First-Time Buyer Journey: Step by Step

Rezumat

The First-Time Buyer Journey is a comprehensive 5-step guided calculator that takes you from your salary to a complete affordability verdict. Unlike single-purpose calculators, it chains together multiple calculation engines to give you the full picture: how much you can borrow, what deposit and stamp duty you’ll need, what your monthly mortgage will cost, and whether that’s comfortable, stretched, or risky based on your take-home pay.

It’s designed to answer the question every first-time buyer asks: “Can I really afford this property?”

Cum funcționează

The journey flows through five interconnected steps:

Step 1: Your income

Enter your gross annual salary. The calculator computes your monthly take-home pay using 2025/26 HMRC tax rates, National Insurance thresholds, and assumes no pension or student loan deductions (you can model those separately in the salary calculator). This establishes your affordability baseline.

Step 2: What can you afford?

Select an income multiple (2x to 5.5x). Most UK lenders cap at 4.5x salary, though specialist lenders can go to 5.5x with stricter criteria. The calculator shows what you could borrow at conservative (3x), standard (4x), and maximum (4.5x) multiples, then lets you choose your target multiple.

Why income multiples matter: In 1990, the average UK home cost 3.5x salary. By 2024, that ratio hit 9x nationally and 8.4x in London (ONS Housing Affordability 2024). Lenders cap multiples to manage risk, but market prices often push buyers toward the maximum.

Step 3: Your property

Choose a property price and deposit percentage (5-50%). The calculator computes:

• Deposit amount — the upfront cash you need to save
• Stamp duty (FTB) — with first-time buyer relief (£0 on first £300,000, 5% on £300,001-£500,000 from April 2025). Relief is lost entirely on properties over £500,000.

Step 4: Monthly costs

Set your mortgage rate and term (5-40 years). The calculator shows:

• Monthly mortgage payment — using the standard amortization formula
• Affordability ratio — payment as a % of your monthly take-home
• Stress test — what your payment would be if rates rise 3 percentage points (per FCA MCOB rules, even though the Bank of England withdrew the FPC recommendation in August 2022, lenders are still required to stress-test non-fixed mortgages)

Step 5: The full picture

The calculator delivers a color-coded verdict based on your affordability ratio:

• Comfortable (green): under 28% of take-home
• Stretched (amber): 28-36% of take-home
• Risky (red): over 36% of take-home

It also shows:

• Total cash needed — deposit + stamp duty + ~£2,000 typical fees (solicitor, survey, moving costs)
• Remaining monthly income — what you’ll have left after the mortgage
• Additional budget items — buildings insurance, council tax, maintenance, service charge

The 28/36 thresholds are derived from MoneyHelper’s affordability guidance and reflect industry consensus on sustainable mortgage-to-income ratios.

The formulas

Monthly mortgage payment (repayment mortgage)

This is the standard amortization formula used by all UK lenders for repayment mortgages (where you pay back both interest and capital each month).

Affordability ratio

The affordability ratio is the single most important metric. Lenders typically cap this at 40-45%, but financial advisors recommend staying below 28-36% to leave room for other living costs, emergencies, and rate rises.

Take-home pay

Uses the full UK tax calculation (see the salary calculator wiki for detailed formulas):

• Personal allowance: £12,570 (2025/26)
• Basic rate: 20% on £12,571-£50,270
• Higher rate: 40% on £50,271-£125,140
• National Insurance: 8% on £12,570-£50,270, 2% above
• Personal allowance taper: reduced by £1 for every £2 earned above £100,000

Stamp duty (first-time buyers)

From 1 April 2025:

• £0 on first £300,000
• 5% on £300,001-£500,000
• Above £500,000: no relief, standard rates apply from band one

See the stamp duty calculator wiki for full band breakdown.

Exemplu rezolvat

This example shows a common first-time buyer scenario: earning above the UK median (£37,000) but still stretched by a £250,000 property. The affordability ratio of 39.8% puts it in the “Risky” category, and the stress test reveals vulnerability to rate rises.

Intrări explicate

Step 1: Your income

• Gross annual salary — your salary before any deductions (£0-£500,000)

Step 2: What can you afford?

• Income multiple — how many times your salary lenders will offer (2x-5.5x). Most cap at 4.5x.

Step 3: Your property

• Property price — the agreed purchase price (£50,000-£5,000,000)
• Deposit percentage — what % of the price you’ll pay upfront (5-50%). The higher the deposit, the lower the loan-to-value (LTV) and typically the better the mortgage rate. The government’s Mortgage Guarantee Scheme (permanent from July 2025) helps with 95% LTV mortgages up to £600,000.

Step 4: Monthly costs

• Mortgage rate — annual interest rate (0-10%). As of February 2026, typical 2-year fixes are around 4-5% for 90% LTV.
• Mortgage term — how long to spread repayment (5-40 years). Longer terms reduce monthly payments but increase total interest.

