Your buy-to-let borrowing is normally capped by the lower of two figures: the rent-based limit, monthly rent ÷ (ICR x stress rate ÷ 12), and the lender's loan-to-value (LTV) cap. On a £200,000 house let at £1,100 a month, an illustrative 145% ICR and 7% stress rate limit an interest-only loan to about £130,000, leaving a £70,000 deposit rather than the £50,000 needed at 75% LTV.
The lender criteria below were read on 17 October 2026. For the mechanics of the ratio itself, start with how ICR works; this post is about the ceiling it sets and when the rent, rather than the LTV, decides your deposit.
How do lenders decide how much you can borrow on a buy-to-let?
For a standard interest-only rental assessment, they compare the rental cap with the LTV cap and use the lower figure, subject to their other lending criteria. The first is the rental test in the Prudential Regulation Authority's supervisory statement SS13/16: the valuer's expected rent must cover the monthly interest, calculated at a stressed rate, by a minimum ratio called the interest cover ratio (ICR). The second is the lender's own LTV limit.
Turn the rental test round and it gives you a maximum loan:
Maximum loan = monthly rent ÷ (ICR x stress rate ÷ 12)
With annual figures, that is annual rent ÷ (ICR x stress rate). Your salary does not enter the standard sum. SS13/16 allows lenders to add personal income, known as top slicing, but plenty do not: The Mortgage Works (TMW) says it does not let surplus earned income cover a rental shortfall, and NatWest rules it out on both its buy-to-let routes, for owner-occupiers and non-owner-occupiers. Top slicing explained covers when it is worth chasing.
The LTV cap is simpler but varies by lender and property. Barclays caps buy-to-let at 75% LTV for loans up to £1.1 million, and at 70% for flat loans above £550,000 and up to £1.1 million (Barclays criteria).
Which ICR applies to you, 125% or 145%?
Some lenders use 125% for limited companies or basic-rate taxpayers and a higher ratio for higher-rate or additional-rate individuals; the exact threshold is lender-specific. SS13/16 calls 125% the "current industry standard" minimum and expects lenders to account for tax, including the restriction on mortgage interest relief. Individuals' residential finance-cost relief is restricted to a basic-rate tax reduction, subject to limits (gov.uk), so a 40% taxpayer keeps less of the rent and lenders want more cover. Companies remain outside this restriction; qualifying business interest is generally deductible under the loan relationship rules.
The higher-rate figure is where lenders differ most:
| Lender | Basic rate | Higher rate | Additional rate | Limited company |
|---|---|---|---|---|
| Barclays | 125% | 145% | 155% | No new company purchases; existing SPV/LLP further advances or transfers of equity only |
| The Mortgage Works | 125% | 160% | 160% | 125% (HMOs 175%) |
For standard non-HMO applications, TMW's 160% applies to personal applicants who do not qualify for its lower-rate treatment; HMOs require 175%. Its 125% personal rate needs gross income below £50,271 per applicant and no more than three rental properties.
Watch how your tax band is judged: lenders add the new rent first. Barclays tells brokers to choose the band after including gross rental income from every property you will own on completion. TMW adds 75% of the new property's rent to your income. On a £42,000 salary, TMW adds £9,900 (75% of £13,200) and lands you at £51,900, above the £50,270 basic-rate limit for 2026/27 (gov.uk). At Barclays the same salary plus £13,200 of rent is £55,200. Your payslip says basic rate; the lender tests you as higher rate.
Which stress rate will the lender use?
It depends mainly on how long the rate is fixed. For purchases and capital-raising loans fixed for less than five years, SS13/16 expects PRA-regulated lenders to allow for a rise of at least 2 percentage points and never to assume less than 5.5%, so the test is usually the higher of 5.5% or the pay rate plus 2 points. Some lenders add the 2 points to their reversion rate instead, which the PRA allows. For fixes of five years or more, the five-year rate-rise test falls away, although lenders must still consider affordability and refinancing risk. This permits testing at or near the pay rate. The statement has exclusions, including qualifying remortgages without additional borrowing.
