Buy-to-Let Mortgage Calculator
Find the maximum buy-to-let mortgage based on monthly rental income and the lender's rental coverage ratio (ICR) stress test.
Reviewed by Richard Ross · Last updated April 2026
How Buy-to-Let Mortgage Calculator works
How BTL mortgage lending works
Unlike residential mortgages, buy-to-let mortgage amounts are primarily driven by rental income rather than the borrower's personal income. Lenders apply a rental coverage ratio (ICR): the annual rent must cover the stress-tested interest by a minimum factor.
Rental coverage ratio (ICR)
Most lenders require rent to cover 125% of the interest payment at a stressed rate (typically 5–6%). For higher-rate and additional-rate taxpayers, many lenders require 145% to reflect the reduced tax relief on mortgage interest. Formula: Max Loan = Annual Rent ÷ (Stress Rate × ICR).
Stress rate
Lenders use a notional stress rate (typically 5–5.5% in 2025) rather than the actual product rate to test affordability. This ensures the loan remains serviceable if rates rise. The stress rate varies by lender.
LTV limits for BTL
Most BTL lenders cap LTV at 75–80%. This typically means a minimum 25% deposit on a BTL purchase. Some specialist lenders offer 80–85% LTV for lower-risk properties and borrowers.
SDLT surcharge and additional tax costs for BTL investors
Buy-to-let purchases attract the 5% SDLT surcharge on top of standard rates (in England and NI). On a £250,000 BTL property, standard SDLT would be £2,500; with the 5% surcharge, total SDLT rises to £15,000. Investors must also register for self-assessment to report rental profits. Rental profits are taxed at the investor's marginal income tax rate (20%, 40%, or 45%), and mortgage interest relief is capped at 20% under Section 24. These costs materially affect the net return and must be modelled before investing.
Portfolio landlord rules
Landlords with four or more mortgaged BTL properties are classed as "portfolio landlords" under PRA rules introduced in 2017. Lenders must assess the portfolio as a whole, including all existing mortgages, rental incomes, and interest coverage ratios across all properties. This can restrict borrowing capacity even if the individual property stacks up. Specialist BTL lenders (including Paragon, Precise, and Fleet Mortgages) have dedicated portfolio landlord underwriting teams and are often more flexible than high-street banks for complex cases.
Source: FCA — Mortgage Conduct of Business sourcebook (MCOB), FCA Handbook (fca.org.uk/firms/mortgages). HMRC — Tax on property and rental income, GOV.UK (gov.uk/renting-out-a-property).
Frequently asked questions
How is a buy-to-let mortgage calculated?
BTL lenders calculate the maximum loan from rental income: Max Loan = Annual Rent ÷ (Stress Rate × Coverage Ratio). Example: £1,500/month rent, 5.5% stress, 145% ICR → £18,000 ÷ (0.055 × 1.45) = £225,564 max loan.
What is the rental coverage ratio?
The ICR (Interest Coverage Ratio) is the minimum rent-to-interest multiple required. 125% means rent must be 25% above the stressed interest payment. Higher-rate taxpayers usually need 145% because their Section 24 mortgage interest tax relief is limited to the basic rate.
Do I need income to get a BTL mortgage?
Most BTL lenders require a minimum personal income of £25,000 per year in addition to the rental income calculation. Some specialist lenders offer "portfolio landlord" products with different criteria for experienced investors.
What deposit do I need for a buy-to-let mortgage?
Typically 25% (75% LTV). Some lenders accept 20% deposits. Lower deposits are rare for BTL and come with higher rates and stricter criteria.
What are the tax implications of a buy-to-let investment?
Rental income is taxable at your marginal rate after allowable expenses (excluding mortgage interest, which is restricted to a 20% credit under Section 24). You also pay the 5% SDLT surcharge on purchase and Capital Gains Tax on profits when you sell (basic-rate taxpayers 18%, higher-rate 24% for residential property, after the annual CGT exempt amount of £3,000 in 2025–26). Speak to a tax adviser to model the full picture.
Capital gains tax calculator →Is buy-to-let still profitable in 2025?
Profitability depends heavily on purchase price, rental yield, financing costs, and your tax position. With mortgage rates at 4–5% and the Section 24 tax restriction, many higher-rate taxpayer landlords are cash-flow negative. Investors with larger deposits (lower LTV), property in high-yield areas, or unencumbered portfolios generally fare better. A net yield above the mortgage rate after tax is the minimum test for a viable investment.
How has the Section 24 mortgage interest tax relief restriction affected BTL landlords?
Section 24 (phased in from 2017, fully in force from 2020) replaced the direct deduction of mortgage interest against rental income with a 20% tax credit. For higher-rate (40%) and additional-rate (45%) taxpayers, this significantly increased the effective tax on buy-to-let. A landlord in the 40% bracket who could previously deduct £12,000 in mortgage interest now gets only a £2,400 credit instead of a £4,800 deduction — a £2,400 annual increase in tax. Many landlords moved properties into limited companies as a result.
Is it better to hold a BTL property personally or through a limited company?
A limited company pays corporation tax (25% for most companies) rather than income tax, and mortgage interest remains fully deductible within a company. This benefits higher-rate taxpayers significantly. However, extracting profits from a company incurs dividend tax, and remortgaging or selling later can trigger additional taxes. The break-even depends on your income tax rate, the number of properties, and your long-term plans. Most accountants recommend a company structure for portfolios of 3+ properties for higher-rate taxpayers.
What is the rental yield needed to make BTL viable?
As a very rough guide, a gross rental yield of at least 5-6% is needed to generate meaningful returns after mortgage costs, maintenance, voids, insurance, and agents' fees. At current mortgage rates (around 4.5-5%), a property yielding less than 5% may generate negative cash flow. Net yield (after all costs) is typically 1-2 percentage points below gross yield. Areas with yields consistently above 6% (such as parts of the North East, Yorkshire, and Scotland) tend to offer better cash flow than high-price, low-yield areas like London.
What insurance do landlords need?
Landlords need: buildings insurance (often a specialist landlord policy, not standard home insurance), contents insurance if the property is furnished, and landlord liability insurance. Many policies also include loss of rent cover (pays out if the property is uninhabitable due to damage) and legal expenses cover (for eviction or dispute costs). Standard home insurance does not cover rental properties — using the wrong policy can invalidate your cover entirely.
Your home may be repossessed if you do not keep up repayments on your mortgage.
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