Quick answer: buy-to-let lenders work out how much you can borrow from the rent. Leeds Building Society, Coventry Building Society and The Mortgage Works publish a test where the rent must be at least 125% of the mortgage interest at a stress rate of 5.5% or more on deals under 5 years, and 145% to 160% for higher-rate taxpayers. On £1,200 a month with a 2-year fix at 5%, our calculation gives a largest loan of about £164,570.
Guestwise is a short-let management company, not a mortgage broker or lender, and this calculator is not mortgage advice. The figures come from the published criteria and rules linked on this page. Lenders change their criteria often, so check with the lender or a broker before you apply.
Buy-to-let borrowing calculator
Enter the monthly rent a letting agent expects and the deal you are looking at. The calculator applies the rental cover test described in the lender criteria below. The result is an illustration, not a mortgage offer or advice.
More options: deal type, loan to value, term and fees
How do lenders work out buy-to-let borrowing?
The Bank of England's Prudential Regulation Authority (PRA) sets the rules UK banks and building societies follow. It defines the interest coverage ratio (ICR) as the ratio of expected monthly rent to monthly interest payments, worked out at a rate that allows for likely rate rises (PRA SS13/16, paragraph 2.3). For deals under 5 years, the PRA says lenders should assume an increase of at least 2 percentage points and a minimum rate of 5.5% (PRA SS13/16, paragraphs 2.13 and 2.14).
Working from the PRA's definition, our calculation of the largest loan is the yearly rent, divided by the rental cover test, divided by the stress rate. Using £1,200 a month (£14,400 a year):
| Deal and test | Stress rate | Largest loan from the rent |
|---|---|---|
| 2-year fix at 5%, 125% cover | 7% (5% + 2 points) | £164,570 |
| 2-year fix at 5%, 145% cover | 7% | £141,870 |
| 5-year fix at 5%, 125% cover, tested at the product rate | 5% | £230,400 |
Worked example using the formula above. Figures rounded to the nearest £10. The lender's maximum loan to value still applies.
What do lenders publish? Three lenders compared
These are the buy-to-let rental tests three UK lenders publish for brokers, read on each lender's own site in October 2026. Most lenders only publish full criteria to brokers, so this table is limited to lenders whose criteria are public.
On a phone, swipe the table sideways to see every column.
| Lender | Basic-rate taxpayer | Higher-rate taxpayer | Limited company | Stress rate, deals under 5 years | Stress rate, 5-year fixes | Maximum loan | Source |
|---|---|---|---|---|---|---|---|
| Leeds Building Society | 125% | 145% | 125% | Rate + 2%, minimum 5.5% | Rate + 0.5%, minimum 5.5% | 80% up to £500,000. 75% for first-time landlords | Criteria Effective 24 August 2026 |
| The Mortgage Works (Nationwide) | 125% | 160% | 125% | Higher of 5.5% or rate + 2% | Higher of 4% (65% LTV or less) or 4.5%, or the rate | Not stated on the page read | Criteria Read October 2026 |
| Coventry Building Society | 125% | 145% | Not offered: loans to named individuals only | Higher of 5.5% or rate + 2% | Higher of 4.5% or the rate | Depends on scheme. Loans up to £750,000 above 50% LTV | Criteria Document dated October 2024 |
The Mortgage Works applies 125% to personal applicants with income below £50,271 each who own no more than three rental properties, according to its criteria. Coventry treats an applicant earning £49,000 or more as a higher-rate taxpayer.
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Can a 5-year fix let you borrow more?
The PRA does not require the 2-point increase when the rate is fixed or capped for 5 years or more (PRA SS13/16, paragraph 2.12). Lenders set their own test for these deals instead. Coventry Building Society tests at the higher of 4.5% or the product rate (Coventry). The Mortgage Works uses 4% at 65% loan to value or less and 4.5% above that, or the pay rate if higher (The Mortgage Works). Leeds Building Society uses the product rate plus 0.5%, with a 5.5% minimum (Leeds). Switch the deal type in the calculator to see the difference.
Why do higher-rate taxpayers need more rent?