TMW's purchase stress rates show the gap (TMW income criteria):
| TMW purchase product | Stress rate |
|---|---|
| 2-year fix, any LTV | Higher of 5.50% or pay rate plus 2.00% |
| 5-year fix, 65% LTV or less | Higher of 4.00% or pay rate |
| 5-year fix, above 65% LTV | Higher of 4.50% or pay rate |
| Limited company 5-year fix | Higher of 4.50% or pay rate |
Pay rates are the moving part. Bank Rate is 3.75% after the Bank of England's 17 September 2026 decision, with the next decision due on 5 November (Bank of England). For reported October averages and their sources, see buy-to-let mortgage rates in October 2026. The pay rates and fees used below are illustrative assumptions, not current product quotes. Why the two-year test bites harder now is covered in the stress test explained.
How much can you borrow on a £200,000 property let at £1,100 a month?
£150,000 in five of the six illustrative cases below; the 145% ICR case at a 7% stress rate supports about £130,000. The rent is £13,200 a year, a 6.6% gross yield, and the 75% LTV cap is £150,000. The table runs three assumed stress rates, with rental caps rounded down to the pound. These are comparisons, not quotes from one lender:
- 4.64%: an illustrative five-year fix tested at its pay rate, above TMW's 4.50% floor for purchases over 65% LTV.
- 5.5%: the PRA floor for shorter products.
- 7.0%: an illustrative two-year fix at 5.0%, tested at pay rate plus 2 points.
| ICR and stress rate | Rental cap | LTV cap | Maximum loan | Which binds | Deposit needed |
|---|---|---|---|---|---|
| 125% at 4.64% | £227,586 | £150,000 | £150,000 | LTV | £50,000 |
| 145% at 4.64% | £196,195 | £150,000 | £150,000 | LTV | £50,000 |
| 125% at 5.5% | £192,000 | £150,000 | £150,000 | LTV | £50,000 |
| 145% at 5.5% | £165,517 | £150,000 | £150,000 | LTV | £50,000 |
| 125% at 7.0% | £150,857 | £150,000 | £150,000 | LTV, just | £50,000 |
| 145% at 7.0% | £130,049 | £150,000 | £130,049 | ICR | £69,951 |
The row that fails, in monthly terms: £1,100 ÷ (1.45 x 0.07 ÷ 12) = £1,100 ÷ 0.0084583 = £130,049. To borrow the full £150,000 on that product, the rent would need to be £1,269 a month (£150,000 x 1.45 x 0.07 ÷ 12).
At TMW's 160% higher-rate ICR, the picture is starker: the 7.0% test caps the loan at £117,857 and the deposit at £82,143, while the five-year fix at 4.64% supports £177,801, so the LTV cap binds again. On rent this tight, the product term moves your deposit by over £32,000.
Rental caps are rounded down to the pound. The deposit excludes purchase costs: an additional property in England at £200,000 carries £11,500 of SDLT at the higher rates (gov.uk), plus legal, valuation and product fees. TMW lets you add a product fee above its maximum LTV but counts it towards the maximum loan, so an assumed 3% fee (£4,500) on a £150,000 five-year loan would take the loan to £154,500, which this rent still supports.
When does the rent, not the LTV, set your limit?
When the gross yield is below LTV x ICR x stress rate. Work out that threshold and you know which cap binds before you compare a single product:
| Stress rate | 125% ICR | 145% ICR | 160% ICR |
|---|---|---|---|
| 4.64% | 4.35% | 5.05% | 5.57% |
| 5.5% | 5.16% | 5.98% | 6.60% |
| 7.0% | 6.56% | 7.61% | 8.40% |
These are the gross yields needed for a full 75% loan. Above your cell, the rent supports a 75% loan and a 25% deposit, subject to the lender's other criteria. Below it, the rent caps the loan and every point of yield short adds to the deposit. Our 6.6% example clears every cell except 145% and 160% at 7.0%, and sits exactly on the 160% line at 5.5%. A 5% gross yield fails every cell except 125% on the five-year fix, which is why the fix length can matter more to your deposit than the rate itself.
