
Personal finances – Minimum income requirements (often £20–25k), credit history, and existing debt.
Mortgage type – Interest-only vs. repayment affects maximum borrowing.
Interest rates – Higher rates reduce maximum loan sizes.

Buy-to-Let Mortgage Stress Test Examples

High-rent city centre apartment – May allow maximum LTV due to strong rental income.
Lower-rent suburban house – Lower rent reduces borrowing capacity.
HMO or high-yield property – Stress-tested differently, often enabling larger borrowing if rental income is high.

How to Improve Your Borrowing Capacity

Increase your deposit size.
Target higher-yielding regions such as Manchester or Liverpool.
Consider interest-only mortgages.
Use lenders with flexible stress-testing criteria.
Explore purchasing through a limited company.

Common Lending Criteria for Buy-to-Let Mortgages

Minimum deposit of 20–25%.
Age and term restrictions.
Portfolio landlord rules for multiple properties.
EPC compliance to meet future lending standards.

Average Loan Sizes Investors Typically Achieve

£150,000 property – £110k–£115k loan typical.
£200,000 property – £150k loan typical.
£300,000 property – £225k loan typical.

Cash buyers can use gearing strategies to scale their portfolios faster.

Buy-to-let mortgage borrowing depends primarily on rental income and stress testing. With careful planning, deposit management, and targeting the right property types, investors can maximise borrowing power and accelerate portfolio growth.

For personalised guidance and to explore your borrowing potential: