HMO Mortgage Calculator
HMO Mortgage Analysis
Mortgage Amount-
Monthly Mortgage Payment-
Gross Monthly Rent-
Net Monthly Rent (after voids)-
ICR (Interest Coverage Ratio)-
Gross Yield-
Monthly Cash Flow-
HMO Mortgage Requirements 2025/26
| Criteria | Standard BTL | HMO (Small) | HMO (Large 7+) |
|---|---|---|---|
| Max LTV | 75-80% | 75% | 70-75% |
| ICR Requirement | 125% | 125-145% | 145%+ |
| Stress Rate | 5.5% | 5.5-6.0% | 6.0%+ |
| Licence Required | No | Check locally | Mandatory |
| Experience Required | No | Preferred | Usually yes |
HMO Key Facts
Typical Yield
8-12%
Licence Cost
£500-£1,500
Min Rooms
3 tenants
Large HMO
7+ tenants
Rate Premium
+0.5-1.5%
Management Cost
12-18%
How to Use This Calculator
1
Enter property details
Input property values and financial information for your scenario.
2
Add cost estimates
Include all relevant costs such as fees, rates and deposits.
3
Select options
Choose the relevant settings for your specific situation.
4
Review the results
The calculator shows a full breakdown of all costs involved.
5
Compare alternatives
Use the results to compare different options and make an informed decision.
Frequently Asked Questions
What is an HMO mortgage?
An HMO mortgage is a specialist buy-to-let mortgage for houses in multiple occupation — properties rented to 3 or more tenants from 2 or more households who share facilities. HMO mortgages typically have higher interest rates and stricter criteria than standard BTL mortgages, but the higher rental yields can make them very profitable.
Do I need an HMO licence?
A mandatory HMO licence is required for large HMOs (5+ tenants in England). Many local authorities also require licences for smaller HMOs through additional licensing schemes. Check with your local council. Operating without a licence can result in fines up to 30,000 pounds per offence and rent repayment orders.
What yield should an HMO achieve?
A well-managed HMO should achieve gross yields of 8-12%, compared to 5-7% for standard BTL. After management costs (12-18% for HMOs), voids (5-10%), and higher maintenance, net yields of 6-9% are realistic. Location, property condition and tenant demand significantly affect actual returns.
What ICR do lenders require for HMOs?
Most HMO lenders require an interest coverage ratio (ICR) of 125-145% at a stress rate of 5.5-6.0%. This means rental income must exceed the stressed mortgage payment by 25-45%. For higher rate taxpayers, the ICR may need to be 145%+ to account for the tax position.
Can I convert a property to an HMO?
Yes, but you may need planning permission for change of use (C3 dwelling to C4 HMO or sui generis for large HMOs). Many areas have Article 4 Directions requiring planning permission for any HMO conversion. You also need to meet fire safety, room size, and amenity standards. Budget for conversion costs of 10,000-50,000 pounds.
Official Sources & References
Data verified against official UK government sources. Last checked April 2026.