How much more can a limited company borrow?
On this property, about £20,000 more when comparing an assumed 125% company ICR with 145% for an individual at the same 7% stress rate: the £150,000 LTV cap binds instead of the £130,049 rental cap. On a five-year fix, or at 5.5%, it makes no difference here, because the LTV cap binds either way.
The company route has costs. The lender pool is narrower: Barclays does not offer new company purchase loans and limits new lending to existing SPV/LLP customers to further advances and transfers of equity, and NatWest's buy-to-let criteria list lending to limited companies among the cases it cannot help with. A company buying this £200,000 dwelling normally pays the higher SDLT rates even on its first purchase, and has accounts costs and possible tax on taking profit out. Transferring an existing property to your own company can trigger tax based on market value (HMRC transfer guidance); incorporation relief may defer qualifying capital gains, so transfers need specialist tax advice. More in limited company buy-to-let mortgages.
Can you borrow more than 75%?
Yes, at some lenders, but a higher pay rate can tighten the rental test. TMW lends up to 80% where the property has an EPC of C or above, with a £500,000 maximum loan at that LTV (TMW general criteria). To compare terms, assume an 80% LTV two-year deal at 4.71% and a five-year deal at 5.29%, before product fees.
At 80%, our property needs £160,000. Assuming pay rate plus 2 points on the two-year deal, the stress rate is 6.71%. Even a 125% borrower has a rental cap of only £157,377, so the extra 5 percentage points of LTV buy £7,377 of borrowing. Assuming the five-year deal is tested at its 5.29% pay rate, the caps are £199,621 at 125% and £172,087 at 145%, so the rent supports the full £160,000 before fees and other lending criteria.
What else limits the loan?
Your portfolio size, homeownership and the rent accepted by the lender can also limit the loan.
- Portfolio size. With four or more mortgaged buy-to-lets you are a portfolio landlord under SS13/16, and lenders test the whole portfolio. TMW also treats any personal applicant with more than three rental properties as higher rate.
- Owning your own home. Barclays only uses the ICR route if you own or part-own your residential home, borrow £1.1 million or less, will hold fewer than four buy-to-let mortgages and have rent covering 100% of the mortgage payments on background properties; otherwise it runs a full personal affordability test.
- The valuer's rent. SS13/16 expects the rent to be verified by an independent valuer, an automated model or an existing tenancy. Your agent's optimistic asking rent does not count.
Does any of this change in Scotland, Wales or Northern Ireland?
The PRA framework applies across the UK to lenders within its scope, but income tax bands and purchase taxes differ. For Scottish taxpayers, TMW's published 125% personal ICR income cut-off is below £43,662 rather than £50,271; this is its lending criterion, not a statement of the statutory tax-band boundary. The cash needed on £200,000 changes too: in Scotland, £1,100 of Land and Buildings Transaction Tax plus the 8% Additional Dwelling Supplement of £16,000 (Revenue Scotland); in Wales, £10,700 of Land Transaction Tax at the higher rates (Welsh Government); in Northern Ireland, the same £11,500 of SDLT as England.
How do you check your own borrowing limit?
Run both caps on your own numbers before you offer. Put your rent, value, ICR and stress rate into the mortgage stress test to see the rental cap, then use the buy-to-let mortgage calculator for the monthly cost of the loan you can actually get. Test the two-year and five-year cases side by side, and size the deposit off the lower cap, not the 75% headline.
General information, not legal, tax or financial advice. Lender criteria and Bank Rate were checked on 17 October 2026. Worked-example pay rates and fees are illustrative. Tax rules and lender criteria may change at the 28 October 2026 Budget; speak to a whole-of-market broker before you commit.
