Most buy-to-let lenders cap the loan at 75% of the property’s value, so you should plan for a deposit of at least 25%, according to MoneyHelper. A bigger deposit lowers the loan-to-value (LTV), which usually opens cheaper deals, but the rent still has to pass the lender’s affordability test.
What loan-to-value means
LTV is the loan divided by the property’s value. Borrow £150,000 against a £200,000 flat and the LTV is 75%; the £50,000 you put in is the deposit. Buying costs such as stamp duty, legal fees and lender fees come on top, so the cash you need is larger than the deposit alone.
Deposit needed on a £200,000 purchase
How lenders decide how much to lend
The Prudential Regulation Authority (PRA), part of the Bank of England, expects lenders to assess affordability mainly on the rent, using an interest coverage ratio (ICR), and where relevant on your personal income. Lenders should not base the decision on the equity in the property or on future house price growth.
In practice, the deposit and the rent work together: if the rent cannot cover the stressed interest cost, the lender will offer less, and you will need a bigger deposit. Our guide to the buy-to-let stress test and ICR shows the calculation step by step.
How a lender sizes a buy-to-let loan
- Value the propertyAn independent valuation sets the value and expected rent.
- Apply the LTV capCommonly 75%, so at least a 25% deposit.
- Run the rental testRent must cover stressed interest by the lender’s ICR.
- Check personal incomeSome lenders let your income top up a shortfall.
- Offer the lower figureThe loan is the smaller of the LTV and rent limits.
What else the lender looks at
The rent figure is not simply what you hope to charge. The PRA expects it to be verified by an independent valuer, an automated valuation model or an existing tenancy agreement, taking local demand into account. Your other borrowing counts too: mortgages on all your properties, loans, car finance and credit cards are part of the assessment if personal income is used. If you already have four or more mortgaged buy-to-let properties, you are treated as a portfolio landlord and the lender reviews the whole portfolio.
Is a buy-to-let mortgage regulated?
Most buy-to-let lending is outside the FCA’s full mortgage regime. A narrower set of rules covers consumer buy-to-let: loans that are not taken out wholly or mainly for a business, for example when someone lets a former home. Firms lending, arranging or advising on those loans must be on the FCA register.
Consumer and business buy-to-let
| Consumer buy-to-let | Business buy-to-let | |
|---|---|---|
| Purpose | Not wholly or mainly for a business | Wholly or mainly for a business |
| Typical case | Letting a former home | Investment letting |
| Oversight | Firms must be on the FCA register | Outside the consumer buy-to-let rules |
| PRA underwriting standards | Apply | Apply |
Other costs to budget for
An additional property usually attracts the higher rates of Stamp Duty Land Tax in England and Northern Ireland, which can add thousands of pounds to the cash you need on completion; see our stamp duty surcharge guide. If you already have a residential mortgage on a home you plan to let, GOV.UK reminds you that you need your lender’s permission first. Once tenants move in, the compliance costs in our landlord obligations checklist start.
The market is active but not growing fast: UK Finance forecasts £11 billion of buy-to-let purchase lending in 2026, flat on 2025, with £5 billion lent by June. This is general information, not financial advice: speak to an FCA-authorised mortgage adviser about your own circumstances.
Frequently asked questions
Can I get a buy-to-let mortgage with a 15% deposit?
Some lenders advertise higher LTVs, but MoneyHelper describes a 75% LTV limit, and so a 25% deposit, as the usual starting point. Check current criteria with an FCA-authorised adviser.
Does a bigger deposit help me pass the rental test?
Yes, indirectly. A smaller loan means less interest to cover, so the rent is more likely to meet the lender’s interest coverage ratio.
Can I let my home without a buy-to-let mortgage?
Only with your lender’s agreement. GOV.UK says you need your mortgage lender’s permission to rent out a mortgaged property.
Plan for a deposit of at least 25%, add stamp duty and fees on top, and remember that the rent, not the equity, decides how much a lender will offer.
Sources
- Buy-to-let mortgages explained — MoneyHelper: loan-to-value limits and minimum deposits.
- Supervisory Statement 13/16: Underwriting standards for buy-to-let mortgage contracts — Bank of England, Prudential Regulation Authority (September 2016): ICR, stress rate, portfolio landlords.
- PERG 4.10B Regulation of buy to let lending — FCA Handbook: buy-to-let credit agreements and the consumer buy-to-let regime.
- Mortgage lending in 2026: mid-year health check — UK Finance (1 September 2026): forecasts and lending to June 2026.
- Renting out your property: landlord responsibilities — GOV.UK: safety, EPC, deposits, right to rent, lender permission.
