First-Time Buyer Contractor Mortgage

What documents do I need to apply for a mortgage as a contractor and first-time buyer?

If you’re a first-time buyer and a contractor, first of all you need proof of income. This can change depending on where it’s derived from. Often you need proof of your current contract or, for a CIS contractor, your last three months’ payslips. If you’re paid into a limited company, potentially you need your limited company accounts.

On top of that, you’d also need proof of deposit and your last four months’ bank statements to prove the income is going into the account. We also need a copy of your credit report. Then, when the application is being keyed in, we know that the data is correct.

What if I have bad credit as a contractor looking at my first mortgage?

If you’ve got bad credit, it doesn’t necessarily mean you can’t get yourself a mortgage. Being a first-time buyer is absolutely fine, but being a contractor and having bad credit are two niches that may limit your options.

In the past, you would need at least a 15% deposit to get yourself a bad credit mortgage, but there are now lenders who will accept a 5% deposit on a mortgage with bad credit.

You do need to be aware that interest rates on bad credit mortgages are more expensive. But once you’ve got yourself on the property ladder and you’re keeping up with your mortgage payments, your credit score improves. At the end of your mortgage deal, you can look at switching onto a standard mortgage.

It also depends on how bad the credit is. For example, if you had a missed payment five years ago, that will have a much lower impact than a CCJ last month. How bad the credit is and how far in the past it happened will affect your mortgage application.

For a contractor, the same rules apply on how they would calculate your income. With a day rate contractor, it’ll be your day rate times five, times 46 to 52. That part won’t change – it’s just about the available lenders based on the bad credit.

As long as you’re speaking to a broker that has knowledge and experience in bad credit and contractors, and you’ve got a big enough deposit, it shouldn’t cause you too much of an issue.

Can I get a Buy to Let mortgage as a first-time buyer contractor?

Being a contractor is fine, but when you’re purchasing a Buy to Let as your first property, it can potentially change things slightly. It’s not impossible, but a lot of lenders won’t allow your first property to be a Buy to Let. Only a handful will do it.

Usually with Buy to Let, the affordability and how much you can borrow is based around the rental income of the property. But it works differently for a first-time buyer, to stop people from buying Buy to Let properties and living in them.

Lenders make sure that not only does the property stack up on the rental income, but also that your personal affordability fits. For example, if you’re buying a house at £200,000 and you’ve got a 25% deposit, you’re borrowing £150,000. They check the rental income, but also your personal income to make sure you can afford that £150,000 borrowing.

It’s possible, but there are limited options and you have to approach it a slightly different way.

How can I improve my chances of getting a mortgage as a contractor and a first-time buyer?

There are a couple of things to look at. The first, which applies to anybody applying for a mortgage, is making sure that your credit’s up-to-date. Check your credit report way in advance – before you decide to go and look for properties. Then, if there are any issues you can get these ironed out.

The second one is making sure you’ve got all your document proof together. You don’t get payslips every month to document your income as a contractor, and it can be harder to pull together your current and past contracts. Collecting those together will massively speed things up for you.

Last but not least, save up as much deposit as you can. Every extra 5% deposit you put down makes your interest rates slightly cheaper and the lenders more lenient. Spending time building up your savings will really help you out.

How do I apply for a mortgage as someone who is a contractor and a first-time buyer? How can a mortgage broker help?

If you’re a first-time buyer contractor and you want to apply for a mortgage, there are a couple of ways to do it. You can speak directly to your bank, and people often start there. But because your income is seen as niche, you could be speaking to a lender who just won’t accept it.

That could get you disheartened and think you can’t buy a property – when it’s not factually correct. On top of that, the way they calculate your contractor income could mean that the lender offers you substantially less than you’d get with another bank.

For example, if you earn £500 on a day rate fixed contract, you’re earning £2,500 per week. If you’re looking at a lender that bases affordability on 46 weeks’ work per year, compared to one that uses 52 weeks, there’s a £15,000 difference in annual income.

Also, if you go to a lender that may lend you 4.5, rather than six times your income, you could lose £75,000 worth of extra affordability. Instead, make sure you’re speaking to a broker with experience in this, who’s dealing with it on a day-to-day basis and can also save you lots of time.

If you’re a day rate contractor, chances are you’re tied up with work, and you’re not going to have the chance to do all the research yourself. But we’ll know exactly which lender to go to for the borrowing amount you need. We also deal with that paperwork for you – so it’s a lot better than speaking directly to your bank, in my humble opinion at least.

Key Takeaways:

• Lenders calculate a contractor’s annual income by taking their daily rate, multiplying it by five for a weekly rate, and then multiplying that by 46 to 52 weeks.
• The time you need to be a contractor varies widely; some lenders may accept just three months’ proof of earnings or a current contract, while others require up to two years of history.
• The standard rule of thumb for borrowing is 4.5 to 5 times your annual household income, but some lenders may potentially offer up to seven times, especially for first-time buyers.
• Using a mortgage broker with experience in the contractor space is crucial, as the differences in how various lenders calculate contractor income can significantly impact your maximum borrowing amount.
• To improve your chances, you should check your credit report far in advance to resolve any issues, gather all necessary document proof and save up as large a deposit as possible.
  
  

YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

MOST BUY TO LET MORTGAGES ARE NOT REGULATED BY THE FINANCIAL CONDUCT AUTHORITY.

Approved by The Openwork Partnership on 17/12/2025.