The question every first-time buyer starts with is how much they can borrow. The honest answer is that two numbers control it — your deposit and your affordability assessment — and they are not equally flexible.
Deposit: 5% works, 10% works better
95% loan-to-value lending is widely available in 2026, so a 5% deposit is a genuine route rather than a theoretical one. A small number of lenders go slightly above 95% on specific products, and the Mortgage Guarantee Scheme supports 5% deposit lending on properties up to £600,000.
But the pricing steps at 95%, 90%, 85% and 80% are significant. On a £250,000 purchase, the difference between a 5% deposit and a 10% deposit is £12,500 of cash and often a meaningfully better rate for the whole fixed period. If you are within reach of the next band, waiting a few months to get there is frequently the better financial decision — and one of the few pieces of advice in this area that is unambiguous.
Remember that stamp duty and legal fees come out of your cash too, not out of the mortgage. First-time buyers pay no SDLT up to £300,000 and 5% between £300,001 and £500,000, with no relief above £500,000.
Income multiples: 4.5x is the anchor, not the ceiling
Most lenders cap lending at around 4.5 times income, and that figure has a regulatory origin: a mortgage above 4.5x is classed as high loan-to-income, and lenders have been constrained in how much of that they can write.
Some lenders already go to 5x, 5.5x or in specific cases higher — usually for applicants with strong income, low commitments, larger deposits, or in professional schemes for doctors, dentists, solicitors, accountants and similar occupations where income growth is predictable.
What is changing. The Bank of England’s Financial Policy Committee asked the regulators to revisit how the loan-to-income flow limit works, and on 1 April 2026 the FCA and PRA published joint proposals (CP6/26) to remove the firm-level 15% cap on high-LTI lending while keeping the market-wide 15% limit intact. In practice that would let individual lenders write more above 4.5x, provided the market as a whole stays within the aggregate limit.
This is a consultation, not a settled rule, so treat it as a direction of travel rather than a product you can apply for. It does suggest more scope for higher income multiples among lenders who choose to use it.
Affordability is not the same as income multiple
Even where a lender will consider 4.5x, the affordability calculation can produce less. Lenders assess:
- Net income after tax, including how they treat bonus, commission and overtime — often only 50% of variable pay counts.
- Committed expenditure: car finance, personal loans, credit card balances, student loan, childcare, maintenance payments.
- A stress rate well above your actual pay rate, testing whether you could still afford the payment if rates rose.
- Number of dependants.
A £400 monthly car finance agreement can reduce borrowing capacity by roughly £20,000 to £25,000. Clearing or reducing commitments before applying is usually the highest-impact thing a first-time buyer can do.
Preparing the application
Six months before you apply:
- Check your credit file with all three agencies. Correct errors, register on the electoral roll, and avoid new credit applications.
- Reduce commitments rather than moving them around. A balance transfer does not remove the commitment.
- Keep your bank statements clean. Lenders read three months of statements. Gambling transactions, unarranged overdrafts and returned direct debits all cause problems.
- Evidence the deposit. Savings need a paper trail; gifts need a signed gift letter from the donor confirming there is no loan and no retained interest.
- Sort the paperwork. Three months of payslips, or two to three years of accounts and tax calculations if self-employed, plus identity and address documents.
Other routes worth knowing
Joint borrower sole proprietor lets a parent’s income support the borrowing without them going on the title — which avoids the 5% SDLT surcharge that a joint purchase would trigger for them.
Shared ownership buys a share with rent on the remainder. It reduces the deposit and the mortgage, but resale is more restricted and the rent and service charge count in affordability.
New-build incentives are common but are deducted from the valuation by most lenders, so a “£10,000 deposit contribution” is rarely worth £10,000 in lending terms. Check before you rely on it.
Start with the agreement in principle
Get it before you view, not after you offer. It tells you what you can actually borrow rather than what a website estimated, and agents increasingly will not put an offer forward without one.
Buying your first home? Talk to us about what you can borrow before you start viewing — it makes the whole process shorter.
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YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE. Giles Finance is authorised by the Financial Conduct Authority (No. 726857) to transact regulated mortgages. Giles Finance is a trading style of Giles Finance & Consultancy Services. This article is general information, not advice; the right answer depends on your circumstances.