Facebook-f X-twitter Instagram Linkedin-in
Contact Title
Call any time 0208 143 7779

HMO Mortgage Calculator

Investing in a House in Multiple Occupation (HMO) can yield higher rental returns, but understanding your borrowing capacity is crucial. Our HMO Mortgage Calculator helps you estimate the maximum loan amount you can borrow for your HMO property based on your rental income.

Compare results using lenient stress rates (4.5% at 125%) and stricter affordability criteria (6.5% at 145%) to plan your HMO investment effectively.

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.

// Determine stress rate and ICR stressRate = 1.25; // Limited Company stressRate = taxpayerType === "higher" ? 1.45 : 1.25; // Individual rates lenientICR = 0.045; // 4.5% ICR for lenient lender strictICR = 0.07; // 7% ICR for strict lender // Loan calculations // Format numbers as GBP currency // Display results

How Does the HMO Mortgage Calculator Work?

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

  • 1. Lenient Lender Stress Rate: 4.5% stress rate with a 125% interest coverage ratio (ICR).
  • 2. Stricter Lender Stress Rate: 6.5% stress rate with a 145% interest coverage ratio (ICR).

Input your expected monthly rental income, and the calculator will:

  • Apply both stress rates and ICRs.
  • Show the maximum loan amount you could borrow under each calculation.

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.

Example Scenarios

  • 1: 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
  • 2: 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

Factors That Affect Your Maximum Loan for HMOs

  • 1. Rental Income: Higher rent from multiple tenants increases borrowing capacity.
  • 2. Stress Rate: A lower stress rate (e.g., 4.5%) allows for higher borrowing.
  • 3. Interest coverage ratio (ICR): Stricter ICRs reduce the maximum loan.
  • 4. Lender Criteria: Some lenders are more flexible with HMO financing than others.

Take the first step toward successful HMO investing with Auction Finance today!

Looking to invest in an HMO property? Use our HMO Mortgage Calculator above to estimate your maximum loan and plan your next property investment with confidence. Get expert advice and tailored financing solutions with Auction Finance.

Contact us

Frequently Asked Questions

Q 1. Can I use this calculator for all types of HMOs?


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.

  • Auction Finance specialises in structured financing solutions for property auctions. Our expert team prioritises a client-focused approach, offering competitive rates and flexible options for quick and efficient funding. Whether you're bidding on residential, commercial, or land, we are committed to supporting your auction success.

Quick Links

Our Services
Follow Us
Facebook-f X-twitter Instagram Linkedin-in
  • THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME.
  • YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
  • We are a credit broker not a lender.
  • The FCA does not regulate most Buy to Let mortgages.
  • Authorised and regulated by the Financial Conduct Authority FCA reg. 994617.
  • 5 Century Court, Tolpits Lane, Watford, WD18 9PX. Registered in England, No 14667048
  • We always aim to provide a high-quality service to our customers. However, if you encounter any problems and we are unable to resolve them, you can take your complaint to an independent ombudsman. Our advice is covered under the Financial Ombudsman Service.

(C) 2025 Auction Finance is a trading name of Mortgage Knight Ltd