What rate should you use for an HMO mortgage screen?
Use a current lender or broker scenario for the actual borrower and property. A headline initial rate alone is incomplete: compare the reversion rate, fixed period, fees, loan size, LTV, valuation method, ICR stress, early-repayment terms and HMO experience/property criteria.
We do not publish a generic “best HMO rate” table here because it would become stale and could not account for eligibility. Record the product source and date alongside the model.
ICR and stress rate are separate inputs
The PRA supervisory statement describes 125% as the current industry-standard minimum ICR, but firms must assess affordability and stressed interest rates under their own policies and relevant regulatory standards. Lenders can use higher ICRs and different stress rates and may treat tax, portfolio size, fixed-term products, rent and property type differently.
Maximum interest-only loan is screened as:
annual qualifying rent ÷ (stress rate × ICR multiple)
For £30,000 annual qualifying rent, a 6.5% stress rate and 1.25 ICR produce a £369,231 screening ceiling. At 1.45 ICR, the same rent and stress rate produce £318,302. These are scenario outputs, not product promises.
Lender comparison matrix
| Criterion | Record in the pack |
|---|---|
| Product pricing | Initial rate, reversion, fixed period and date checked |
| Fees | Arrangement, valuation, legal, broker and exit/ERC basis |
| ICR screen | Qualifying rent, stress rate, ICR and maximum loan |
| LTV | Purchase/market-value basis and valuation method |
| HMO property | Rooms, licence/planning position, AST structure and commercial-valuation eligibility |
| Borrower | Experience, portfolio, entity, income/liquidity and credit criteria |
| Refinance | Seasoning, works completion, evidence and exit timing |
What to do before making an offer
- Verify the rent evidence and lawful room configuration.
- Obtain a dated broker/lender scenario.
- Run the actual stress rate and ICR in the ICR calculator.
- Apply the LTV limit separately and use the lower ceiling.
- Stress a lower valuation, lower qualifying rent and completion delay.
- Confirm licensing, planning and insurance separately.
Primary references
- Bank of England/PRA: Underwriting standards for buy-to-let mortgage contracts
- FCA: mortgage consumer guidance
- GOV.UK: HMO licensing
Reviewed 26 August 2026. Educational screening guidance, not a mortgage recommendation or offer.