Quick summary For more information, see government home ownership schemes.
- A 5% deposit gets you onto the ladder; 10% to 15% gives you significantly better rates
- The Lifetime ISA (LISA) adds a 25% government bonus on savings of up to £4,000 a year
- Help to Buy has closed in England; the Mortgage Guarantee Scheme supports 95% LTV mortgages
- Stamp duty thresholds for first-time buyers reverted to standard levels from April 2025
Buying your first home is a significant milestone, and the mortgage process can feel overwhelming when you first encounter it. There are new terms to learn, decisions to make about deposit size and product type, and a lot of paperwork. The good news is that once you understand the structure of the process, it becomes much more manageable.
This guide covers everything a first-time buyer in the UK needs to know in 2026: deposit requirements, government schemes, how lenders assess affordability, and the step-by-step process from getting a mortgage in principle through to collecting your keys.
How much deposit do you actually need?
The minimum deposit accepted by mainstream UK lenders is 5% of the property value. However, the rate you pay on a 95% loan-to-value (LTV) mortgage is significantly higher than on a 90% or 85% LTV deal. The closer you can get to a 15% to 20% deposit, the more meaningful the improvement in rate becomes.
| Deposit | LTV | Rate availability | Monthly payment difference on £250,000 mortgage |
|---|---|---|---|
| 5% | 95% | Limited lenders, higher rates (typically 5.0 to 6.0%) | Baseline |
| 10% | 90% | Most mainstream lenders, competitive rates (4.5 to 5.5%) | Save approx. £60 to £120 per month |
| 15% | 85% | Wide choice, better rates (4.2 to 5.0%) | Save approx. £100 to £160 per month |
| 20 to 25% | 75 to 80% | Best rates, full lender panel accessible | Save approx. £150 to £220 per month |
Practical point
Saving the extra few per cent to reach the next LTV band is nearly always worth doing. The rate improvement more than compensates for the additional saving time for most buyers.
Government schemes for first-time buyers in 2026
Lifetime ISA
The Lifetime ISA is the most powerful savings tool currently available for first-time buyers in the UK. You can open one if you are between 18 and 39 years old. Save up to £4,000 per tax year and the government adds a 25% bonus, up to £1,000 per year. Over five years at the maximum contribution, your LISA balance can reach £25,000 (before investment growth on a stocks and shares LISA).
The LISA can be used towards the purchase of a first home costing up to £450,000, provided the account has been open for at least twelve months. Withdrawals for any other purpose before age 60 incur a 25% penalty, which effectively claws back both the government bonus and a portion of your own savings.
Mortgage Guarantee Scheme (Freedom to Buy)
This scheme allows lenders to offer 95% LTV mortgages with government backing on properties up to £600,000. It does not reduce the rate you pay, but it makes more lenders willing to lend at 95% LTV. Available in England, Scotland, Wales and Northern Ireland.
Help to Buy (Wales only in 2026)
The Help to Buy equity loan scheme in England closed to new applicants in 2023. In Wales, a version remains open: you put down a 5% deposit, the Welsh Government provides an equity loan of up to 20% of the property value, and you take out a mortgage for the remaining 75%. The property must be a new build costing up to £300,000 in Wales.
First Homes (England)
Eligible first-time buyers can purchase certain new-build homes in England at a discount of at least 30% off market value. The discount applies permanently to the property when it is resold. Income caps and local authority variations apply.
Shared Ownership
Buy a share of a property (typically 25% to 75%) and pay rent on the remainder to a housing association. You can buy more shares over time in a process called staircasing. Shared ownership properties are leasehold, and service charges apply. Available through housing associations across England, Scotland, Wales and Northern Ireland.
Stamp Duty Land Tax for first-time buyers
From April 2025, the temporary enhanced stamp duty relief for first-time buyers ended. The thresholds reverted to standard levels. First-time buyers now pay no stamp duty on the first £300,000 (England and Northern Ireland), 5% on the portion between £300,001 and £500,000, and standard rates above £500,000. Properties above £500,000 do not benefit from first-time buyer relief at all.
