How much can a first-time buyer borrow?

How much can you borrow on your first mortgage?

As a first-time buyer, you can typically borrow between 4 and 4.5 times your household income for a mortgage, but you may be eligible for a smaller or larger mortgage than this. It all depends on factors like your income, mortgage affordability, credit score, and job type.

The lender you choose to go with also has an impact. There are thousands of mortgages available on the market (we advise on over 20,000!), which is why going with your high-street bank may not give you the best deal. If you use a mortgage broker that compares mortgages from across the market, including specialist first-time buyer schemes, you could borrow more or buy sooner.

When you apply for a mortgage, the mortgage lender will carry out a series of affordability checks to make sure you can afford the monthly mortgage payments without getting into financial trouble. As part of this, they’ll look at:

• Income. This can include your income from employment, self-employment, pensions, investments, child maintenance and other forms.
• Expenses. Lenders want to know how much you typically spend each month, taking into account credit payments, utilities, food, travel and even childcare costs, if applicable.
• Savings. How much deposit have you saved? If you have a bigger deposit (and therefore a smaller Loan to Value, a.k.a LTV), this could give you access to better interest rates.
• Credit/Debt. If you have credit cards, store cards, loans, car finance or other forms of debt, these can affect your borrowing potential.
• Employment status. Lenders will want to know how stable your job is and whether your income is reliable. If you’re likely to get promoted in future, you may be offered a bigger mortgage or preferential rates, but this isn’t guaranteed. Self-employed borrowers may find it harder to get a mortgage than those in employment, but it’s certainly not impossible!

You might like: What’s the lowest LTV on a mortgage?

Can first-time buyers borrow more than 4.5× income?

Yes, some first-time buyers are able to borrow more than the standard 4 to 4.5x income multiplier. There are plenty of budget-boosting schemes available to allow eligible borrowers to borrow a mortgage that’s 5-6x their income. Guarantor mortgages are also a way to increase your buying budget through family help. Other schemes, like shared ownership, help you afford a larger property without having to put down a large deposit or afford a larger mortgage through a part buy, part rent set-up.

Here are just a few ways to get a bigger mortgage:

1. Income Boost

Are you struggling to get a mortgage big enough for the home you want? There could be options available to boost your borrowing. Parents (or other loved ones) may be able to increase your borrowing potential without giving you a pile of cash. An Income Boost lets you add someone else’s income to your mortgage application, without adding their name to the property itself.

This can help you borrow a bigger loan, even if you’re the only one who’ll be living in the property. Your loved one will act as a guarantor, meaning if you cannot make the repayments, they’ll be required to step in.

This mortgage type is also known as a Joint Borrower Sole Proprietor mortgage, but we think that’s a bit of a mouthful, which is why we use Income Boost instead!

2. Higher lending schemes

If you earn more than £37,000 a year (or £55,000+ as a couple), you may be eligible for a 5x Mortgage, which, as the name suggests, offers you a mortgage worth 5x your income. Couples can combine their salaries for this calculation, potentially opening up a larger budget. So, if you're buying a house by yourself on a salary of £37,000, you could be eligible for a mortgage of up to £185,000. If you're buying with your partner and they earn the same salary, your combined borrowing potential could reach £370,000.

If you’re a key worker, doctor, vet, accountant, lawyer, or you have another role that lenders consider ‘professional’, you may be eligible for a Professional Mortgage or a Key Worker Mortgage, which also lets you borrow up to 5x your income! These higher lending schemes often require just a 5% deposit, making them more accessible for first-time buyers.

Not everyone is eligible for these schemes, so it’s worth checking if you could be accepted before applying by completing your details on our free online fact find.

3. Shared ownership

Shared ownership is an innovative solution that helps first-time buyers purchase their first home by purchasing a share of a home, typically between 25% and 75%, while renting the remainder at a reduced rate. This approach lowers the initial deposit and mortgage you need, making it easier to afford a larger property. You'll also have the option to gradually increase your share over time through a process called staircasing.

Find out more about Shared Ownership here

If you’re struggling to borrow enough for a mortgage, another way around it is to borrow less by putting down a bigger deposit. If saving a larger deposit feels challenging, there are several ways to boost your house deposit:

4. Deposit Boost

A Deposit Boost can significantly help first-time buyers who are struggling to save up a big enough deposit, or want to reduce the amount they borrow for a mortgage. It works by a loved one using a small mortgage to release money from their property - the proceeds are then gifted to the first-time buyer to be used as their whole house deposit, or to top up what they have saved.

By increasing the size of their deposit, first-time buyers could access better interest rates as they'll have a lower loan-to-value (LTV) ratio. Or, first-time buyers could use the bigger deposit to put down a downpayment on a more expensive property.

This is how a Deposit Boost can help you bridge the gap between your savings and the amount needed to secure your ideal home, helping you afford properties that would otherwise be out of reach.

5. Savings as Security

A Savings as Security mortgage, also known as a Springboard mortgage, allows family members to help you buy your first home by providing savings as security. Typically, they’ll need to provide 10% of the property’s value in cash, which is then held in a savings account by the lender for a set period, normally 5 years. This reduces the deposit you need to put down yourself, and after the set time period, if you can afford the property by yourself, your loved ones will get their money back!

6. Forces Help to Buy

Serving members of the armed forces may be eligible for an interest-free loan of from the government to buy their own home. The Armed Forces Help to Buy Scheme lets eligible borrowers use this loan as a house deposit, to pay solicitor and estate agent fees, or in some cases renovate a property. You can then take out a mortgage to cover the remainder of the property

To qualify, you’ll need to have at least 6 months’ service history. Mortgage lenders will also want to see that you can afford your monthly mortgage payments and the interest-free government loan repayments.

How much income does a first-time buyer need?

There isn’t a single ‘minimum income’ every first-time buyer must earn. Instead, lenders work backwards from the property price and your deposit to decide what size loan is comfortable for you. Free online affordability calculator can give you a quick indication based on your budget before you speak to a broker. With the rise in higher lending schemes and innovative first-time buyer mortgages, it’s possible to buy your first home with a smaller income and even a smaller deposit.