It is the first question everyone asks, and the honest answer is that a single multiple of your income will not give it to you.
Two self-employed applicants declaring the same profit can be offered very different amounts. The difference is rarely the income. It is everything sitting around it.
Income multiples are a starting point, not the answer
You will see rules of thumb quoted everywhere, usually somewhere between four and five times income. They are a rough indication only. The exact multiple a lender will stretch to depends on the lender, your income level, your deposit and your wider profile, and it can be lower as easily as higher.
More importantly, the multiple is a ceiling rather than a promise. Clearing it does not mean you will be lent that amount. The real test comes next.
Affordability is the real test
Lenders model your actual monthly position. Income after tax, credit commitments, dependants, childcare, essential outgoings, and in some cases your spending patterns from bank statements.
They then stress test the payment against a higher interest rate than the one you are applying for, to check you could still afford it if rates moved. That stress rate does more to shape the final number than the headline multiple does.
Which income figure counts
Before any of this, the lender has to decide what your income actually is, and that depends entirely on how your business is structured. Sole traders are assessed on net profit. Most lenders assess limited company directors on salary plus dividends drawn, while a minority will also consider profit retained in the company.
That choice can change the assessable figure dramatically. We set out how each structure is treated in how lenders work out your self-employed income, and it is worth reading before you go any further.
What pulls the number down
- Credit commitments. Car finance, personal loans, credit card balances and buy now pay later agreements all reduce affordability, sometimes more than people expect.
- Dependants and childcare. Lenders apply their own assumed costs per child.
- Business borrowing. Outstanding business loans and an overdrawn director's loan account both get taken into account.
- Falling income. If the latest year is down on the year before, most lenders will work from the lower figure and ask why.
What pushes it up
- A larger deposit. It lowers the loan to value, which widens the lender choice and usually improves the rate.
- A clean credit file with no recent missed payments.
- Three years of stable or rising accounts rather than the minimum two.
- The right lender for your structure, which is the single biggest variable in this part of the market.
What if you only have one year of accounts
It is possible with some lenders, but the field is much smaller. It usually helps to have a meaningful deposit and a clear employment history in the same line of work before you went self-employed.
Contractors are often a different case entirely. Many lenders will assess a contractor on their day rate rather than on filed accounts, which can produce a far more generous figure and needs far less trading history. If you contract, do not let anyone assess you as a standard sole trader without checking that route first.
Get an agreement in principle before you view anything
An agreement in principle is a lender's initial indication of what they may lend, based on the information you give and an initial credit check, usually a soft search that does not affect your credit file.
It is not a guarantee and it is not a mortgage offer. What it does is give you a realistic range to search in and give estate agents confidence that your offer is serious. For a self-employed buyer, that second point matters more than most people realise.
The short version
Work out which income figure applies to your structure, get your last two years of documents in order, understand what your commitments are doing to your affordability, and get an agreement in principle from a lender that actually suits your case rather than the first one you find.