17 May 2025

How Much Deposit Do I Need to Buy My First Home?

Dominic Leigh-Southey

Date: 17/05/2025

Saving for a deposit is often the biggest barrier for first-time buyers. With rising house prices and financial uncertainty, it's important to understand your options so you can prepare effectively. Whether you're aiming for a standard mortgage or exploring more flexible deposit options, knowing what lenders expect can help you take the first confident step onto the property ladder.

How Much Deposit Do You Need?

Your deposit is a percentage of the home’s purchase price. Most first-time buyers need to provide at least 5%, but the more you can save, the more mortgage deals you’ll unlock.

Here’s a breakdown:

1. 5% deposit: Common starting point for many lenders.
2. 10–15% deposit: Offers better mortgage rates and more choices.
3. 20% or more: Unlocks top-tier rates and lowers your borrowing.

💡 Example (Property Price: £200,000)

1. 5% = £10,000
2. 10% = £20,000
3. 15% = £30,000

£5,000 Minimum Deposit

For first-time buyers with limited savings, some lenders now offer mortgages requiring a fixed £5,000 minimum deposit, irrespective of the property's value. This can be particularly advantageous for those aiming to purchase homes priced up to £500,000. 

However, this option comes with stringent eligibility criteria (below is an example of some of the criteria to meet):

1. First-Time Buyer Status: At least one applicant must be a first-time buyer, meaning they have never owned a property before.
2. Property Type Restrictions: The mortgage is available for existing houses and flats but excludes new-build properties.
3. Credit History: Applicants must have a completely clean credit history, with no missed payments, defaults, or adverse credit records - You can check your credit history for free here.
4. Affordability Checks: Applicants must pass thorough affordability assessments to ensure they can manage the mortgage repayments.
5. Residency and Age: Both applicants must have the indefinite right to reside in the UK, and the mortgage term must conclude before the applicant's 70th birthday.

While this £5,000 deposit mortgage can make homeownership more accessible, it's essential to ensure you meet all the criteria and understand the responsibilities involved

Why a Bigger Deposit Can Still Help

Even though smaller deposit options exist, saving more will:

1. Lower your monthly repayments
2. Improve your chance of approval
3. Give you access to lower interest rates
4. Reduce the amount of overall interest you pay on the mortgage

Ways to Fund Your Deposit

1. Savings or ISAs
2. Gifted deposits from family
3. Government-backed schemes (explained below)
4. Bonuses or inheritance
5. Sale of another asset

Government Support for First-Time Buyers

If saving feels like a stretch, you could get help from government schemes:

1. Lifetime ISA (LISA) – Save up to £4,000/year, with a 25% government bonus.
2. Shared Ownership – Buy a share in a property and pay rent on the rest.
3. First Homes Scheme – Get a discount of up to 30% on a new-build property.

Most buyers will need to save at least 5%, but options do exist for those with as little as £5,000—if your finances are in perfect shape. The more you can save, the more mortgage options you’ll have and the less you’ll pay in the long run. Take your time, explore government support, and make sure your credit history is spotless before applying.

💬 If you’d like help assessing your options or checking your mortgage readiness, we’re here to support you every step of the way at First Mortgage Steps.

Get in touch!

Your home may be repossessed if you do not keep up repayments on your mortgage