The formula
How to calculate mortgage affordability
Mortgage affordability is set by two things: an income multiple cap and an affordability assessment of what you can pay each month. This estimates the first, adjusted for the debts a lender will net off your income.
Lenders deduct committed outgoings before applying the multiple. A £300-a-month car finance agreement reduces income by £3,600 and therefore borrowing by around £16,000 at 4.5 times — often more than clearing the debt would cost.
Here is what each field means:
- Household annual income — gross, including a second applicant
- Income multiple (×) — most lenders cap at 4 to 4.5, sometimes 5.5 for high earners
- Annual debt commitments — loan and card payments over the next few years, times twelve
- Deposit
No submit button: type and the answer moves. Your inputs end up in the link, so the page can be shared already filled in.
The order the fields are filled in makes no difference to the result — the calculator recomputes the whole formula from whatever is currently in every field, not step by step. That means it is safe to adjust one number, watch the result change, and adjust it back, without worrying about resetting anything first.
Why mortgage affordability matters
Most people who look up a mortgage affordability calculation already have a specific number in mind — a quote, an offer, a target — and want to check it rather than learn the theory behind it. This page is built for that: enter your own figures, see the result immediately, and change any field to see how the answer moves without redoing the arithmetic from scratch each time.
This tends to come up when comparing two concrete alternatives — two lenders, two savings products, two ways of structuring the same decision — rather than in the abstract. Run both scenarios through the same calculator with the same assumptions and the comparison becomes fair, because the only thing changing between the two results is the number you are actually trying to test.
The reason a page like this exists at all, rather than leaving the calculation to a spreadsheet or a textbook appendix, is that the formula behind mortgage affordability is fiddly enough to get wrong by hand but not complicated enough to need specialist software. That middle ground — real enough maths to matter, simple enough to check instantly — is exactly what a dedicated calculator is for, and it is why the same figure recalculated here should match a careful manual calculation almost exactly.
A calculator like this one is often bookmarked and returned to repeatedly over months rather than used once, particularly for anything tied to an ongoing plan such as a mortgage, a savings goal or an investment being tracked. Because the figures live in the web address rather than only in memory, coming back to the same page with updated numbers is quicker than starting from a blank spreadsheet each time.
Worked example
Take the figures the calculator starts with:
- Household annual income: 62,000
- Income multiple: 4.5 ×
- Annual debt commitments: 3,600
- Deposit: 45,000
That gives:
- Estimated borrowing: 262,800
- Property price it supports: 307,800
- Loan to value: 85.38 %
These figures are only the calculator's own starting values, included so the working is visible rather than hidden inside the tool above. Replace them with your own numbers and the same arithmetic applies — nothing about the method changes, only the inputs feeding it.
Reading the result
The LTV figure decides your rate. Crossing below 90%, 85%, 80% and 75% each unlocks a better band, and the step between 90% and 85% is usually the biggest.
Where this goes wrong. This is an indicative figure, not a decision. Every lender also stress-tests the payment at a rate several points above the one on offer, and that test binds before the income multiple does when rates are high.
A useful check on any unfamiliar result is to compare it against a rough mental estimate first — round the inputs to convenient numbers and see whether the calculator's answer lands in roughly the same territory. A wildly different figure usually means one of the fields was entered in the wrong unit, most often a percentage typed as a whole number where a decimal was expected, or the reverse.
Typically 4 to 4.5 times household income. Some lenders go to 5 or 5.5 times for professionals or higher earners, and a few offer more with a larger deposit — but the stress test still has to pass.
Not the borrowing itself, which is capped by income. It increases the price you can buy at and lowers the LTV, which improves the rate and therefore the affordability assessment.
The headline figure is estimated borrowing. With 62,000 household annual income, 4.5 × income multiple and 3,600 annual debt commitments, that comes to 262,800. Change any field and the figure moves with it.
Whenever one of the underlying figures changes — a new interest rate, a different balance, an updated term — since the result only reflects what is currently in the fields. There is no need to keep a separate record of past results; the web address for a filled-in version already carries the figures used to produce it.
Not unless a tax rate or a fee is explicitly one of the inputs above. Where it is not, the figure shown is a gross calculation, and any tax due depends on your personal circumstances and current tax rules, which are worth checking separately.
The arithmetic itself is exact — the calculator applies the formula shown above precisely, with no rounding until the final figure is displayed. The uncertainty, where it exists, is entirely in the inputs: an estimated rate or an approximate balance carries that same approximation through to the result.