How Much Can Contractors Borrow for a Mortgage?

How Much Can Contractors Borrow for a Mortgage?

Blog Article

If you’re a contractor planning to buy a home, a key question is: “How much can I borrow?” The answer depends on several factors, but the good news is, many lenders now offer generous borrowing limits based on your contract rate—not just your payslips or accounts.

Let’s break it down.

How Contractor Mortgage Borrowing Is Calculated
Unlike traditional employees, contractors often don’t have a fixed salary. Instead, lenders look at your contract value and work out an annualised income using a simple formula:

Daily Rate × 5 (days/week) × 48 (weeks/year)

For example: If you're on a £450/day contract:
£450 × 5 × 48 = £108,000 annual income

Most lenders then multiply this figure by 4.5 to 5 times to determine how much you could borrow:

£108,000 × 4.5 = £486,000

£108,000 × 5 = £540,000

This puts contractors in a strong borrowing position—often better than some permanent employees on similar pay.

What Affects the Amount You Can Borrow?
While contract rate is important, other factors influence your mortgage limit:

Length of your current contract and renewal history

Gaps between contracts

Credit history

Debt-to-income ratio

Deposit size

A larger deposit and a strong credit profile can help you borrow more or access better rates.

How Specialist Brokers Can Help
Not all lenders are contractor-friendly. Some still ask for two years of accounts, which may limit your borrowing potential. A contractor mortgage broker knows which lenders:

Use contract-based underwriting

Consider day-one contractors

Offer higher multiples on annualised income

Final Thoughts
Contractors can borrow significant amounts with the right lender—often based solely on your current contract. Understanding how your income is assessed is key to planning your property purchase.

At Contractor Mortgage Solutions, we’re experts at helping you unlock your full borrowing potential.