How Much Deposit Do You Need as a First-Time Buyer?
Buying your first home is equal parts thrilling and terrifying. You’ve probably spent hours scrolling Rightmove, daydreaming about your ideal place. Then-reality hits. The question every first-time buyer eventually faces: how much deposit do I actually need?
There’s no single number. It depends on your income, the property price, your credit score, and what kind of mortgage deal you can secure. But once you strip away the jargon, it’s not as complicated as it sounds. Let’s break it down.
The short answer
Most first-time buyers in the UK need a deposit of at least 5% of the property price.
So if you’re buying a £200,000 home, that’s £10,000.
That’s the minimum. But if you can stretch to a 10% or 15% deposit, you’ll open the door to better mortgage rates and smaller monthly payments. The higher your deposit, the less risk the lender takes-and the more they’re likely to reward you with a lower interest rate.
Why your deposit size matters
A mortgage is simply a loan. The bigger the deposit, the smaller the loan you need, and the less you’ll pay back overall.
Lenders like security. A larger deposit shows you’re serious, financially stable, and less likely to default. That means you’ll often get access to better deals-sometimes saving you thousands over the term of your mortgage.
Let’s put that into perspective.
| Deposit | House Price | Mortgage Amount | Typical Interest Rate | Monthly Repayment (25 years) |
|---|---|---|---|---|
| 5% (£10,000) | £200,000 | £190,000 | 5.5% | ~£1,165 |
| 10% (£20,000) | £200,000 | £180,000 | 5.0% | ~£1,055 |
| 15% (£30,000) | £200,000 | £170,000 | 4.7% | ~£980 |
(Figures are illustrative and rounded to the nearest £5.)
That’s nearly £200 a month difference between a 5% and 15% deposit. Over 25 years, that’s about £60,000 saved-not small change.
Can you still buy with just a 5% deposit?
Yes. Thanks to government-backed schemes and competitive lending, 95% mortgages are still available for first-time buyers. They’re designed to help those with smaller savings get on the ladder.
The catch? The interest rates are often higher, and lenders can be a little stricter on affordability checks. You’ll need a decent credit score, stable income, and ideally, minimal unsecured debt.
That said, plenty of buyers start with 5%. Especially in high-cost areas like London, where saving 10% or more could take years.
The role of Loan-to-Value (LTV)
You’ll often hear lenders talk about LTV ratios.
It stands for Loan-to-Value, which simply means how much you’re borrowing compared to the property value.
So:
- A 95% LTV means you’ve put down 5%.
- A 90% LTV means you’ve put down 10%.
- A 75% LTV means you’ve put down 25%.
The lower the LTV, the better the deal you’re likely to get. Lenders usually offer their most competitive rates at 60% or 75% LTV.
What if you can’t save a big deposit?
You’re not alone. For many first-time buyers, scraping together even 5% can feel like climbing Everest. Average house prices in the UK are around £290,000 (according to the ONS), so even a 5% deposit means finding nearly £15,000.
There are, however, ways to make it happen faster.
1. Government schemes
There are still a few first-time buyer support schemes that can give you a boost:
- Lifetime ISA (LISA): Save up to £4,000 a year and get a 25% government bonus. That’s an extra £1,000 annually toward your deposit.
- Shared Ownership: Buy part of a property (usually 25–75%) and pay rent on the rest. Later, you can “staircase” up to owning more.
- First Homes Scheme: Certain new-build homes are discounted by 30–50% for local first-time buyers and key workers.
Each has pros and cons, but all can reduce the amount you need upfront.
2. Family assistance
More buyers than ever are turning to the Bank of Mum and Dad. Some lenders even offer family deposit mortgages, where a relative can use their savings as security instead of handing over cash outright.
It’s not always comfortable asking for help, but if it means getting out of the rental trap, it’s worth considering.
3. Guarantor and joint mortgages
If someone (usually a parent) agrees to act as a guarantor, they promise to cover repayments if you can’t. It’s a serious commitment, but it can allow you to borrow more with a smaller deposit.
Joint mortgages, meanwhile, combine incomes-useful for couples or friends buying together.
How lenders assess your deposit and affordability
Your deposit is only half the story. Lenders will also look closely at:
- Your income: Typically, you can borrow around 4.5× your annual salary.
