In this guide For more information, see government home ownership schemes.
- The minimum deposit in the UK is 5% — but 10%+ opens far more options
- Deposit size directly affects the rate you pay — the difference can be £100+/month
- First-time buyers have access to schemes that effectively boost deposit buying power
- The source of your deposit matters — lenders check it as part of anti-money-laundering rules
Your deposit is one of the most consequential decisions in any mortgage application. It shapes which lenders you can access, what rate you pay, and the total cost of your mortgage over its lifetime.
The minimum deposit in the UK
Most UK lenders require a minimum deposit of 5% of the property price (known as a 95% LTV mortgage). A small number of lenders offer these, but choice is limited and rates are higher. Most buyers aim for at least 10% where possible.
Quick illustration
On a £300,000 property: a 5% deposit is £15,000 (mortgage £285,000). A 10% deposit is £30,000 (mortgage £270,000). A 25% deposit is £75,000 (mortgage £225,000). The bigger the deposit, the smaller the mortgage — and the lower the rate you pay on it.
How deposit size affects your mortgage rate
The rate difference between LTV bands is significant. Here is a rough guide to how current rates vary by deposit size:
| Deposit | LTV | Typical 2-year fixed rate | Monthly payment (£250k mortgage) |
|---|---|---|---|
| 5% | 95% | ~5.5%–6.0% | ~£1,620–£1,666 |
| 10% | 90% | ~5.0%–5.5% | ~£1,573–£1,620 |
| 15% | 85% | ~4.8%–5.2% | ~£1,543–£1,588 |
| 25% | 75% | ~4.3%–4.8% | ~£1,481–£1,543 |
| 40% | 60% | ~4.0%–4.5% | ~£1,452–£1,510 |
The 75% LTV threshold
The biggest rate improvement in most markets comes at 75% LTV (25% deposit). If you are close to this threshold, it may be worth stretching to reach it — the savings over a 2-year fix can outweigh the cost of the additional deposit.
First-time buyer schemes that stretch your deposit
| Scheme | How it helps | Key limit |
|---|---|---|
| Lifetime ISA | Government adds 25% to savings up to £4,000/year (max £1,000 bonus/year) | Property price must be £450,000 or under |
| Shared Ownership | Buy 25%–75% of a property; deposit on your share only | Rent paid on unsold share; future purchases possible |
| First Homes scheme | New build properties sold at 30%–50% discount to eligible first-time buyers | Local eligibility criteria apply |
Does the source of your deposit matter?
Yes — lenders must verify where your deposit comes from as part of anti-money-laundering regulations.
| Source | What lenders need |
|---|---|
| Personal savings | 3–6 months of bank statements showing the build-up of funds |
| Gifted deposit (family) | Signed gift letter confirming it is a gift, not a loan; donor’s bank statement showing transfer |
| Property equity | Solicitor handles this as part of the sale/purchase transaction |
| Inheritance | Grant of probate or solicitor’s letter confirming the source |
| Lifetime ISA | Your conveyancer handles the withdrawal process |
Watch out
A deposit from a personal loan will be identified on your credit file. Most lenders will decline applications where the deposit is borrowed. Your deposit must come from your own savings, equity or a genuine, non-repayable gift.
How much should you save before buying?
Beyond the deposit itself, factor in additional purchase costs:
- Stamp duty — varies by price and buyer type (see our stamp duty calculator)
- Solicitor/conveyancing fees — typically £1,200–£2,500
- Survey costs — £400–£1,500 depending on type
- Mortgage arrangement fee — £0–£1,999 (often added to the loan)
- Moving costs — £500–£2,500 depending on distance and volume
As a rule, budget an additional 2–3% of the property price on top of your deposit for purchasing costs.
Frequently asked questions
Can I buy with a 5% deposit as a first-time buyer?
Yes — several lenders offer 95% LTV mortgages for first-time buyers. The choice of lender is more limited and rates are higher, but it is achievable. Using a Lifetime ISA alongside a 5% personal deposit is a common route.
Can I use a gifted deposit from parents?
Yes, gifted deposits from close family members are widely accepted. The lender requires a signed gift letter confirming the money will not be repaid, plus bank statements showing the transfer. Some lenders accept gifts from friends but may require extra documentation.
Is a larger deposit always better?
Generally yes in terms of rate and cost — but not if saving a larger deposit means waiting significantly longer to buy in a rising market. A broker can model the financial comparison: save more vs buy now with a smaller deposit and benefit from potential price appreciation.
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