If you’re planning to invest in a House in Multiple Occupation (HMO), securing the right mortgage is one of the most important steps. HMO finance works differently from standard buy-to-let mortgages, and only certain lenders specialise in this type of property. This guide breaks down what mortgage lenders for HMOs look for, the types of lenders available, the criteria you’ll need to meet, and how to boost your chances of approval.
What Is an HMO Mortgage?
An HMO mortgage is a specialist type of buy-to-let finance designed for properties rented out to three or more tenants who are not part of the same household. Because HMOs can generate higher rental yields but also carry higher HMO management demands, lenders assess them more carefully.
How HMO Mortgage Lenders Differ From Standard Buy-to-Let Lenders
| Feature | Standard Buy-to-Let | HMO Lender |
|---|---|---|
| Tenant Type | Single household | Multiple unrelated tenants |
| Risk Level | Lower | Higher |
| Experience Required | Often none | Often 12+ months landlord experience |
| Rental Stress Tests | Less strict | More stringent |
| Licensing Checks | Not always needed | Usually required |
This means lenders assess HMOs more thoroughly, and criteria can vary widely.
Types of Mortgage Lenders for HMOs
1. Specialist HMO Lenders
These lenders focus on complex buy-to-let and are often the most flexible.
They typically accept:
✔ Larger HMOs
✔ Student lets
✔ Multi-let properties
✔ Less conventional layouts
These lenders may offer competitive HMO mortgage rates but usually require some landlord experience.
2. Challenger Banks
Challenger banks often provide:
- Fast underwriting
- Flexible criteria
- Options for portfolio landlords
- Higher loan-to-value (LTV) limits
They can work well for investors wanting quicker decisions or using HMOs to build a portfolio.
3. Commercial & Semi-Commercial Lenders
If your HMO is large or needs planning changes, commercial lenders may be best.
They’re ideal for:
- 7+ bedroom HMOs
- Mixed-use buildings
- Properties needing refurbishment
- Complex HMO layouts
Commercial lenders use income-based assessments rather than strict formulas.
What HMO Lenders Look For (Approval Criteria)
HMO mortgage criteria are more detailed than for standard buy-to-let. Expect lenders to assess:
✔ 1. Rental Income & Stress Testing
Lenders want strong, predictable rental income.
Most lenders test affordability using higher stress-rate calculations due to the perceived risk.
✔ 2. Property Layout
HMO lenders examine:
- Number of rooms
- Room sizes
- Fire safety compliance
- Kitchen/bathroom ratios
- Communal space availability
✔ 3. Licensing & Local Authority Rules
Most lenders require proof that the property:
- Has the correct HMO licence, or
- Is eligible for licensing upon purchase
Local rules matter more than many landlords expect.
✔ 4. Landlord Experience
Many lenders prefer:
- At least 12–24 months’ landlord experience, or
- Prior HMO management experience
New landlords may still qualify, but from a more limited pool of lenders.
✔ 5. Applicant’s Financial Position
Includes:
- Credit history
- Income stability
- Proof of deposit (often 20–35%)
How to Improve Your Chances of Getting an HMO Mortgage
1. Prepare All Required Documentation
Gather:
- Tenancy schedules
- Floor plans
- HMO licence or application
- Safety certificates (EICR, gas safety, fire alarms, etc.)
2. Strengthen Your Credit Profile
Pay down debts, update electoral registration, and avoid unnecessary credit applications.
3. Show Landlord or HMO Management Experience
If you’re new, consider:
- Starting with a standard buy-to-let
- Using a licensed HMO management company
- Demonstrating strong cash reserves
4. Understand Local HMO Regulations
Each council has unique rules.
Lenders favour landlords who clearly understand their local market.
5. Work With an HMO Mortgage Broker
Because criteria vary widely between lenders, specialist advice increases approval chances significantly
FAQ: Mortgage Lenders for HMOs
Who lends on HMOs?
Specialist lenders, challenger banks, and commercial mortgage providers typically offer HMO mortgages.
Are HMO mortgages harder to get?
Yes. Due to higher perceived risk, lenders use stricter criteria and require more documentation.
What experience do lenders require?
Many prefer 12–24 months of landlord experience. Some accept first-time landlords but with tighter limits.
Which lenders offer the best HMO rates?
Rates vary by lender, deposit size, and borrower profile. Specialist lenders often offer the most suitable HMO mortgage rates.