Use our stamp duty calculator to get a precise figure for your situation.
How lenders assess what you can borrow
Most UK lenders will lend up to four to four-and-a-half times your gross annual income, with some lenders stretching to five times for applicants with higher incomes or strong applications. The exact multiple depends on:
- Your gross income (salary, bonus, regular overtime, rental income)
- Your existing financial commitments (loans, credit cards, car finance, student loan repayments)
- Your household expenditure as declared on the application
- The loan-to-value of the mortgage you are applying for
- Whether you are buying alone or jointly
Example: what can a first-time buyer borrow?
Two buyers with a combined income of £70,000, no existing debts and a 15% deposit. At 4.5 times income, they could borrow around £315,000. Combined with their deposit, that could support a purchase of £370,000 or so. With a 10% deposit on the same income, the maximum purchase price might be £350,000. The size of the deposit affects both the maximum property value and the rate available.
The mortgage application process: step by step
Get a mortgage in principle
Before you start viewing properties seriously, get a mortgage in principle (also called an agreement in principle). This is a conditional indication from a lender of how much they would lend you. It does not commit you to anything, but it shows estate agents you are a serious buyer.
Find your property and have an offer accepted
Once your offer is accepted, you move to a full mortgage application. You will need to have already instructed a solicitor at this point, as the lender will ask for their details.
Submit the full mortgage application
Provide all required documents: payslips, P60, bank statements, proof of deposit, ID and address confirmation. Your broker will check everything before submission to avoid delays.
Valuation and underwriting
The lender values the property and underwrites your application. Straightforward cases can complete in one to two weeks; more complex ones may take three to four weeks. Your broker should be chasing on your behalf throughout.
Mortgage offer issued
Once approved, you receive a formal mortgage offer, typically valid for six months. Your solicitor can now proceed to exchange of contracts.
Exchange and completion
Exchange of contracts is legally binding: you and the seller are committed. Completion follows, typically one to four weeks later, when the funds are transferred and you collect your keys.
Costs beyond the deposit
Many first-time buyers focus entirely on saving the deposit and are caught out by the range of additional costs involved. Budget for these early so they do not disrupt your plans at a critical moment.
| Cost | Typical range |
|---|---|
| Stamp Duty Land Tax | Varies by purchase price (see SDLT calculator) |
| Solicitor and conveyancing fees | £1,200 to £2,500 |
| Mortgage arrangement fee | £0 to £2,000 (sometimes added to mortgage) |
| Survey (homebuyer or full structural) | £400 to £1,500 |
| Removal costs | £400 to £1,500 for a first home |
| Buildings insurance (required from exchange) | £150 to £400 per year |
Frequently asked questions
Can I get a mortgage as a first-time buyer with a gifted deposit?
Yes. Most lenders accept gifted deposits from immediate family members, provided the donor signs a letter confirming the money is a gift and not a loan, and that they have no interest in the property. Some lenders require the donor to provide a bank statement showing the funds in their account.
Does a student loan affect how much I can borrow?
Lenders include student loan repayments in their affordability assessment as a committed outgoing. This reduces the amount they will lend by roughly four to five times the annual repayment amount. It does not prevent you from getting a mortgage, but it is a factor in the calculation.
Can two first-time buyers buy together and both claim first-time buyer stamp duty relief?
Yes, provided neither buyer has previously owned residential property anywhere in the world. If one buyer has owned before and the other has not, the transaction is treated as a standard (non-first-time-buyer) purchase for stamp duty purposes.
What credit score do I need for a first-time buyer mortgage?
There is no universal minimum. Each lender uses its own scoring system. A clean credit history with no missed payments, a credit card used and repaid regularly, and no recent applications for credit puts you in the strongest position. If your credit file has issues, speak to a specialist broker before applying anywhere.
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