Check the maximum loan a lender will offer based on your expected rental income, using the interest cover ratio (ICR) tests lenders apply to landlords.
Unlike a residential mortgage, buy-to-let lending is mostly assessed on what the property can earn in rent, not your salary. Lenders check that the rent comfortably clears the mortgage payment with room to spare — the calculator below shows exactly how much that lets you borrow.
Enter the property value and the rent you expect to charge. Then pick the interest cover ratio that matches your situation — most individual landlords paying higher-rate tax should use 145%. Not sure? Ask your accountant or broker.
Lenders often require a lower interest cover ratio for limited company purchases — commonly 125% — since companies aren't affected by the personal tax restriction (Section 24) that pushed individual ratios higher.
£
£
%
%
Lender interest cover ratio
125%
Standard
145%
Higher-rate tax
125%
Typical for companies
145%
Some lenders, lower LTV
Maximum loan based on rental income
£113,793
Within your deposit-based borrowing limit
Deposit needed
£55,000
Loan needed (75% LTV)
£165,000
Annual rent£13,200
£1,100 × 12 = £13,200
Your monthly rent multiplied by twelve gives the total rent you'd collect over a year.
Required annual mortgage cost£9,103
£13,200 ÷ 1.45 = £9,103
Lenders want your rent to be at least 145% of the mortgage cost, so we divide the annual rent by that ratio to find the maximum mortgage payment they'll allow.
Maximum loan at this rate£113,793
£9,103 ÷ 5.63% = £113,793
Dividing that allowed annual cost by your mortgage rate tells you the biggest loan the rent can support.
Estimates only. Actual lending limits depend on individual lender criteria, your income, credit history, and property type. Always speak to a mortgage adviser or broker before proceeding.
What this actually means
What rental income do lenders actually want?
Most lenders want rent to be at least 125-145% of the monthly mortgage payment, and they often test this against a "stress rate" a few points above your actual rate — to check the numbers still work if rates rise. The exact figure depends on your tax status and whether you're buying personally or through a company.
Does a letting agent's management fee count against affordability?
Not in the ICR test itself — that's based on the gross rent figure, before any fees. But agent fees (typically 8-15% of rent), insurance, and maintenance are real costs you'll pay out of that rent in practice, so it's worth budgeting for them separately even though the lender's headline test ignores them.
Can I use rental income if I've never been a landlord before?
Yes — most lenders will lend to first-time landlords based on a projected rent from a letting agent or surveyor, rather than requiring an existing track record. Some apply slightly stricter criteria, and a larger deposit can help.
What if the rent doesn't quite meet the ICR test?
Some lenders allow "top-slicing" — using your personal income to cover the shortfall — though not every lender offers this. If the maximum loan shown above falls short of what you need, a specialist buy-to-let broker can usually find a lender with criteria that fit.
Worked example: the average Scottish rental
Using our own homepage figures — an average house price of £172,000 and average monthly rent of £1,009 — here's what that supports at a 5.63% mortgage rate:
Personal, higher-rate tax (145% ICR)
Maximum loan based on rent: roughly £148,300. With a 25% deposit (£43,000), the loan needed is £129,000 — comfortably within what the rent supports.
Limited company (125% ICR)
Maximum loan based on rent: roughly £172,000 — even higher, since the lower ICR requirement allows more borrowing for the same rent.
Higher and additional-rate taxpayers receive less tax relief on mortgage interest than basic-rate taxpayers, which reduces their net rental profit. Lenders apply a higher ICR to these borrowers to ensure the rent still comfortably covers costs after tax.
Should I buy personally or through a company?
This depends on your individual tax position, how many properties you own, and your long-term plans. Limited company ownership can offer tax advantages for some landlords but comes with its own costs and considerations. This is a decision worth discussing with an accountant — see our personal vs limited company guide.
What if the rent doesn't cover the ICR test?
If the rental income alone doesn't support the loan you need, some lenders allow "top-slicing" — using your personal income to make up the shortfall. Not all lenders offer this, so it's worth discussing with a specialist buy-to-let broker.
Want the full picture?
This page covers the calculation itself. For more on how lenders assess buy-to-let mortgages and the ICR scenarios in detail, see the full guide. Many landlords choose interest-only specifically to improve this calculation — see our repayment vs interest-only guide for why.