Calculator
HMO mortgage calculator
HMO lending is underwritten room by room. Enter your room count and average rent, and this calculator shows the maximum loan rental cover supports, and whether the LTV cap gets there first.
HMO lenders differ on room counts, Article 4 areas, commercial valuations and licensing. We will tell you which lender fits your property.
How this calculator works
An HMO mortgage is sized the same way as any buy-to-let, by rental cover, but the rent that feeds the calculation is the aggregate of the individual room rents. That is what makes HMOs attractive to professional landlords in the first place: five rooms at £550 a month produces £33,000 a year, far more than the same house would earn on a single family let, and the higher rent supports a larger loan.
The maximum loan from rental cover is the annual rent divided by the interest cover ratio (ICR) multiplied by the stress rate. The ICR depends on who is borrowing: 130 per cent for basic-rate taxpayers and limited companies, 170 per cent for higher-rate taxpayers, because lenders must allow for the tax you will pay on the rental income. This is one of the main reasons most HMO purchases now complete through a limited company; the 130 per cent ICR can support a loan roughly 30 per cent larger than the higher-rate equivalent on the same rent. The stress rate defaults to 5.5 per cent, which is typical for shorter fixed rates, though five-year fixes are often stressed at the pay rate, which can lift the maximum loan further.
Rental cover is only half the story. Most HMO lenders cap lending at 75 per cent loan to value regardless of how strong the rent is, so the calculator shows the implied LTV and tells you which constraint actually binds. On a high-yielding HMO it is almost always the LTV cap, which means the property value, and crucially the basis of valuation, drives the loan. Smaller HMOs are usually valued as houses; larger or Article 4 properties may attract a commercial-style investment valuation, which can materially change the numbers.
The gross yield figure, annual rent against value, is a quick health check. Most viable HMOs run at 8 per cent plus; if yours shows much less, the property may be better suited to a standard buy-to-let product.
Our HMO mortgages page covers licensing, valuation bases and which lenders take larger room counts. If you are buying a property that needs conversion or licensing work before an HMO lender will touch it, a bridge is often the route in; our guide to bridging loan exit strategies explains how to structure that refinance exit safely.