How much deposit do you need to buy a house? (First-time buyers)

How much deposit do you need to buy a house?

For first-time buyers, the deposit is often one of the biggest parts of the “how do we make this work?” question. It’s also a key input into how a mortgage is structured.

Your deposit is the portion of the property price you pay upfront. The mortgage lender then lends the remainder, and your deposit size helps determine your loan-to-value (LTV)—the percentage of the property value you’re borrowing.

This guide explains what deposit levels are commonly seen for first-time buyers, how they can affect mortgage options and repayments, and the practical costs to plan for beyond the deposit itself.

Why your deposit size matters

1) It sets your loan-to-value (LTV)

LTV is calculated as:

• LTV = mortgage amount ÷ property value

So, if you put down a larger deposit, you borrow a smaller percentage of the property price.

In general:

• Higher deposit → lower LTV
• Lower deposit → higher LTV

Lenders often treat higher LTV lending as higher risk, which can influence the range of products available and the pricing.

2) It can affect which mortgage products you can access

Many mortgage products are grouped by LTV bands (for example, 95% or 90% LTV). If your deposit places you in a higher LTV band, you may have fewer options to choose from.

3) It can influence monthly repayments

A bigger deposit reduces the amount you borrow. Borrowing less typically means:

• lower monthly repayments (all else being equal)
• less interest paid over the life of the mortgage

4) It affects your equity buffer

If house prices fall after you buy, borrowers with a higher LTV may be more exposed to the risk of being in negative equity (when the mortgage balance is higher than the property’s value).

How much deposit do first-time buyers need?

In the UK, a 5% deposit is often discussed as a starting point for first-time buyers, and it is commonly associated with a 95% LTV mortgage.

However, whether a 5% deposit is realistic depends on more than just the deposit percentage. Lenders also consider affordability, credit history, the property type, and their own lending criteria.

Many first-time buyers aim to save a bit more—moving from 95% LTV to 90% LTV—because that can widen the mortgage options they may be able to consider.

The trade-off with a smaller deposit

A smaller deposit can help you buy sooner, but it may come with compromises such as:

• potentially higher interest rates compared with lower-LTV options
• higher monthly repayments because you’re borrowing more
• a smaller equity buffer from day one

Typical deposit levels you’ll see in the market

Deposit sizes vary depending on property prices and what you can afford to save. As a broad guide, first-time buyers commonly plan around:

5% deposit (95% LTV)

Often the minimum deposit level people plan for. It can be a route onto the property ladder if you meet lender affordability and eligibility requirements.

10% deposit (90% LTV)

A common “next step” for first-time buyers. Increasing your deposit can improve your LTV position and may help with product choice.

15%–25% deposits (lower LTV)

A larger deposit reduces the amount you borrow. Lower LTV lending is often treated as less risky by lenders, which can translate into more mortgage options.

Deposit-free routes

True deposit-free mortgages are uncommon. Where arrangements exist, they typically involve additional structures or conditions (for example, guarantor-style support or other assistance). The underlying risk profile for the lender is still relevant, so it’s important to understand the full terms.

How deposit size can affect repayments (illustrative)

To see the direction of travel, consider a property where increasing your deposit reduces the mortgage you borrow.

For example, on a £300,000 property with a 25-year term, moving from a 5% deposit to a 25% deposit reduces the loan amount significantly. That reduction can mean lower monthly repayments.

Repayments will depend on the specific interest rate and fees available to you, so any figures should be treated as illustrative rather than a prediction.

Don’t forget: the deposit isn’t the only upfront cost

When planning how much cash you need, it’s easy to focus only on the deposit. In practice, buying a home usually involves other costs too, such as:

• solicitor or conveyancing fees
• mortgage arrangement fees (where applicable)
• surveys and searches
• moving costs

A common planning approach is to avoid using every last pound of savings. Keeping an emergency buffer can help you manage unexpected expenses after completion.

Building your deposit: practical steps

1) Work from your target purchase price

Start with the property price you’re aiming for and decide what deposit percentage you’re trying to reach.

2) Model different deposit options

It’s helpful to compare what happens if you save for 5%, 10% or 15%—not only the deposit amount, but also how that changes your LTV and the mortgage products you may be able to consider.

3) Separate deposit and buying costs

Treat deposit and transaction costs as different “buckets” so you don’t underestimate the total cash required.

4) Check your monthly saving capacity

A deposit plan only works if it’s sustainable alongside everyday spending.

5) Protect your savings

Avoid putting money aside for emergencies at risk. Many first-time buyers find it easier to stay on track when they keep a clear buffer.

Deposit-boosting options first-time buyers may consider

Some first-time buyers use structured savings or family support to help reach their deposit goal.

Lifetime ISA (LISA)

A Lifetime ISA can be used towards buying your first home, subject to the relevant rules and conditions.

Gifts from family

Some lenders accept gifted deposits, typically requiring clear documentation so the lender can understand the nature of the funds.

Because how gifted funds are treated can vary, it’s important that any support is handled in a way that fits the mortgage process.

Buying with a smaller deposit: what to watch

If you’re aiming for a smaller deposit (such as 5% or 10%), it’s worth paying close attention to:

• the affordability of the mortgage repayments you’ll actually pay
• the interest rate and fees on the specific mortgage product
• how repayments could change after any fixed period ends
• whether you’ll still have enough savings for moving costs and emergencies
• your comfort level with the equity position if property values move

Summary: choosing the right deposit level

For first-time buyers, the “right” deposit is usually the one that balances:

• LTV position (which can influence mortgage options)
• repayments (which depend on how much you borrow)
• financial resilience (keeping enough cash for costs and unexpected events)

If you can save more, you may improve your LTV and potentially access a wider range of mortgage products. If you need to buy sooner with a smaller deposit, it can still be possible—but it’s important to understand the trade-offs and plan for the full cost of buying a home.