How can I buy my first home with a small deposit?

Buying your first home with a small deposit: what to know

It’s common to feel stuck when you’re ready to buy, but your deposit is smaller than you expected. The good news is that there are routes to homeownership that can work with a lower upfront payment than the traditional “bigger deposit = easier mortgage” approach.

When you’re planning a small-deposit purchase, it helps to think in two parts:

• Your deposit and mortgage size (how much you can borrow)
• The wider buying costs (which can catch first-time buyers out)

This guide explains the main options that may be available when you’re aiming for a small deposit, including 5% deposit approaches.

Start with the basics: what a deposit actually does

A mortgage deposit is the amount you pay upfront when buying a property. Lenders typically calculate the mortgage based on the property value and the size of your deposit.

In general terms:

• A larger deposit usually means a smaller mortgage.
• A smaller deposit usually means a larger mortgage, which can affect affordability checks and the type of mortgage products available.

Even if you can secure a small-deposit mortgage, lenders will still look closely at your overall financial position.

Don’t overlook the costs beyond the deposit

A deposit is only one part of buying. Many first-time buyers also need to budget for items such as:

• Mortgage fees (where applicable)
• Valuation/survey costs
• Legal fees and conveyancing
• Stamp Duty Land Tax (SDLT) (if applicable)
• Moving and set-up costs
• Ongoing costs once you’ve moved in (utilities, maintenance, insurance)

If you’re working with a smaller deposit, it’s especially important to keep some savings aside for these costs so you’re not stretching finances right after completion.

Saving for a small deposit: practical steps that move the needle

If you’re still building your deposit, the most effective approach is usually simple and consistent:

1) Track spending accurately

Write down what you spend for a couple of weeks (or use your bank statements) and categorise it. Many people underestimate smaller, frequent costs.

2) Identify “easy wins”

Look for spending you can reduce without fundamentally changing your lifestyle—subscriptions, eating out, impulse purchases, and recurring charges.

3) Build a dedicated savings pot

Treat deposit savings as a separate goal. Automating transfers can help you avoid spending money that was intended for the deposit.

4) Plan for irregular expenses

Car repairs, annual bills, and household costs can derail deposit progress. Including a buffer in your monthly plan makes it easier to stay on track.

What if you only have a small deposit? Common routes

If you’re aiming to buy with a smaller deposit, you may need to consider specific schemes or product types that are designed for lower deposit scenarios. Availability can vary over time and by lender.

Below are three routes that are often discussed by first-time buyers when they don’t have a large deposit.

1) Buying with a 5% deposit

A 5% deposit can be a realistic target for some buyers, but it usually depends on the mortgage product and the rules attached to it.

Mortgage guarantee-style options (often discussed for 5% to 9% deposits)

Some government-backed or guarantee-style arrangements have been used to support higher loan-to-value lending. These typically come with conditions around who can apply, the type of property, and how the mortgage must be structured.

Because the exact rules and availability can change, it’s important to check the current eligibility criteria before you plan around a specific scheme.

Other 5% deposit options

Depending on the property and your circumstances, there may also be 5% deposit mortgages outside of guarantee-style structures. Product availability and terms can vary, so it’s worth getting advice based on your situation.

2) Help to Buy Equity Loan (new-build route)

The Help to Buy Equity Loan (where available) has been used to help buyers purchase new-build homes with a smaller deposit.

In broad terms, the structure works like this:

• You provide a deposit (for example, 5%)
• An equity loan contributes towards the purchase price
• You take out a mortgage for the remaining amount

Important considerations include:

• The home generally needs to be new-build
• There are repayment mechanics when the time comes to repay the equity loan
• There can be management fees and interest-related charges after an initial period

Because government schemes can change over time, you should confirm the latest position before relying on this route.

3) Shared Ownership (buy a share, pay rent on the rest)

If you can’t meet the requirements for other low-deposit routes, Shared Ownership can be an alternative approach.

With Shared Ownership, you buy a percentage of the property and pay rent on the remaining share. Because you’re only financing the portion you own, the deposit required for the mortgage can be lower than buying the whole property outright.

Key points to understand:

• You’ll need a mortgage for the share you purchase
• You’ll pay rent on the portion you don’t own
• The scheme has its own rules and processes, which can vary by provider and property

Shared Ownership can be a stepping stone for some buyers, but it’s important to understand the ongoing costs and how the arrangement works over time.

How lenders and affordability checks affect small-deposit purchases

Even when a scheme or product allows a low deposit, lenders will still assess affordability. That typically includes:

• Your income and regular outgoings
• Existing debts and commitments
• How much you can realistically afford to repay each month
• The property’s value and suitability

A small deposit can increase the mortgage amount, which may influence what you can borrow and the mortgage term options available.

Choosing the right option for your situation

The best route depends on factors such as:

• Whether the property is new-build or existing
• The size of your deposit (and whether you’re targeting 5% specifically)
• Your ability to meet ongoing payments, including rent (if relevant)
• The type of property you’re looking to buy

Because availability and rules can vary, it’s often helpful to compare options in a structured way—looking at both the upfront deposit and the longer-term cost picture.

A final checklist before you commit

When you’re buying with a small deposit, it’s worth checking that you’re comfortable with:

• Your deposit and the remaining buying costs
• The monthly payment you’ll be committing to
• Any scheme-specific requirements that apply to the property
• How you would handle changes in circumstances (for example, income changes or unexpected expenses)

With the right plan, a small deposit doesn’t have to mean putting your home purchase on hold.

Get advice

If you’re considering a small-deposit purchase, speaking to our brokers can help you understand which options may be available to you and what the total cost could look like over time.