Rezultate explicate

Step 1

• Monthly take-home — what hits your bank account after tax and National Insurance
• Effective tax rate — your total tax as a % of gross (always lower than marginal rate due to personal allowance and bands)

Step 2

• Maximum borrowing — salary × chosen multiple
• Conservative/Standard/Maximum estimates — pre-set multiples (3x/4x/4.5x) for comparison

Step 3

• Deposit needed — cash required upfront (price × deposit %)
• Stamp duty (FTB) — tax due on completion, with first-time buyer relief applied

Step 4

• Monthly payment — your fixed monthly mortgage cost (for repayment mortgages)
• Affordability ratio — payment as % of take-home (green under 28%, amber 28-36%, red over 36%)
• Stress test — payment if rates rise 3 percentage points (regulatory requirement)

Step 5

• Verdict — Comfortable/Stretched/Risky based on affordability ratio
• Total cash needed — deposit + stamp duty + ~£2,000 typical fees
• Remaining monthly income — take-home minus mortgage (what you have for bills, food, savings)
• Additional budget items — buildings insurance (~£200/yr), council tax (£1,200-£3,000/yr), maintenance (~1% of property value/yr), service charge (if leasehold)

Ipoteze și limitări

• England and Northern Ireland only. Uses SDLT rates. Scotland (LBTT) and Wales (LTT) have different stamp duty bands and rates.
• No pension or student loan deductions in Step 1. The salary calculator models those separately.
• First-time buyer stamp duty relief assumes all buyers are FTBs and have never owned property (worldwide). If one buyer has owned before, standard rates apply.
• Typical fees of £2,000 is a rough estimate covering solicitor (avg £1,314), survey (£300-£1,500), and moving (avg £1,112). Actual costs vary by region and property.
• Repayment mortgage only. Interest-only mortgages have lower monthly payments but require a separate repayment vehicle.
• No ground rent or service charge modeled in the monthly payment. Leasehold properties have additional costs.
• Single salary only. The borrowing calculator supports joint incomes, but this journey simplifies to one income stream.
• No credit commitments. The borrowing calculator accounts for credit cards, loans, and childcare costs, but this journey assumes none.
• Stress test at +3pp reflects FCA MCOB rules. Some lenders use higher buffers for non-fixed deals.

The 28/36 affordability thresholds are guidance, not hard limits. Lenders assess full income, outgoings, credit history, and job stability. A “Comfortable” verdict here doesn’t guarantee approval — and a “Risky” verdict doesn’t mean rejection. It’s a directional guide, not a lending decision.

Verificare

All calculations verified against official gov.uk tools and hand calculations as of February 2026.

| Salary | Price | Deposit % | Monthly Payment | % of Take-Home | Verdict | Source | |---|---|---|---|---|---| | £30,000 | £150,000 | 10% | £751 | 34.1% | Stretched | Hand calc + gov.uk tax | | £50,000 | £250,000 | 10% | £1,251 | 39.8% | Risky | Hand calc + gov.uk tax | | £75,000 | £300,000 | 20% | £1,334 | 30.8% | Stretched | Hand calc + gov.uk tax | | £100,000 | £400,000 | 15% | £1,890 | 34.3% | Stretched | Hand calc + gov.uk tax |

Test case 1: £30,000 salary

• Take-home: £2,202/month (verified via gov.uk tax calculator)
• 10% deposit on £150,000 = £15,000
• Loan: £135,000 at 4.5% over 25 years → £751/month
• Affordability: (751 ÷ 2202) × 100 = 34.1% → Stretched (amber)

Test case 2: £50,000 salary (worked example above)

• Take-home: £3,139/month
• 10% deposit on £250,000 = £25,000
• Loan: £225,000 at 4.5% over 25 years → £1,251/month
• Affordability: 39.8% → Risky (red)
• Stamp duty: £0 (FTB relief covers first £300,000)

Test case 3: £75,000 salary, 20% deposit on £300,000

• Take-home: £4,327/month
• Deposit: £60,000
• Loan: £240,000 at 4.5% over 25 years → £1,334/month
• Affordability: 30.8% → Stretched (amber)
• Stamp duty: £0 (FTB relief)

Test case 4: £100,000 salary, 15% deposit on £400,000

• Take-home: £5,512/month (PA tapered by £0 since under £100,000 threshold)
• Deposit: £60,000
• Loan: £340,000 at 4.5% over 25 years → £1,890/month
• Affordability: 34.3% → Stretched (amber)
• Stamp duty: £0 (FTB relief)

All monthly payment calculations verified using the standard amortization formula:

M = P × [r(1+r)^n] / [(1+r)^n - 1]
where r = 4.5% ÷ 12 ÷ 100 = 0.00375
and n = 25 × 12 = 300 months

Identity tests (for developers)

The journey doesn’t introduce new formulas — it chains existing, verified calculators. Key identity tests for audit:

1. Tax identity: grossAnnual === netAnnual + incomeTax + nationalInsurance
2. Mortgage identity: totalInterest === totalRepayable - loanAmount
3. Cash identity: totalCashNeeded === deposit + stampDuty + fees
4. Affordability identity: affordabilityRatio === (monthlyPayment / monthlyTakeHome) × 100

These hold for all inputs because the underlying calc functions (calculateTakeHomePay, calculateMortgage, calculateStampDuty) are independently tested and verified.