Government schemes for 5% deposit mortgages

If you’re buying with a 5% deposit, you may be looking for ways to make a high loan-to-value (LTV) mortgage more achievable. In the UK, a small number of government-backed schemes can help by reducing risk for lenders or improving affordability through discounted purchase prices.

This guide explains the main options, how they work in practice, and what to think about when planning your application.

What does “5% deposit” mean for a mortgage?

A 5% deposit typically means you’re borrowing 95% of the property’s purchase price. That’s a high LTV, and many mortgage lenders are more selective at this level.

Government schemes don’t automatically guarantee approval, but they can make it easier to access products that might otherwise be unavailable or harder to secure.

Government schemes that can support a 5% deposit

Mortgage Guarantee Scheme

The Mortgage Guarantee Scheme was introduced to encourage lenders to offer 95% LTV mortgages by providing a government guarantee on part of the lending.

Key points to check (scheme-specific):

• Deposit range: typically for borrowers with a deposit between 5% and 9%
• Property value limit: the property must be under £600,000
• New-build restriction: the scheme cannot be used for new-build properties
• Not limited to first-time buyers: it can apply beyond first-time buyers

Because these rules are specific, it’s important to confirm the property and your deposit fall within the scheme parameters before you invest time in an application.

Note: scheme rules and lender participation can change. Always verify the latest eligibility details before applying.

First Homes Scheme

The First Homes Scheme can help buyers with a smaller deposit indirectly.

Rather than guaranteeing the mortgage itself, it offers a discounted purchase price for eligible new-build homes. If the purchase price is lower, your LTV improves, which may bring you within the range of more mortgage products.

What to know:

• It’s for new-build properties
• You must be a first-time buyer
• You must buy locally (local connection requirements apply)
• Discounts: commonly 30% to 50% off the market value (the final discount is determined locally)
• You still need a deposit (the deposit required depends on the mortgage product and your circumstances)

If you’re set on a new-build home, this scheme can be a practical route to improving affordability—even if your cash deposit is relatively modest.

How to plan your application with a 5% deposit scheme

Even with a government-backed option, lenders will still assess your overall affordability and risk. A good plan can help you avoid delays.

1) Start with the property and scheme fit

Before you choose a mortgage, confirm:

• whether the property type matches the scheme rules (for example, new-build restrictions)
• whether the purchase price is within any scheme limits
• whether your deposit percentage falls within the relevant range

2) Prepare your documents early

High-LTV applications often require clear evidence of income and outgoings. A broker can help you understand what will be needed and how to present it.

Common areas lenders look at include:

• proof of income (and how stable it is)
• affordability calculations (monthly commitments)
• deposit evidence
• credit history and any relevant explanations

3) Expect product availability to be narrower

Schemes can open doors, but they don’t mean every lender offers every product. You may find fewer options at 95% LTV, so it’s worth getting advice on which lenders are likely to consider your application.

Which lenders may offer these mortgages?

Mortgage availability varies over time, but in general:

• Mortgage Guarantee Scheme products are offered by lenders that participate in the scheme
• First Homes is linked to eligible new-build purchases and the mortgage products available for those purchases

A broker can help you narrow down the lenders that are most likely to be able to proceed with your specific combination of deposit size, property type, and purchase price.

If you can’t use a 5% deposit scheme

If the main schemes don’t fit your circumstances, you may still have options—though they may involve different routes to reaching an acceptable LTV.

Right to Buy (where applicable)

If you rent from your local council and meet the Right to Buy requirements, the discount can reduce the amount you need to borrow, which may help with deposit/LTV considerations.

Consider other ways to reduce the LTV

Depending on your situation, alternatives may include:

• Shared ownership: you buy a share and rent the rest, which can reduce the mortgage size you need
• Guarantor mortgages: a guarantor may support the application by offering additional security (subject to lender rules)

A broker can help you compare what’s realistic for your income, deposit, and the type of property you want.

Why using a broker can make a difference

With 95% LTV lending, the number of suitable products can be limited. A specialist broker can:

• identify which scheme (if any) you can use
• match your circumstances to lenders that support the relevant route
• help you understand what information lenders will focus on
• reduce the risk of wasted applications

Next steps

If you’re aiming for a 5% deposit and want to explore whether a government scheme applies to your purchase, it’s worth getting your plan checked early—especially around property type, purchase price, and deposit range.

A mortgage broker can help you map out the most suitable approach before you commit to a property.