- Your outgoings: Car finance, credit cards, childcare-all affect what you can afford.
- Your credit history: Missed payments, defaults, or payday loans can raise red flags.
- Employment stability: A regular, predictable income goes a long way.
If you’re on a temporary or self-employed contract, don’t panic-it’s still possible, but you’ll need to show a consistent income history.
How to build your deposit faster
Saving for a deposit can feel like a never-ending grind. But a few small habits make a huge difference.
Cut invisible spending
Subscriptions, food delivery, takeaways-it all adds up. Cutting £100 a month from non-essentials gets you £1,200 closer to your target each year.
Automate your savings
Set up a direct debit that moves money into a dedicated “house fund” as soon as you get paid. You can’t spend what you don’t see.
Use a LISA or high-interest savings account
Don’t leave your savings in a current account earning nothing. Even 4–5% interest adds hundreds a year-plus the LISA bonus if you qualify.
Look at cheaper areas (seriously)
Buying in a neighbouring town or further out can knock tens of thousands off the price. It might mean a longer commute, but it could get you on the ladder years sooner.
Hidden costs that first-time buyers forget
It’s not just the deposit. You’ll need to budget for the extras too-often overlooked until they hit you square in the wallet.
| Cost | Typical Range | Notes |
|---|---|---|
| Mortgage arrangement fee | £0–£1,000 | Sometimes added to loan |
| Valuation & survey | £250–£700 | Basic valuations are cheaper |
| Conveyancing (legal fees) | £800–£1,500 | Shop around |
| Stamp Duty | £0–£625 (first-time buyer relief) | Applies over £425,000 |
| Removal & setup | £300–£1,000+ | Varies with distance |
Even modest purchases can push you over budget-so keep a little “just in case” fund aside.
What happens if house prices fall?
It’s a fair question. You save hard, buy your first place… and then prices dip.
While that’s always a risk, the UK housing market tends to recover over time. A short-term dip isn’t usually disastrous unless you’re forced to sell quickly. The key is affordability-choose a property and mortgage you can comfortably manage, whatever the market does.
How to decide your deposit target
There’s no magic formula, but here’s a rough guide to help:
| Deposit | Best for | Pros | Cons |
|---|---|---|---|
| 5% | Buyers with limited savings | Lowest entry point | Higher rates, fewer deals |
| 10% | Moderate savers | Better choice of lenders | Slower to save |
| 15–20% | Strong savers | Lower rates, lower payments | Harder to reach |
| 25%+ | High earners or downsizers | Best deals on the market | Takes time and discipline |
For most first-time buyers, 10% strikes a good balance between affordability and access to better rates.
What if you’re buying alone?
Solo buyers face an uphill battle. With just one income to lean on, affordability limits are tighter. But it’s not impossible.
Look for smaller homes, flats, or properties slightly outside major cities. Some lenders also offer single-person mortgage products, acknowledging the changing reality of homeownership today.
What mortgage type suits smaller deposits?
If you’re working with a smaller deposit, you’ll usually be looking at:
- Fixed-rate mortgages: Peace of mind with predictable payments. Great for budgeting.
- Tracker or variable mortgages: These follow the Bank of England base rate. They can start cheaper but may rise later.
It’s worth getting professional advice to compare options tailored to your situation. (You can read more about how lenders assess first-time buyers in our first-time buyer mortgages guide.)
A quick note on timing
There’s never a “perfect” time to buy. Mortgage rates move, house prices rise and fall, and life doesn’t wait for ideal conditions.
If you can afford the repayments, have a secure income, and a sensible deposit saved-go for it. Waiting for the market to crash rarely pays off in the long run.
Final thoughts
Most first-time buyers start smaller than they planned. A slightly cheaper home. A longer commute. A 5% deposit instead of 15%. But that’s fine-because once you’re in, you’re in.
Every mortgage payment builds equity. Every year brings new options-remortgaging, moving up, or even renting the place out later.
So, how much deposit do you need? As much as you can manage without sacrificing your sanity. 5% gets you started, 10% gives you options, and 15% sets you up nicely.
But don’t get paralysed chasing perfection. The hardest step is the first one.
Note: The information in this guide was correct at the time of publication but is subject to change.