The difference between having a deposit and being ready to buy is often bigger than first-time buyers expect. If you are asking how much deposit a first time buyer needs, the short answer is that 5% can be enough for some mortgages. The more useful answer is that your deposit is only one part of the affordability picture – and a larger deposit can give you more choice and potentially lower monthly payments.
A mortgage adviser can help you look beyond a headline percentage, taking account of your income, regular commitments, credit history and the full costs of moving. That means you can set a realistic savings target before you start viewing properties.
How much deposit does a first-time buyer need?
Most first-time buyers aim for a deposit of at least 5% of the purchase price. On a £250,000 home, that would be £12,500. This leaves you borrowing 95% of the property value, known as a 95% loan-to-value mortgage, or LTV.
However, borrowing at 95% is not the only option. A 10% deposit is often a useful next target, while deposits of 15%, 20% or more can open up a wider range of mortgage products. As the amount you borrow compared with the property value falls, lenders generally see less risk. That may mean access to more competitive interest rates, although the right mortgage will always depend on your circumstances at the time.
For example, on a £300,000 purchase:
- A 5% deposit is £15,000, leaving a £285,000 mortgage.
- A 10% deposit is £30,000, leaving a £270,000 mortgage.
- A 20% deposit is £60,000, leaving a £240,000 mortgage.
Saving an extra £15,000 is not realistic for everyone, nor should buying be put on hold indefinitely just to reach an arbitrary number. The key is understanding the trade-off: a smaller deposit may get you onto the property ladder sooner, but it can mean a higher rate and larger repayments. A bigger deposit may improve your options, but it should not leave you without a financial cushion after completion.
Your deposit is not the only amount to budget for
One of the most common surprises for buyers is discovering that the deposit is not the full amount needed before moving day. You will also need to allow for the costs of buying a home.
These may include a mortgage valuation, survey, solicitor’s fees, searches, removals and, depending on the property price and your circumstances, Stamp Duty Land Tax. Some lenders charge product fees, although it may be possible to add certain fees to the mortgage. Doing so increases the amount borrowed and means interest is charged on that fee, so it is worth checking whether paying it upfront is affordable.
A sensible approach is to keep your deposit fund separate from your costs budget. If every pound of savings goes into the deposit, you may find yourself short when the solicitor asks for funds or when the first unexpected household expense arrives. Retaining an emergency buffer can provide valuable breathing room.
What lenders assess alongside your deposit
A deposit supports your application, but it does not guarantee that a lender will offer the amount you want to borrow. Lenders also assess whether the mortgage is affordable now and whether it could remain manageable if interest rates rise.
They will typically look at your income, employment type, credit commitments, household expenditure and credit history. Student loan repayments, childcare costs, credit cards, car finance and other regular commitments can all affect the maximum mortgage available. For couples buying together, both applicants’ circumstances are considered.
Your credit record matters too. A missed payment does not always mean you cannot get a mortgage, but it can reduce the products available or mean a lender wants a larger deposit. It is usually sensible to check your credit report well before applying, correct any errors and avoid taking out unnecessary new credit in the run-up to a mortgage application.
A higher deposit cannot solve every affordability issue
It is tempting to assume that saving harder will automatically make a desired property affordable. In reality, the lender may still cap what you can borrow based on income and outgoings. If the gap is substantial, a higher deposit can help reduce the mortgage required, but it may take longer to reach your target.
This is why an early conversation with an adviser can be so useful. It gives you an indication of your likely borrowing range and helps you decide whether to focus on deposit savings, reducing existing commitments, adjusting your property budget, or a combination of all three.
Where can a first-time buyer deposit come from?
For many buyers, a deposit is built through regular savings over time. Others use a combination of savings, a bonus, investments that can be accessed, or a gift from family. Lenders can accept gifted deposits in many cases, but they will usually need evidence of where the money has come from and confirmation that it is a genuine gift rather than a loan that must be repaid.
Keep a clear trail for money going into your savings account. Large or unusual payments may need to be explained as part of anti-money-laundering checks. Bank statements, payslips and identification are all routine parts of the application process, and supplying them promptly can help avoid delays.
If you use a Lifetime ISA, the government bonus may boost your purchase savings, subject to the scheme rules, eligibility requirements and withdrawal conditions. Make sure your conveyancer and mortgage adviser know early in the process, as the funds need to be requested correctly.
Should you wait for a 10% or 20% deposit?
There is no universal answer. Waiting to save more may reduce your borrowing and improve your mortgage choices. It could also mean paying rent for longer while property prices, mortgage rates and your own circumstances change. Buying with a 5% deposit may be right where repayments are comfortably affordable, the property suits your plans and you still have money set aside for buying costs and emergencies.
It is worth looking at the figures rather than relying on percentages alone. Compare likely monthly payments at different deposit levels, taking account of the mortgage term and rate. Also consider how long it would take to save the difference. An adviser can source suitable options based on your individual position rather than asking you to fit a generic rule.
Practical steps before making an offer
Start by working out your regular monthly budget and a savings amount you can maintain without relying on credit. Then check your credit report, gather evidence of income and deposit savings, and avoid major financial changes if possible. Moving jobs, changing to self-employment or taking on new borrowing is not necessarily a problem, but it can affect which lenders are suitable.
Once you have a clearer idea of your budget, obtaining a mortgage agreement in principle can help you search with confidence. It is not a mortgage offer, and the lender will still carry out full checks, but it can show estate agents and sellers that you have taken a serious first step.
Buying your first home is a major financial decision, not a race to hit the biggest possible deposit. A clear plan, honest affordability checks and responsive personal advice can help you move forward when the numbers genuinely work for you.