How Much Deposit Do You Need for a First-Time Buyer Mortgage?

Getting on the property ladder is one of the biggest financial milestones you will achieve, and the deposit is usually the biggest hurdle. In this guide, we explain everything you need to know about first-time buyer mortgage deposits, including how much you need, how to save, and which schemes can help.

What is the minimum deposit for a first-time buyer?

The minimum deposit for a first-time buyer mortgage in the UK is typically 5% of the property’s purchase price. This means:

For a £200,000 property, you would need at least £10,000
For a £300,000 property, you would need at least £15,000
For a £400,000 property, you would need at least £20,000

Use our affordability calculator to see how much you could borrow based on your income and deposit, or try our mortgage calculator to estimate your monthly repayments at different deposit levels.

While 5% is the minimum most lenders accept, putting down a larger deposit has significant advantages.

Why a bigger deposit helps

The more deposit you put down, the lower your loan-to-value (LTV) ratio. A lower LTV means:

Better interest rates — lenders reserve their best rates for lower LTV borrowers. The difference between a 95% LTV and a 90% LTV mortgage can be 0.5% or more
More lender choice — more lenders will consider your application, giving your broker more deals to compare
Lower monthly payments — you are borrowing less overall, which reduces your monthly commitment
Less interest over the term — this can save you tens of thousands of pounds over a 25-year mortgage

Use our repayment calculator to see the difference a larger deposit makes to your total interest paid over the full mortgage term.

Key LTV thresholds to aim for

Lenders typically offer rate improvements at these deposit levels:

5% deposit (95% LTV) — minimum for most lenders; highest rates
10% deposit (90% LTV) — significant rate improvement; most popular bracket for first-time buyers
15% deposit (85% LTV) — another rate step-down
25% deposit (75% LTV) — access to the most competitive rates on the market

Even if you cannot quite reach the next threshold, every extra pound helps reduce your borrowing and interest costs.

How to save for a deposit

Here are some practical strategies to build your deposit faster:

Lifetime ISA — save up to £4,000 per year and receive a 25% government bonus (up to £1,000 per year). You must be aged 18-39 to open one, and the funds can only be used for your first home (up to £450,000) or retirement
Regular savings accounts — set up automatic transfers on payday so saving happens before spending
Reduce expenses — review subscriptions, switch utility providers, and cut unnecessary spending
Family help — gifted deposits from parents or grandparents are accepted by most lenders, provided the family member confirms the money is a gift (not a loan)
Shared savings — if buying with a partner, combining your savings doubles the effort

Government schemes that help with deposits

Several government schemes are designed to help first-time buyers who are struggling to save a large deposit:

Lifetime ISA

As mentioned above, the 25% government bonus effectively boosts your deposit by up to £1,000 per year. Over four years, that is an extra £4,000 towards your deposit.

Shared Ownership

Shared ownership schemes allow you to buy a share of a property (typically 25% to 75%) and pay rent on the remaining share. Your deposit is based only on the share you are purchasing, making it much more affordable. For example, buying a 50% share of a £250,000 property means your deposit is based on £125,000 rather than the full price.

Guarantor mortgages

Guarantor mortgages allow a family member to use their savings or property as additional security, enabling you to borrow more or access better rates with a smaller deposit. The family member’s money is typically held in a savings account linked to the mortgage and released once you have paid down enough of the loan.

Family springboard mortgages

Family springboard mortgages work similarly, where a family member deposits a sum (usually 10% of the property value) into a linked savings account for a set period. This acts as additional security, allowing you to borrow up to 100% of the property value.

Stamp duty for first-time buyers

First-time buyers benefit from stamp duty relief, paying no stamp duty on the first £300,000 and 5% on the portion between £300,000 and £500,000. If the property costs more than £500,000, the standard rates apply with no first-time buyer relief.

Use our stamp duty calculator to work out exactly how much stamp duty you will pay on your purchase.

Common mistakes to avoid

When saving for and using your deposit, watch out for these common first-time buyer mistakes:

Forgetting about additional costs — you will also need money for solicitor fees, surveys, moving costs, and furnishing. Budget an extra £3,000-£5,000 on top of your deposit
Not checking your credit score — review your credit file well before applying and fix any errors
Assuming you cannot afford to buy — speak to a broker before giving up, as there may be schemes or products you are not aware of
Waiting for the “perfect” time — property prices and mortgage rates fluctuate, but the cost of waiting often outweighs the benefit of timing the market

Get expert advice

Every situation is different, and the right deposit amount depends on your income, the property you are buying, and your overall financial picture. At Option Finance, our specialist first-time buyer advisers compare deals from 90+ lenders to find the best mortgage for your circumstances.

Read our ultimate UK first-time buyer guide for a complete walkthrough of the buying process, or contact our team for personalised advice on how much you need to save and which mortgage products suit you best.