Ask a high street branch how much a contractor can borrow and you’ll usually be told to come back with two years of accounts.
That’s the answer for a generic self-employed applicant. Most day-rate contractors are not best served by being treated as one.
The alternative is contract-based underwriting, and it works on a different principle. The lender looks at what your contract pays and annualises it. Your accounts, dividend policy and corporation tax position are largely beside the point.
The calculation is simple:
Day rate × days worked per week × 46 weeks.
A contractor on £500 a day working five days a week has an assessed income of £115,000. At £750 a day, £172,500. At £1,000 a day, £230,000.
That figure is then treated much as a salary would be.
What Lenders Look At in 2026
Why 46 weeks
The reduction allows for holiday, illness and gaps between assignments. Some older guidance still quotes 48 weeks — treat that with caution and plan against 46.
What counts as your rate
Outside IR35 through your own company, the gross contract rate is generally used. Inside IR35 through an umbrella, some lenders work from the gross rate and others from the post-deduction payslip.
Hourly and part-week contracts
Hourly rates are converted using an assumed working day. Part-week contracts scale — three days at £800 gives £800 × 3 × 46.
Continuity
Most lenders want a minimum period contracting, a reasonable unexpired term, and evidence that gaps between assignments have been short.
Documentation
Usually lighter than the self-employed route: current contract, evidence of renewals, a few months of bank statements and a CV.
Case Studies
Case Study 1: David – £700 a Day, Bristol
David drew £12,570 salary and £35,000 dividends, showing declared income under £48,000.
Annualised on his contract, the same work presented at £161,000. The gap was entirely a function of which assessment route the lender used.
Case Study 2: Aisha – Three-Day Contract, Nottingham
Aisha worked three days a week at £800 a day and assumed she’d be assessed on a five-day equivalent.
Lenders annualise contracted days only, so her assessment scaled proportionately — a figure worth establishing before setting a purchase budget.
Case Study 3: Ryan – Contract Expiring, Newcastle
Ryan applied with six weeks left on his assignment and no renewal in writing.
Once his extension was documented, the same case became straightforward. The paperwork, not the income, had been the obstacle.
Where Cases Come Unstuck
- Contracts that don’t state a rate, with the schedule held separately
- A short unexpired term with no evidence of renewal
- Multiple concurrent contracts, which several lenders won’t aggregate
- A recent substantial rate increase with no explanation
- Being routed to a generic self-employed assessment by default
FAQs
Day rate multiplied by days per week, multiplied by 46 weeks.
It allows for holiday, illness and gaps between assignments.
Not for contract-based underwriting.
It can, depending on whether the lender uses your contract rate or your payslip.
Sometimes, where you have relevant prior employment in the same field.
The calculation scales to your actual contracted days.
The calculation is straightforward. Getting your application in front of a lender that uses it is the harder part.
Most direct approaches default to the self-employed route, which produces a far lower figure for the same contract.
