The minimum deposit: 5% of the price
Most high-street lenders will offer you a mortgage worth up to 95% of a home's value. That means you need a deposit of at least 5%. On a £250,000 home, 5% is £12,500. On a £180,000 home it is £9,000.
These are called 95% mortgages, and they come and go depending on how confident lenders are feeling. Two schemes help keep them on the shelf. The Mortgage Guarantee Scheme sees the government cover part of the lender's risk if a borrower cannot pay, which encourages banks to keep offering 95% deals. Deposit Unlock does a similar job on brand-new-build homes, backed by house builders and insurers, because some lenders are cautious about lending 95% on new-builds.
A handful of specialist lenders go further with 100% or near-100% mortgages, often needing a family member to put up savings or their own home as security. These are rare and worth taking advice on before you commit.
Why a bigger deposit unlocks a cheaper mortgage
Lenders price mortgages by loan-to-value, or LTV. That is the size of your loan compared with the property's value. A 5% deposit means a 95% LTV; a 25% deposit means a 75% LTV. The lower your LTV, the less risk the lender carries, so the lower the interest rate they will offer.
Rates step down in bands. Each time you cross into a lower band, the rate usually drops. The biggest savings come from getting under 90%, then under 80%, and the best rates of all sit at 60% LTV and below.
- ▸95% LTV (5% deposit): The highest rates. You can buy, but you pay a premium for borrowing so much.
- ▸90% LTV (10% deposit): A meaningful drop from 95%. This is a common first-time-buyer target.
- ▸85% LTV (15% deposit): Better again, with a wider choice of deals.
- ▸80% LTV (20% deposit): Sharper rates and access to many more lenders.
- ▸75% LTV (25% deposit): Among the most competitive mainstream rates.
- ▸60% LTV (40% deposit): The lowest rates on the market. Beyond this, rates rarely fall further.
What deposit do first-time buyers typically put down?
Although 5% is the floor, most first-time buyers put down more. Across the UK the typical first-time-buyer deposit in 2026 sits somewhere between 15% and 20% of the price, though this varies hugely by region. In London and the South East, where prices are highest, deposits are far larger in cash terms even when the percentage is similar.
There is no right answer. A 10% deposit gets you a noticeably better rate than 5% and is a realistic goal for many. If you can stretch to 15% or 20%, your monthly payments ease further and you have a bigger cushion if house prices dip. The trick is balancing the rate you want against how long saving will take, because rents and prices may rise while you save.
Where to save your deposit
Where you keep your deposit matters, because the right account can add free money or interest while you save.
- ▸Lifetime ISA (LISA): The standout option for most first-time buyers. You can pay in up to £4,000 a year, and the government adds a 25% bonus, so £4,000 becomes £5,000. Over several years that is a big boost. You must be aged 18 to 39 to open one, the home must cost £450,000 or less, and you must have held the LISA for at least 12 months before you buy. Take the money out for any other reason before age 60 and you pay a 25% withdrawal charge, which claws back more than the bonus, so only use it for your first home or retirement.
- ▸Help to Buy ISA (legacy): Closed to new savers back in 2019, but if you opened one before then you can keep paying in and claim the 25% bonus when you buy. You cannot hold both a Help to Buy ISA and a LISA bonus for the same purchase, so compare which gives you more. For most savers the LISA is more generous.
- ▸Regular savings and easy-access accounts: Once you have maxed a LISA, top up your deposit in a competitive easy-access or fixed-rate savings account. Keep the money somewhere safe and instantly reachable as you get close to buying, not tied up in investments that could fall in value just before you need them.
Gifted deposits from family
Many first-time buyers get help from parents or grandparents, often called the Bank of Mum and Dad. Lenders are happy to accept a gifted deposit, but they have rules you need to follow.
The money must be a genuine gift, not a loan. Your lender will ask the person giving it to sign a gifted-deposit letter confirming they have no stake in the property and expect no repayment. If it were a loan, it would count as a debt against your affordability and could sink the application.
Lenders and solicitors also carry out source-of-funds and anti-money-laundering (AML) checks. The giver may need to show bank statements proving where the money came from. This is routine, so ask them to keep evidence of savings or the sale that funded the gift.
The deposit is not the only cash you need
Your mortgage deposit and the total cash you need to complete a purchase are two different things. On top of the deposit you should budget for stamp duty (if it applies), legal fees, a survey and moving costs.
Stamp Duty Land Tax is the big one. First-time buyers in England and Northern Ireland pay no stamp duty on the first slice of the price up to a set threshold, so many pay nothing. Buyers who are not first-time buyers, or anyone buying above the threshold, will owe stamp duty on part of the price. Scotland and Wales have their own versions (LBTT and LTT) with different bands. Always check the current rules for your situation, as thresholds change.
Legal or conveyancing fees typically run to a four-figure sum once searches and disbursements are added. A survey to check the home's condition can range from a basic homebuyer report to a fuller building survey. Then there are removal costs and any furniture or repairs on day one.
The table below shows how the picture changes on a £250,000 home depending on your deposit. The stamp duty figure assumes a first-time buyer paying nothing; a non-first-time buyer would need to add their stamp duty bill on top. Legal, survey and moving costs are rough estimates and vary widely.
| Deposit % | Deposit (cash) | LTV / loan | Other cash on top | Total cash needed |
|---|---|---|---|---|
| 5% | £12,500 | 95% / £237,500 | ~£2,500 | ~£15,000 |
| 10% | £25,000 | 90% / £225,000 | ~£2,500 | ~£27,500 |
| 15% | £37,500 | 85% / £212,500 | ~£2,500 | ~£40,000 |
Frequently Asked Questions
Can I really buy a house with only a 5% deposit? Yes, many lenders offer 95% mortgages, so a 5% deposit is enough to buy in principle, though you will need to pass affordability checks and budget for the extra costs on top.
Is a bigger deposit always better? A larger deposit lowers your interest rate and monthly payments, but there is little rate benefit below 60% LTV, so saving beyond a 40% deposit mainly just reduces how much you borrow rather than cutting the rate further.
Does a gifted deposit affect my mortgage application? A properly documented gift from close family is widely accepted, but the giver must sign a gifted-deposit letter confirming it is not a loan and may need to prove where the money came from, so it should not hold up your application if it is arranged properly.
Do first-time buyers pay stamp duty? Many first-time buyers in England and Northern Ireland pay no stamp duty because of a relief on lower-priced homes, but you still owe it if the price is above the first-time-buyer threshold.
How much should I keep aside for costs beyond the deposit? A safe rule is to hold a few thousand pounds on top of your deposit for legal fees, a survey and moving, plus any stamp duty you owe, so your deposit is not the only figure you should be saving towards.
Key Takeaways
- ✓The minimum deposit to buy a UK home is 5% of the price, supported by 95% mortgages and schemes like the Mortgage Guarantee Scheme and Deposit Unlock.
- ✓A bigger deposit lowers your loan-to-value and unlocks a cheaper mortgage rate, with the sharpest savings under 90%, under 80% and at 60% LTV or below.
- ✓Most first-time buyers put down 15% to 20%, but 10% is a realistic middle ground that beats a 5% deposit on rate.
- ✓A Lifetime ISA adds a 25% government bonus on up to £4,000 a year, making it the strongest savings vehicle for most first-time buyers, subject to age, price and 12-month rules.
- ✓Family gifts are accepted, but need a gifted-deposit letter and source-of-funds evidence, and must be genuine gifts rather than disguised loans.
- ✓Budget beyond the deposit for stamp duty, legal fees, a survey and moving, so the total cash you need is more than the deposit alone.