Why is the ICR threshold higher for higher-rate taxpayers?

Because higher-rate taxpayers receive Section 24 mortgage interest relief at a flat 20% (rising to 22% from April 2027) rather than at their marginal 40% or 45% rate, more of their rental profit ends up being taxed. That leaves less of the rental income available to cover the mortgage after tax, so lenders typically apply a tougher 145% ICR test to higher-rate taxpayers compared with 125% for basic-rate taxpayers.

What is a "stress rate" and where does the figure come from?

Lenders don't test affordability against the actual pay rate on your mortgage. Instead they add a margin (commonly around 2 percentage points) to the pay rate, and apply a minimum floor (commonly around 5.5%), then use whichever is higher as the "stress rate". This protects against the possibility that rates rise during the mortgage term and the rental income would no longer comfortably cover the higher payments.

Do all lenders use the same ICR and stress rate rules?

No - this varies considerably between lenders, and some specialist lenders use entirely different approaches, such as top-slicing (allowing other personal income to support the application) or product-specific stress tests linked to the mortgage's initial fixed-rate period. The figures here use the standard, widely-quoted thresholds as a planning guide. A specialist BTL mortgage broker can tell you which lenders might assess your specific situation more favourably.

Does the loan-to-value (LTV) ratio affect how much I can borrow?

LTV determines the maximum loan a lender will offer relative to the property's value, but it doesn't override the ICR test - both have to be satisfied. In practice, the loan you can actually secure is the lower of (a) the maximum the property value and your deposit allow at your chosen LTV, and (b) the maximum the rental income supports under the lender's ICR and stress rate rules. This calculator shows you both so you can see which one is the binding constraint for your scenario.

Updated for 2026/27

Buy-to-Let Mortgage Affordability Calculator

BTL lenders don't use income multiples like residential mortgages: they use the Interest Coverage Ratio (ICR), testing your rental income against a stressed interest rate. Enter your numbers to see how much you could typically borrow, and whether your desired loan would pass.

Lender criteria vary significantly. The figures below use the standard, widely-quoted 125% / 145% ICR thresholds and a 5.5% stress rate floor as an indicative guide, not a lending decision. Speak to a specialist BTL broker for an assessment against actual lender criteria.

Your results

Maximum loan at 125% ICR

£153,600

Based on your rental income at the stress rate of 7.5%

Your desired loan: ICR test

Fail

Achieves 107% ICR, against a 125% requirement

Maximum loan at 125% ICR (basic rate)£153,600

Maximum loan at 145% ICR (higher rate)£132,414

Rental income needed for your desired loan£1,406/mo

Stress test rate applied7.5%

Binding constraint: your rental income is the limiting factor here, at £153,600, it supports a smaller loan than 75% LTV against this property (£180,000).

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Frequently asked questions

ICR compares your expected rental income to the interest cost of the mortgage at a deliberately cautious "stressed" rate, expressed as a percentage. Lenders use it instead of income multiples because a buy-to-let mortgage is repaid from rental income rather than your salary. A higher ICR requirement means the rent has to cover the stressed interest by a wider margin, giving the lender more confidence the loan will keep being paid if rates rise or the property sits empty for a period.

Related calculators

Buy-to-Let Cashflow Calculator Rental Yield Calculator Stamp Duty Calculator Section 24 Tax Calculator

Buy-to-Let Mortgage Affordability Calculator

Your results

Frequently asked questions

What is the Interest Coverage Ratio (ICR) and why do BTL lenders use it?−

Why is the ICR threshold higher for higher-rate taxpayers?+

What is a "stress rate" and where does the figure come from?+

Do all lenders use the same ICR and stress rate rules?+

Does the loan-to-value (LTV) ratio affect how much I can borrow?+

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