First-time buyer deposit: how much you’ll need and what it affects

For most first-time buyers, the deposit is the first major milestone in the home-buying process. It’s also one of the biggest factors lenders use when assessing a mortgage application.

This guide explains:

• Typical deposit ranges for first-time buyers
• How deposit size can affect mortgage options and monthly payments
• Government support schemes that may help you reach your deposit goal

How much deposit do first-time buyers usually need?

In many cases, first-time buyers aim for a deposit somewhere in the 5% to 10% range of the property’s purchase price.

The exact amount you’ll need can vary depending on:

• Whether you’re buying alone or with someone else (a joint purchase can change how the deposit is split)
• The lender’s loan-to-value (LTV) requirements
• The property type and purchase price
• Your overall affordability and credit profile

If you’re planning for a deposit, it’s helpful to think in terms of LTV bands (the deposit size relative to the property value). LTV is often used to determine which mortgage products may be available.

What is LTV, and why does your deposit matter?

Loan-to-value (LTV) is calculated by comparing the mortgage amount to the property value.

• A larger deposit usually means a lower LTV
• A lower LTV can make you look like a lower-risk borrower to lenders

Because of this, deposit size can influence:

• Whether certain mortgage products may be available
• The pricing of the mortgage (including the interest rate)
• The range of terms you can consider

It’s worth noting that deposit size isn’t the only factor. Lenders also consider affordability, income stability, credit history, and the overall risk profile of the application.

Can a bigger deposit reduce your monthly mortgage payments?

A bigger deposit can reduce the mortgage amount you need to borrow. In turn, that may help lower your monthly payments.

However, the final outcome depends on several things, such as:

• The interest rate you’re offered
• The mortgage term (for example, 25 years vs 35 years)
• Whether you choose repayment or interest-only (interest-only is more limited and typically requires additional considerations)

In practice, many first-time buyers find it useful to model a few scenarios—such as different deposit sizes and mortgage terms—to understand how the numbers could change.

Average deposit levels and why they can vary

Deposit sizes can differ widely between buyers due to factors like household income, savings habits, family support, and the local property market.

While some buyers may be able to save a larger deposit, others may need to rely on support schemes or a smaller deposit combined with a mortgage product that fits their LTV.

The key is to plan for a deposit that is realistic for your finances—not just what’s possible in theory.

Government support schemes that may help first-time buyers

If you’re struggling to reach a deposit target, there are government-backed options that can provide additional support. Availability and rules can change, and some schemes are location- or property-specific.

Common options include:

Lifetime ISA (LISA)

A Lifetime ISA can be used to help build savings towards a first home.

Typical features include:

• You can open a LISA if you meet the age requirements
• You can save up to an annual limit
• The government adds a bonus to your contributions

There are also rules about how and when you can use the money for a qualifying first home.

Equity loan (England)

An equity loan can help eligible first-time buyers purchase a new-build home within certain regional price limits.

Key points often include:

• You borrow an additional percentage of the purchase price as an equity loan
• The loan is interest-free for an initial period (after which interest may apply)
• You typically repay the equity loan when you sell or at specified milestones

Shared ownership

Shared ownership allows you to buy a share of a home and pay rent on the remaining share. Over time, you may be able to buy additional shares (“staircase”) up to full ownership.

This can reduce the upfront deposit requirement compared with buying 100% of the property.

Planning your deposit: practical steps

Saving for a deposit can feel slow, but structure helps. Consider:

• Work out your target deposit based on the property price you’re aiming for and the LTV you want to target
• Budget for the full buying picture, not just the deposit (for example, legal fees and other upfront costs)
• Use a dedicated savings approach (such as regular transfers into a savings account)
• Keep your savings accessible so you’re not forced to withdraw from unsuitable accounts or incur penalties

Deposit size isn’t the only factor lenders look at

Even with a strong deposit, lenders still assess the overall strength of your application. That usually includes:

• Affordability based on income and outgoings
• Credit history and any existing debts
• Stability of income and employment
• The property’s suitability and valuation

A deposit can open doors, but the mortgage still needs to fit your wider financial profile.

Summary

For first-time buyers, a deposit is more than just a savings goal—it’s a key part of how lenders assess risk through LTV.

• Many first-time buyers target 5% to 10%
• A larger deposit can improve mortgage options and may help reduce monthly payments
• Government schemes such as Lifetime ISA, equity loans, and shared ownership may help bridge the gap

If you’re deciding how much to save, the most useful approach is to balance what you can realistically achieve with how different deposit sizes could affect your mortgage options.