How Lenders Assess Mortgage Affordability in 2026
A plain-English guide to what really matters.
- Lenders don’t just look at your income — they focus heavily on monthly outgoings.
- Affordability is tested against higher interest rates, not just today’s rate.
- Fixed monthly costs (bills, finance, childcare) matter more than lifestyle spending.
- Small changes to outgoings can significantly affect how much you can borrow.
- Affordability rules have softened slightly in 2026 — but discipline still matters.
1 | What “Affordability” Actually Means
When a lender assesses affordability, they’re answering one question:
Can you comfortably afford this mortgage now — and still afford it if rates rise?
This isn’t about judgement or box-ticking. It’s about risk.
Lenders are required to make sure a mortgage remains affordable even if circumstances change, which is why affordability checks can feel stricter than expected.
2 | Income Is Only Half the Story
Yes, income matters — but it’s only part of the equation.
Lenders look at:
- Basic salary
- Overtime, bonuses or commission
- Self-employed profits or dividends
- Pension income (where applicable)
But income alone doesn’t determine borrowing power.
Two people earning the same salary can receive very different mortgage offers depending on their outgoings.
3 | The Outgoings Lenders Care About Most
This is where many applications are won or lost.
Fixed monthly commitments carry the most weight:
- Credit cards and loans
- Car finance (PCP / HP)
- Childcare costs
- Maintenance payments
- Phone, broadband and TV contracts
- Utility bills
- Student loans
- Buy Now Pay Later agreements
Lenders prioritise regular, unavoidable costs over discretionary spending.
4 | Why Discretionary Spending Matters Less Than You Think
Everyday spending — food, fuel, shopping — is usually assessed using standard living cost models, not line-by-line judgement.
That means:
- Occasional takeaways aren’t the issue
- A coffee habit isn’t a deal-breaker
- Normal spending patterns are expected
What does raise flags is:
- Gambling transactions
- Persistent overdraft use
- Missed payments
- High BNPL usage
Consistency matters more than perfection.
5 | Stress Testing: The Part Most People Don’t Realise
Lenders don’t test affordability at today’s interest rate.
They typically assess your mortgage against:
- A higher “stress rate”
- Your ability to cope with rate rises
- Long-term sustainability
In 2026, stress testing has eased slightly compared to previous years — but it’s still a core part of the process.
This is why small reductions in outgoings can have a big impact on borrowing power.
6 | What’s Changed in 2026?
Compared to recent years, lenders are now:
- Using more realistic cost-of-living assumptions
- Stress testing slightly less aggressively
- Being more flexible with certain income types
- Taking a more balanced view of household budgets
This is good news — but affordability is still the main limiting factor for most borrowers.
7 | How to Improve Your Affordability (Practically)
You don’t need to overhaul your life.
Small, sensible steps often make the biggest difference:
- Review fixed monthly bills
- Reduce or consolidate credit commitments
- Avoid new finance before applying
- Tidy up overdraft usage
- Keep spending patterns consistent
Saving £100–£200 a month on outgoings can sometimes increase borrowing power more than a pay rise.
8 | The Bottom Line
Mortgage affordability in 2026 is more balanced than it’s been for a while — but it’s still about sustainability, not just income.
Understanding how lenders assess affordability puts you in control and helps you prepare before you apply.
📞 Want to Understand Your Own Affordability?
This website is for information only — we don’t give mortgage advice.
However, we can put you in touch with a specialist mortgage adviser who can:
- Assess affordability properly
- Explain how lenders will view your situation
- Suggest practical ways to improve your position
- Help you decide the right time to apply
Information only: No advice is given on this website. We introduce you to FCA-authorised advisers who can provide regulated advice.