How much deposit do you actually need?

A 5% deposit gets you a 95% loan-to-value (LTV) mortgage — you borrow 95% of the price. These products exist across the market, supported by the Mortgage Guarantee Scheme, under which the government underwrites part of the lender's risk on high-LTV lending. The Chancellor has confirmed the scheme as a permanent feature rather than a temporary support, which means 95% mortgages should remain available rather than vanishing in the next downturn as they did in 2008 and 2020.

The catch is cost. At 95% LTV you are the riskiest kind of borrower from the lender's point of view, so you pay the highest rates on the shelf. You'll also face tighter criteria: a cleaner credit file, more scrutiny of your spending, and in some cases a cap on how many times your income you can borrow.

A 5% deposit also gives you no equity buffer. If prices fall 5%, you're in negative equity — owing more than the home is worth — which makes remortgaging or moving very difficult until prices recover or you've paid down the balance.

The jump from 5% to 10% is the single most valuable move most first-time buyers can make. Lenders price in LTV bands, and 90% is where the pricing starts to improve meaningfully — as a benchmark in mid-2026, the best first-time buyer two-year fixes sit around 4.67% at 90% LTV, against roughly 4.4% to 4.5% once you have a 15% to 25% deposit.

That gap looks small as a percentage and large as a monthly payment. Over a 25 or 30 year term, a fraction of a percent compounds into thousands of pounds. If you are three or four months of saving away from 10%, it is almost always worth waiting — provided prices in your area aren't rising faster than you can save, which is the one scenario where waiting costs you more than it saves.

Beyond 25% deposit, the rate improvements flatten out. There's no strong rate argument for stretching to 40% if that money would be better kept as an emergency fund.

The legal minimum and the typical reality are far apart. According to UK Finance data, the average first-time buyer deposit in England is around £63,855 — far more than 5% of a typical first home, because buyers save as much as they can rather than the least they can get away with.

Regional variation is enormous, driven by house prices rather than saving habits:

This is where first-time buyer budgets most often break. The deposit is the biggest number, but it is not the whole number, and the additional costs are due at different points in the process — some before you've even exchanged.

Budget separately for the buying costs on top of your deposit, and keep them in cash rather than counting them as part of it:

The Lifetime ISA is the most powerful tool available to most first-time buyers: pay in up to £4,000 a year and the government adds 25% on top, so the maximum bonus is £1,000 a year. The property you buy must cost £450,000 or less, and you must have held the account at least 12 months before you can use it for a purchase — so open one early even if you only put in a token amount, because that starts the clock.

A gifted deposit from family is common and entirely acceptable to lenders, provided it's a genuine gift rather than a loan. Your lender will want a gift letter confirming the giver has no stake in the property and no expectation of repayment, and will usually want the funds to have sat in your account for around 30 days before completion.

If you're buying a new build, ask about Deposit Unlock, a scheme backed by housebuilders that allows a 5% deposit on new-build homes where standard 95% lending is harder to obtain.