The minimum deposit is 5%, but the size of your deposit affects your mortgage rate, monthly payments and total cost. Here’s everything you need to know.
Saving a deposit is the biggest hurdle for most first-time buyers in the UK. With average house prices above £285,000 in England, even a 10% deposit means saving £28,500 — a significant sum for most people. Understanding exactly how much you need, and the impact of different deposit sizes on your mortgage, is essential before you start house hunting.
Find out how much you could borrow with your deposit and income
The minimum deposit accepted by most UK mortgage lenders is 5% of the property purchase price. This gives you a 95% loan-to-value (LTV) mortgage. At this level, you are borrowing 95p for every £1 the property is worth.
95% LTV mortgages are available but they come with the highest interest rates and the most restrictive lending criteria. Not all lenders offer them, and the number of deals available at 95% LTV is much smaller than at 85% or 75% LTV.
The single biggest impact of a larger deposit is access to lower mortgage rates. Lenders price risk — a lower LTV means the loan is safer for them, so they charge less. Even a small increase in your deposit can unlock a materially better rate:
On a £250,000 mortgage over 25 years, the difference between a 5.5% rate (95% LTV) and a 4.5% rate (75% LTV) is approximately £140 per month — and over £42,000 in total interest over the term. Saving a larger deposit genuinely pays off.
| Property price | 5% deposit | 10% deposit | 15% deposit | 25% deposit |
|---|---|---|---|---|
| £150,000 | £7,500 | £15,000 | £22,500 | £37,500 |
| £200,000 | £10,000 | £20,000 | £30,000 | £50,000 |
| £250,000 | £12,500 | £25,000 | £37,500 | £62,500 |
| £300,000 | £15,000 | £30,000 | £45,000 | £75,000 |
| £350,000 | £17,500 | £35,000 | £52,500 | £87,500 |
| £400,000 | £20,000 | £40,000 | £60,000 | £100,000 |
| £500,000 | £25,000 | £50,000 | £75,000 | £125,000 |
Remember: your deposit is not the only upfront cost. You also need to budget for stamp duty, solicitor fees (£1,500–£3,000), survey costs (£400–£1,500), mortgage arrangement fees (often £999–£1,999), and moving costs.
The Lifetime ISA (LISA) is one of the most effective ways for first-time buyers to save a deposit. It provides a 25% government bonus on contributions — essentially free money toward your first home.
The government’s Mortgage Guarantee Scheme allows lenders to offer 95% LTV mortgages with greater confidence, because the government guarantees part of the loan. This has been extended and makes 5% deposit mortgages more widely available than they would otherwise be. Check the government website for the current status of this scheme as it is periodically reviewed.
Shared ownership allows you to buy a share of a property (typically 25%–75%) and pay rent on the remainder. The deposit is based only on the share you are buying, making it much smaller. For example, buying a 40% share of a £280,000 property means buying £112,000 of property — and a 10% deposit is just £11,200 rather than £28,000.
First Homes offers newly built properties at a discount of at least 30% to eligible first-time buyers. The discount is passed on when you sell, keeping homes affordable for future buyers. Availability is limited to specific new developments.
Council and housing association tenants may be eligible to buy their home at a significant discount through Right to Buy. The discount can serve as your deposit in many cases. Eligibility rules and discount levels vary.
Saving a deposit while paying rent is genuinely difficult. Here is a realistic guide to how long it takes to save different deposit sizes, based on saving £500, £750 or £1,000 per month:
| Deposit target | Saving £500/month | Saving £750/month | Saving £1,000/month |
|---|---|---|---|
| £15,000 | 2.5 years | 1.7 years | 1.25 years |
| £25,000 | 4.2 years | 2.8 years | 2.1 years |
| £35,000 | 5.8 years | 3.9 years | 2.9 years |
| £50,000 | 8.3 years | 5.6 years | 4.2 years |
Using a LISA alongside regular savings significantly accelerates this — the £1,000 annual government bonus is equivalent to 2 extra months of saving £500 per month, every year.
Many first-time buyers receive financial help from family — often called the “Bank of Mum and Dad.” Lenders generally accept gifted deposits from close family members, but they will ask for a signed letter confirming the money is a gift (not a loan) and that the donor has no interest in the property.
For inheritance tax purposes, a parent gifting money toward a deposit is a potentially exempt transfer — if the parent survives for seven years, the gift falls outside their estate. The annual gift exemption of £3,000 per parent is immediately IHT-free.
First-time buyers pay no stamp duty on properties up to £425,000 — check your bill