Buying your first home is one of the biggest financial steps you will ever take, and the question that keeps most first-time buyers awake at night is simple: how much can I actually borrow? With mortgage rates having settled from their recent highs and lenders easing some of their stricter rules, 2026 is shaping up to be a more hopeful year for first-time buyers than the last few.
Here is a plain-English guide to how lenders decide what you can borrow, what deposit you will need, and how to put yourself in the strongest position.
How Lenders Decide What You Can Borrow
As a rough starting point, most lenders will offer you somewhere between 4 and 4.5 times your annual income. So a couple earning a combined £60,000 might borrow around £240,000 to £270,000. Some lenders now stretch to 5 or even 5.5 times income for buyers on higher salaries or in certain professions.
But income multiples are only the headline. Lenders also run a detailed affordability check, looking at what you actually have left over after your regular outgoings. They will examine your bank statements for things like:
- Existing debts, such as loans and credit card balances
- Car finance and other monthly commitments
- Childcare costs
- Your general day-to-day spending
- Any student loan deductions from your pay
This is why two people on the same salary can be offered very different amounts. Our mortgage calculator lets you see how the loan size, rate, and term affect your monthly payment, and our salary calculator shows your true take-home pay, which is what really determines what you can afford.
A worked example
Picture two friends, both earning £35,000 a year. The first has no debts, no car finance, and a tidy bank statement. A lender might happily offer 4.5 times income, around £157,000. The second earns exactly the same but has a £300-a-month car loan and a credit card balance. That £300 a month does not just reduce the offer by £300 — lenders treat ongoing commitments as a long-term drain on affordability, so it could knock £15,000 to £20,000 off what they will lend. Same salary, very different outcome. It is a powerful reminder that what you owe matters almost as much as what you earn.
What Has Changed for 2026
For most of the past decade, lenders had to test whether you could still afford your mortgage if rates rose sharply. Regulators have recently relaxed some of these stress-test rules, which means many buyers can now borrow a little more than they could a year or two ago.
At the same time, mortgage rates have come down from their peak. While they are nowhere near the rock-bottom levels of a few years back, fixed deals around the 4% to 4.5% mark are widely available, which makes monthly payments more manageable than they were when rates touched 6%.
The difference a lower rate makes is bigger than people expect. On a £200,000 mortgage over 25 years, dropping from a 6% rate to a 4.5% rate cuts the monthly payment by well over £170 — more than £2,000 a year back in your pocket. That is money that can go towards bills, savings, or simply making the early years of home ownership less of a squeeze. It is why it pays to shop around for the best deal rather than accepting the first offer your bank makes.
How Much Deposit Do You Need?
The bigger your deposit, the better the mortgage rate you will usually be offered. Here is the general picture:
- 5% deposit: possible, but rates are higher and choice is limited
- 10% deposit: a noticeable improvement in the deals available
- 15% to 25% deposit: access to the most competitive rates
On a £250,000 home, a 10% deposit means saving £25,000, which is a serious sum. A Lifetime ISA can help, because the government adds a 25% bonus to what you save for a first home, up to £4,000 a year. If you are building your deposit, our compound interest calculator shows how your savings can grow over time.
Do Not Forget Stamp Duty
Stamp Duty Land Tax is a tax you pay when you buy property in England or Northern Ireland. First-time buyers get relief, meaning you pay nothing up to a set threshold and a reduced rate above it, as long as the property is below the qualifying price cap.
The thresholds changed in 2025, so it is important to use up-to-date figures. Our stamp duty calculator tells you exactly what you would pay as a first-time buyer, which helps you budget for the full cost of buying rather than just the deposit.
One trap to watch: if the home you are buying costs more than the first-time buyer cap, you can lose the relief entirely and pay the standard rates instead. That can mean a jump of several thousand pounds in tax, so it is worth knowing exactly where the threshold sits before you fall in love with a property at the top of your budget. A short check on the calculator before you make an offer can save a painful surprise at completion.
How to Boost What You Can Borrow
If the amount a lender offers falls short of what you need, there are practical steps that can help:
- Clear or reduce existing debts before you apply, as these directly cut your affordability
- Avoid taking on new credit, such as a car loan, in the months before applying
- Check your credit report and fix any errors, as a clean record can unlock better deals
- Save a larger deposit, which both reduces the loan you need and improves your rate
- Consider a longer mortgage term to lower the monthly payment, though you will pay more interest overall — our loan repayment calculator shows the trade-off
Budget for the Full Cost of Buying
The deposit is just the start. You also need to budget for solicitor and conveyancing fees, a survey, mortgage arrangement fees, removal costs, and the cost of furnishing your new home. As a rough guide, set aside a few thousand pounds beyond your deposit so you are not caught short at the last minute.
It is also worth checking your tax code is correct before you apply, because the take-home pay shown on your payslip is exactly what lenders use to judge your affordability. If you are overpaying tax, you may be understating what you can truly afford.
Getting Your Application Ready
Lenders look closely at the few months before you apply, so a little preparation goes a long way. In the three to six months before you submit a mortgage application, it helps to:
- Keep your bank account tidy and avoid going into an unarranged overdraft
- Steer clear of gambling transactions, which lenders view poorly
- Make sure you are on the electoral roll at your current address, as it helps confirm your identity
- Gather your paperwork early — payslips, bank statements, and proof of your deposit
- Avoid changing jobs right before you apply, as lenders prefer to see settled, stable income
Getting a mortgage agreement in principle before you start viewing homes is also a smart move. It gives you a clear budget and shows estate agents you are a serious buyer, which can make all the difference when you find the right place.
The Bottom Line
2026 is shaping up to be a more encouraging year for first-time buyers, with rates off their peak and lenders easing some of their rules. The key is to go in prepared: know your true take-home pay, reduce your debts, save the biggest deposit you reasonably can, and budget for every cost, not just the headline price. Use our calculators to run the numbers before you start house-hunting, so you make an offer with confidence rather than crossed fingers.