What Is an HMO Mortgage?

An HMO mortgage is a specialist buy-to-let mortgage for Houses in Multiple Occupation - properties let to multiple unrelated tenants who share facilities. HMOs typically require 25-40% deposit and offer higher rental yields (8-12%) than standard BTL. You'll need landlord experience, appropriate HMO licensing, and properties must meet fire safety and room size regulations.

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What is an HMO mortgage?

An HMO mortgage is a specialist buy-to-let mortgage for Houses in Multiple Occupation - properties let to 3 or more tenants from 2 or more households who share facilities like kitchens and bathrooms. Common examples include student houses, professional house shares, and bedsits.

What deposit do I need for an HMO mortgage?

Most HMO mortgages require 25-40% deposit, compared to 25% for standard buy-to-let. Larger HMOs (6+ bedrooms) or first-time landlords may need 30-40%. The higher deposit reflects the specialist nature and perceived higher risk of multi-let properties.

Do I need an HMO licence?

Mandatory HMO licensing applies to properties with 5+ occupants from 2+ households. Many councils also have additional licensing schemes for smaller HMOs. You'll need to demonstrate you have or will obtain the appropriate licence for your mortgage application.

Can I convert a property to an HMO?

Yes, but you may need planning permission for change of use (C4 use class), building regulations approval for fire safety and room sizes, and an HMO licence. Some areas have Article 4 directions requiring planning permission for any HMO conversion.

What are HMO mortgage rates like?

HMO rates are typically 0.5-1% higher than standard BTL rates due to the specialist nature. However, the higher rental yields from HMOs (often 8-12% vs 4-6% for standard BTL) usually more than offset the higher borrowing costs.

What experience do I need for an HMO mortgage?

Many HMO lenders require landlord experience - typically owning at least one buy-to-let property for 12+ months. Some lenders accept first-time landlords but may require larger deposits or professional property management.

Quick Answer

How Do HMO Mortgages Work?

Last reviewed: December 2025

Reviewed by Jay Sabine – CeMAP Qualified – 29 years experience

Specialist mortgages for multi-let properties. Higher yields but larger deposits (25-40%). Landlord experience usually required. HMO licensing mandatory for larger properties.

HMO mortgages are designed for properties rented to multiple tenants from different households who share facilities. While they require higher deposits (typically 25-40%) and landlord experience, they offer significantly higher rental yields - often 8-12% compared to 4-6% for standard BTL. Lenders assess income based on the combined room rents and require the property to meet or be capable of meeting HMO licensing requirements. Most mainstream lenders don't offer HMO mortgages, so you'll typically work with specialist lenders through a broker.

Your property may be repossessed if you do not keep up repayments on your mortgage. HMO properties require ongoing licensing and regulatory compliance.

Key Points

1Properties with 3+ tenants from 2+ households
225-40% deposit required (higher than standard BTL)
3Higher rental yields (8-12% typical)
4HMO licence required for 5+ person properties
5Landlord experience usually needed
6Specialist lenders only (not high street banks)

Eligibility Criteria

Minimum 25% deposit (often 30-40%)
Previous landlord experience (12+ months)
Property meets HMO regulations
Appropriate licensing in place or planned
Good credit history
Rental income meets lender requirements

Typical Timeframe

HMO mortgage applications take 4-8 weeks. You may need to provide evidence of HMO licence application, fire safety compliance, and room size measurements. Some lenders require a specialist HMO valuation.

Next Steps

1Check local HMO licensing requirements
2Verify property meets room size and safety standards
3Calculate potential rental income per room
4Gather evidence of landlord experience
5Speak to a specialist HMO broker

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How Do HMO Mortgages Work?

Key Points

Eligibility Criteria

Typical Timeframe

Next Steps

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