Buy-to-let mortgages in 2026: Rates, deposits and how lenders assess landlords

A buy-to-let mortgage looks like a residential mortgage from a distance, but lenders treat the two very differently. In 2026, most buy-to-let lenders want a deposit of at least 25%, judge the deal primarily on the rent the property can earn rather than your salary, and check whether the rent would still cover the mortgage if interest rates were higher. Tax depends on your personal circumstances, and this article is general information rather than advice.

This guide covers what deposit you will need, how lenders assess landlords in 2026, what a typical purchase costs from start to finish, and the choice between interest-only and repayment.

How buy-to-let lending differs from residential

With a residential mortgage, the lender's core question is whether your income covers the repayments. With buy-to-let, the core question is whether the rent covers them, with room to spare. Your personal income can still matter. Some lenders require a minimum earned income, commonly around £25,000 a year, while others have no fixed threshold or assess the applicant's wider financial position instead. For most applications, the property's income is central to the lender's decision, although some lenders may also consider the applicant's personal income to support affordability.

Buy-to-let mortgages are also usually interest-only. You pay only the interest each month and repay the full loan at the end of the term, typically by selling the property or refinancing. That keeps monthly costs down and is why the structure is popular with landlords, but it means the debt itself never shrinks unless you choose a repayment product or make overpayments.

The deposit: expect 25%, sometimes more

Most lenders in 2026 ask for a minimum deposit of 25% of the property's value. A handful will go to 20%, and the most competitive rates are generally reserved for landlords putting down 40% or more. On a £200,000 property, that means finding at least £50,000 before you get anywhere near fees and tax.

How lenders stress test the rent

Lenders normally assess the rent using an interest coverage ratio, or ICR. The rent typically needs to cover between 125 and 145 % of the mortgage interest, calculated not at your actual pay rate but at a higher notional stress rate. Basic-rate taxpayers usually sit at the lower end and higher-rate taxpayers at the top, because of how landlord tax relief now works. We cover that in our separate article on Section 24 and mortgage interest relief.

As an illustration, take a £150,000 interest-only loan stress tested at a notional 5.5%. That is £8,250 of interest a year, or £687.50 a month. At a 145% coverage requirement, the lender would want rent of roughly £997 a month before agreeing the loan. Every lender sets its own rates and ratios, so treat this as the shape of the calculation rather than a universal rule.

What a purchase actually costs

Buying a rental property brings a stamp duty bill most first-time landlords underestimate, because buy-to-let purchases in England and Northern Ireland carry a 5% surcharge on top of standard rates when the purchase leaves you owning more than one property.

Take that £200,000 example. Standard stamp duty comes to £1,500: nothing on the first £125,000 and 2 per cent on the next £75,000. The surcharge adds 5 per cent of the full £200,000, which is £10,000, giving a total bill of £11,500. Add the £50,000 deposit, legal fees, a survey and lender arrangement fees, and the real cash needed is comfortably over £63,000. The return goes in within 14 days of completion, which is one of several reasons landlords need conveyancers who know the buy-to-let process; our guide to buy-to-let conveyancing costs covers the legal side in detail.

Interest-only or repayment?

There is no single right answer. Interest-only maximises monthly cash flow and keeps rent covering the ICR comfortably, but relies on the property's value to repay the debt. Repayment costs more each month but builds equity and removes the end-of-term question. Points worth weighing:

• Interest-only suits landlords prioritising cash flow or planning to sell within the mortgage term, but leaves the full loan outstanding and exposed to market conditions when it ends.
• Repayment suits landlords planning to hold long term, because each year of ownership reduces the balance and improves your loan-to-value for future remortgages.

Rates and fees in 2026

Buy-to-let rates sit above equivalent residential deals, and the pricing structure differs in one important way: arrangement fees are often charged as a percentage of the loan, commonly up to around 2% or 3% on the most aggressively priced products, rather than the flat fees typical of residential lending. A low headline rate with a 3% fee can easily cost more over a two-year deal than a higher rate with a flat fee, so compare on total cost over the deal period, never on rate alone.

Portfolio landlords, generally meaning four or more mortgaged rental properties, face an extra layer of underwriting: lenders will look at the whole portfolio's rental cover and borrowing, not just the new purchase, and will usually want a business plan and cash flow figures. If that is you, allow extra time and paperwork.

The bottom line

In 2026, a 25% deposit remains a sensible starting point for many buy-to-let purchases, although maximum loan-to-value limits vary between lenders. The rent will normally need to satisfy the lender's interest coverage calculation, commonly using an ICR somewhere between 125% and 145%, but the exact ration and stress rate will depend on the lender, mortgage product, ownership structure and borrower's tax position.

For an individual buying a £200,000 property in England or Northern Ireland where the higher SDLT rates apply, the tax bill would be £11,500. Together with a £50,000 deposit, that means finding at least £61,500 before legal, valuation, survey and mortgage costs are considered.

Buy-to-let underwriting and conveyancing can involve additional checks, particularly for limited companies and portfolio landlords, so it pays to compare conveyancing quotes from firms that handle landlord purchases every week.