How Do I Work Out How Much I Can Afford as a First-Time Buyer?

Working out your budget is the first step to a confident home purchase. Affordability is determined by more than just a simple multiple of your salary – it’s about your real-time financial footprint. 

1. The real-time assessment (Open Banking) 

Most lenders now use Open Banking to review your spending during the application process. Instead of relying on manual estimates, they see exactly what you spend on groceries, subscriptions, and regular lifestyle costs. 

To maximise your borrowing power, it’s wise to tidy up your bank statements for three months before applying – reducing non-essential recurring costs can significantly boost your perceived disposable income. 

2. Your rental track record 

If you have a strong history of paying rent on time, this is now a powerful asset. Specialised products like Skipton’s Track Record mortgage allow eligible first-time buyers to access 100% lending (no deposit) if they can prove 12 consecutive months of on-time rent that is equal to or higher than the proposed mortgage payment. 

For more on deposit options and alternatives, see our guide on how much deposit you need for your first home. 

3. The hidden constraints 

Lenders now use granular data to factor the cost of living directly into your loan offer: 

• Regulated BNPL – as of July 2026, Buy Now Pay Later services are fully regulated. Lenders now treat outstanding Pay in 3 balances as committed debt, which can directly lower your maximum loan amount 

• Energy efficiency – homes with high EPC ratings (A or B) often qualify for Green Mortgages. Because these homes have lower running costs, some lenders will offer lower interest rates or even allow you to borrow slightly more 

• Service charges – for leasehold flats, monthly service charges are deducted from your disposable income before the lender calculates your loan 

4. Credit score and debt-to-income 

While lenders have become more flexible with income multiples (often up to 6x salary for those who qualify), they remain strict on credit health. A clean record and a low Debt-to-Income (DTI) ratio – your total monthly debt payments divided by your gross income – remain essential for accessing the most competitive rates. 

For more on credit requirements, see our guide on what credit score you need to buy a house. 

Final Thoughts 

Understanding your true borrowing power allows you to search for a home within a realistic price bracket. Once you have a Decision in Principle and are ready to make an offer, our conveyancing team at Setfords will be here to manage the legal contracts and ensure a smooth transition into your first home. 

Get your free conveyancing quote today.

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