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HMO Mortgage Calculator

HMO Mortgage Calculator

Use the calculator below to input your monthly rental income from your HMO property and instantly see the maximum loan amount available from lenient and strict lenders.
HMO Mortgage Calculator

HMO Mortgage Calculator

Calculate mortgage affordability for House in Multiple Occupation investments

Property Details

£
£100k £1.5M £3M
3 7 12
£
£300 £900 £1500
%
4% 7% 10%
Years
Months
%
3% 7.5% 12%
%
125% 150% 175%
£
£0 £4k £8k

HMO Analysis

Mortgage Amount
£300,000
Amount being borrowed
Monthly Rent
£2,250
Total rental income from all rooms
Monthly Payment
£1,755
Mortgage payment at current rate
Stress Payment
£2,145
Payment at stress test rate
Coverage Ratio
155.6%
Rent vs stress test payment
Monthly Cashflow
+£195
After mortgage and costs

HMO Financial Breakdown

Item Monthly Annual
Gross Rental Income £2,250 £27,000
Mortgage Payment £1,755 £21,060
Management Costs £300 £3,600
Net Cash Flow +£195 +£2,340
HMO Assessment
This HMO investment looks viable with 155.6% rental coverage (above the 145% requirement). The property generates £2,250 monthly rent, providing a positive cash flow of £195 per month after mortgage payments and management costs.

HMO Information

HMO mortgages typically require 25% minimum deposit, stress testing at higher rates, and 125-145% rental coverage.

How Does the HMO Mortgage Calculator Work?

Our calculator uses two key stress rate calculations tailored for HMO properties

Lenient Lender Stress Rate

4.5% stress rate with a 125% interest coverage ratio (ICR).

Stricter Lender Stress Rate

6.5% stress rate with a 145% interest coverage ratio (ICR).

Your Rental Income Input

Enter your expected monthly rental income, and the calculator will apply both stress tests and show the maximum loan amount you may qualify for.

Example Scenarios

01

Large HMO in High-Demand Area

  • Monthly Rent: £3,000
  • Lenient Lender Calculation (4.5%, 125%): £640,000
  • Strict Lender Calculation (6.5%, 145%): £406,897
02

Small HMO in Regional Location

  • Monthly Rent: £1,800
  • Lenient Lender Calculation (4.5%, 125%): £384,000
  • Strict Lender Calculation (6.5%, 145%): £243,448

What Are Stress Rates for HMOs?

Stress rates for HMOs are typically higher than standard buy-to-let properties due to their complexity and perceived risk.
  • Typical Stress Rates for HMO Lending:
  • Lenient Lenders: 4.5% stress rate at 125% ICR
  • Stricter Lenders: 6.5% stress rate at 145% ICR
  • Input the Interest Rate: Use the rate offered by your lender or an estimated rate.
  • Example Calculation for HMO Monthly Rent of £2,500:
  • Lenient Lender Calculation (4.5%, 125%)
  • Annual Rental Income = £2,500 × 12 = £30,000
  • Maximum Loan = (£30,000 ÷ 125%) ÷ 4.5% = £533,333
  • Strict Lender Calculation (6.5%, 145%)
  • Annual Rental Income = £2,500 × 12 = £30,000
  • Maximum Loan = (£30,000 ÷ 145%) ÷ 6.5% = £317,241

Why Use an HMO Mortgage Calculator?

  • Higher interest rates compared to residential mortgages.
  • Larger deposit requirements, often starting at 20-25%.
  • Eligibility criteria based on rental income rather than personal salary.

Plan Your HMO Investment

Understand how your rental income from an HMO impacts your borrowing power, helping you secure the right property and finance.

Compare Lender Options

See the difference in loan amounts offered by lenient and strict lenders, enabling you to select the most suitable financing option.

Avoid Surprises

Know your borrowing limits upfront to prevent unexpected challenges during the mortgage application process.

Factors That Affect Your Maximum Loan for HMOs

Our calculator provides accurate estimates based on

Rental Income

Higher rent from multiple tenants increases borrowing capacity.

Stress Rate

A lower stress rate (e.g., 4.5%) allows for higher borrowing.

Interest coverage ratio (ICR)

Stricter ICRs reduce the maximum loan.

Lender Criteria

Some lenders are more flexible with HMO financing than others.

0208 143 7779

Frequently Asked Questions

Ans: Yes, the calculator applies to standard HMOs. However, for larger or more complex HMOs (e.g., multi-unit freehold blocks), specific lender policies may differ.
Ans: Lenders may reduce the loan amount or require a larger deposit. Lenient lenders may be a better fit in such cases.
Ans: No, this tool focuses solely on maximum loan amounts. Additional fees, such as arrangement fees, should be considered separately.
Ans: Yes, the calculator is suitable for both individual and SPV HMO mortgages.
Ans: HMOs typically offer higher rental yields compared to single-let properties, making them an attractive option for cash flow-focused investors.