HMRC restricted mortgage interest relief for individual landlords to the basic rate of income tax, fully in place from 6 April 2020. Relief is now a 20% tax reduction rather than a deduction from rental income (HMRC). The PRA tells lenders to take into account any tax liability linked to the property, and lets them assume higher-rate tax (PRA SS13/16, paragraph 2.6). That is why Leeds and Coventry ask higher-rate taxpayers for 145% cover and The Mortgage Works asks for 160%.
Is a buy-to-let mortgage regulated?
The Mortgage Works says most buy-to-let mortgages are not regulated by the FCA (The Mortgage Works). The FCA treats a buy-to-let loan as consumer buy-to-let, with its own rules, when it is not taken out "wholly or predominantly for the purposes of a business" (FCA Handbook PERG 4.10B). The PRA treats a borrower with four or more mortgaged buy-to-let properties as a portfolio landlord (PRA SS13/16, paragraph 3.1).
Letting to holiday guests rather than a tenant uses a different test. Our guide to holiday let mortgages compares five lenders' seasonal rent rules.
Frequently asked questions
How much can I borrow on a buy-to-let mortgage?
Lenders start from the rent, not your salary. At Leeds Building Society, a basic-rate taxpayer needs rent of 125% of the interest at the stress rate. On £1,200 a month with a 2-year fix at 5%, the stress rate is 7%, so by our calculation the largest loan that passes is about £164,570. The lender's maximum loan to value also applies.
What is the interest coverage ratio (ICR)?
The ICR is the rent divided by the mortgage interest. The Bank of England's Prudential Regulation Authority defines it as the ratio of expected monthly rent to monthly interest payments. A 125% ICR means £125 of rent for every £100 of interest, worked out at a stress rate rather than your actual rate.
What stress rate do buy-to-let lenders use?
For deals under 5 years, the PRA says lenders should assume an increase of at least 2 percentage points and a minimum rate of 5.5%. Leeds, Coventry and The Mortgage Works all publish the higher of 5.5% or the product rate plus 2% for these deals.
Is it easier to borrow with a 5-year fixed rate?
Often, yes. The PRA does not require the 2-point increase when the rate is fixed for 5 years or more. Coventry Building Society tests 5-year fixes at the higher of 4.5% or the product rate, and The Mortgage Works uses 4% or 4.5% depending on loan to value. Leeds Building Society uses the product rate plus 0.5%, with a 5.5% minimum.
Why do higher-rate taxpayers need more rent?
Since April 2020 HMRC gives individual landlords relief on mortgage interest only as a 20% basic-rate tax reduction. Lenders allow for the extra tax: Leeds and Coventry ask higher-rate taxpayers for 145% rental cover, and The Mortgage Works asks for 160%.
How much deposit do I need for a buy-to-let mortgage?
It depends on the lender and loan size. Leeds Building Society lends up to 80% of the value on loans up to £500,000, so a 20% deposit, and up to 75% for first-time landlords, according to its criteria effective 24 August 2026. The rent test can mean you need a bigger deposit than the loan to value alone suggests.
Can I borrow more through a limited company?
Some lenders use a lower rental cover test for companies. Leeds Building Society and The Mortgage Works both publish 125% for limited company buy-to-let, compared with 145% and 160% for higher-rate taxpayers buying in their own name.
Are buy-to-let mortgages regulated by the FCA?
Most are not. The Mortgage Works says most buy-to-let mortgages are not regulated by the FCA. The FCA treats a buy-to-let loan as consumer buy-to-let, with its own rules, when it is not taken out "wholly or predominantly for the purposes of a business".
What is a portfolio landlord?
The PRA defines a portfolio landlord as a borrower with four or more mortgaged buy-to-let properties. Lenders then look at the whole portfolio, not just the new property.
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Related guides
Sources
- Bank of England PRA: SS13/16 underwriting standards for buy-to-let mortgage contracts
- Leeds Building Society: lending criteria, effective 24 August 2026
- The Mortgage Works: income and rental criteria
- Coventry Building Society: buy-to-let lending criteria
- The Mortgage Works: mortgage payment calculator
- HMRC: changes to tax relief for residential landlords
- FCA Handbook PERG 4.10B: buy-to-let lending
This is general information, not mortgage, financial or tax advice. The calculator shows an illustration using published rules and the figures you enter. Speak to an FCA-authorised mortgage broker or a tax adviser before you act.