For years, a 25% deposit has been the gold standard for buy-to-let (BTL) mortgages. But in 2025, is 80% LTV (a 20% deposit) still an option?
The short answer is yes—for the right property and applicant, and with the right advice.
If you’re serious about attempting 80% LTV, start by speaking with a buy to let advisor in the UK who places landlord cases daily, or tap a mortgage broker with whole-of-market access; ultimately, you want the best mortgage advisor uk for your particular rental, tax, and income profile.
Success at 80% LTV hinges on two things: lender selection and passing rental stress tests. Below, you’ll find what lenders look for, how to prep your figures, and the steps to take before you offer on a property.
Why 80% LTV Isn’t “Gone”—Just Selective
Post-rate volatility and tighter risk controls haven’t completely eliminated 80% LTV in BTL; they’ve simply made it more selective. Lenders who still consider 80% LTV tend to do so when the case is clean, the property is standard, and the rental yield comfortably supports the mortgage under their stress assumptions. If any one of those pillars looks shaky, a lender may either push you back to 75% LTV or decline outright.
Common traits of successful 80% LTV cases:
- Strong rental yield relative to purchase price.
- Standard properties (freehold houses often easier than leasehold flats).
- Straightforward personal profile: clear credit file, stable income, basic-rate taxpayer (helpful, not mandatory).
- Tight documentation: bank statements, proof of deposit, AST expectations, and realistic rent evidence in writing.
What Determines if 20% Can Work?
Lenders are all about managing risk. To get them comfortable with a smaller deposit, your application needs to be strong in these four areas:
1) The Rental Stress Test (ICR)
This is the central calculation. Lenders use an Interest Cover Ratio (ICR) to ensure the monthly rent covers the mortgage payment by a significant margin (often 125%–145%), tested at a stressed interest rate (commonly 6%–8% in the current environment, but it varies by lender, product, and tax status).
Worked example:
- Target loan: £200,000 (80% LTV on a £250,000 purchase).
- Stress rate: 7.00% (illustrative).
- Monthly interest at stress: £200,000 × 7.00% ÷ 12 ≈ £1,166.67.
- If lender needs 145% ICR: required rent ≈ £1,166.67 × 1.45 = £1,691.67.
If your realistic rent is £1,700+, you may pass. If it’s £1,450, you’ll likely fail at 80% LTV and need a higher yield, a cheaper property, a different lender/product, or a lower LTV.
Tip: Different lenders use different stress rates and ICR thresholds (and some flex by tax band). A broker can “shop” the case to find the most favourable test you can credibly pass.
2) Property Type
Lenders are far more comfortable at 80% LTV on standard properties:
- Easier: Freehold houses in established rental areas.
- Harder: Flats with short leases, high-rise new-builds, ex-local authority with complex service charges, HMO conversions (unless under specific HMO products), or anything with title quirks.
If you’re targeting 80% LTV, avoid edge-cases until you have a portfolio and track record.
3) Your Tax Band
Your personal tax status affects the ICR hurdle. Some lenders use stricter ICRs for higher-rate and additional-rate taxpayers, which makes 80% LTV tougher. Basic-rate taxpayers often benefit from more favourable calculations (all else equal).
4) “Top-Slicing” (Personal Income)
If rent nearly passes but falls a touch short, a subset of lenders may allow top-slicing—using a portion of your personal earned income to cover the stress shortfall. It’s not universal and the affordability must still stack; however, for experienced, well-paid applicants, top-slicing can be the bridge to 80% LTV.
The 3-Step Action Plan (Before You Offer)
Step 1: Get Realistic Rent Evidence
Ask two local letting agents for written rental valuations (emails are fine). Provide them with property specifics and comparable rentals. Your broker will use these figures to model lender ICRs and stress rates.
Step 2: Calculate True Cost, Not Just Rate
Beyond the headline rate, add:
- Product fee (can be a large fixed amount or % of loan).
- Valuation & legal fees (and whether any are free/incentivised).
- Broker fee (and what service scope it includes).
- Refurbishment budget (if needed to hit the rent you’re projecting).
- Voids & maintenance (pessimistic but realistic allowances).
Step 3: Define Your Exit Strategy
When the fixed period ends, will you remortgage, sell, or sit on SVR? If rates fall, a refinance may be attractive; if yields disappoint, disposal or capital injection might be wiser. Document your Plan A/Plan B now—the clarity helps both you and the underwriter.
Case Patterns That Often Succeed at 80% LTV
- 3-bed houses near transport/schools in steady rental markets with sub-7% gross yields—but excellent rent-to-price ratio relative to lender stress.
- Turn-key properties needing minimal works (quicker to let, fewer surprises).
- Applicants with clean credit, stable income, modest commitments, and basic-rate tax status.
- Landlords willing to adjust the target property (e.g., dropping from £265k to £245k) to meet the yield math.
Patterns that struggle:
- Optimistic rent projections unsupported by comparables.
- New-build flats with premium pricing but ordinary rent.
- High personal outgoings or adverse credit that tightens affordability.
- Chasing a “deal” where the fee stack wipes out most of the yield advantage.
Limited Company vs Personal Name at 80% LTV
Some landlords explore limited company structures for tax planning. A few points:
- Lenders’ ICR and stress rules still apply (they may differ from personal).
- Fees and rates can vary; some lenders prefer personal ownership at higher LTVs, others are comfortable with SPVs.
- Always obtain tax advice before choosing structure; the right vehicle for tax may not be the cheapest on the lending table for a given LTV.
Where to Get Tailored BTL Advice (Fast)
A 20% deposit BTL is a specialist placement problem. This isn’t the moment for generic comparison tools—you need a broker who lives inside stress tests and landlord criteria every day.
What a good broker will do for you:
- Model multiple lenders’ stress tests using your exact rent evidence.
- Pressure-test scenarios (rate movements, fee options, product types).
- Package the case to pre-empt underwriter questions and accelerate time to offer.
The Bottom Line
A 20% deposit for buy-to-let is possible in 2025—but it’s not a given. You’ll need:
- A strong rental yield that comfortably passes the relevant ICR at the lender’s stress rate.
- A standard, low-friction property profile.
- A clean, well-documented personal financial picture (with top-slicing in reserve if appropriate).
- A specialist broker who aligns lender selection with your rent evidence and tax status.
Get your numbers straight. Choose the right property. And partner with a broker who can structure the case to pass the lender’s maths from day one—so your 80% LTV plan becomes a signed mortgage offer, not a near-miss.
