How Much Deposit Do I Need To Buy A House?

Almost every first-time buyer in the UK asks, “How much deposit do I need?” before buying a new property.

In the UK, the minimum deposit you will need is 5%. Ideally, the rate is 10%-25% depending on the type of mortgage and your personal circumstances.

In this guide, you will understand the deposit needed by all borrower types. Based on your requirements, this will help you make an informed decision before starting the property purchase.

Deposit requirements at a glance

Here is a quick answer to the question, “How much deposit do I need?” for different mortgage types:

What is a mortgage deposit?

A Mortgage deposit is the amount you pay towards the property purchase as your share. The amount you borrow plus the deposit makes the full purchase price.

You pay this sum toward the total price of the property you want to buy. This means that the lender deducts this amount from the total purchase price and lends the balance as a loan.

Naturally, paying a higher deposit will reduce your loan amount (and vice versa). Your deposit ultimately determines your loan-to-value (LTV) ratio. A higher deposit results in a lower LTV, reducing the lender’s risk. This often motivates lenders to offer better mortgage deals at lower interest rates.

Many new build home buyers often confuse the mortgage deposit with the reservation fee. Please note that the reservation fee is just a holding payment you make to take the property off the market. This is generally £500 to £2,000 based on your deal and property.

How much deposit do I need for a first-time buyer mortgage?

First-time buyers are often too hung up on the deposit as they struggle with savings. The minimum deposit you can pay here is 2 % to 5%.

However, this is not always the best option as your mortgage rates are higher and fixed for 5 years.

Ideally, paying a deposit of 10% to 15% gets you better interest rates and more lending. First-time buyers in higher-value London markets often need larger deposits because of average property prices. Speak to our mortgage broker in Ealing or our mortgage broker in Kingston upon Thames for a personalised deposit assessment.

Suppose you want to buy a £250,000 property as a first-time buyer. Here is the deposit you will pay under different rates:

• 5% deposit: £12,500
• 10% deposit: £25,000
• 25% deposit: £62,500

Paying anywhere between £25,000 and £62,500 as a deposit to give more assurance to your mortgage lender and get better mortgage lending and rates.

However, if you are struggling with your deposit, some of the schemes for first-time buyers may work with smaller deposits:

• Skipton track record: This is a unique 100% mortgage (0% deposit) for renters who can prove they have paid their rent on time for the last 12 months.
• Shared ownership: In this arrangement, you can buy a share of the property (usually 25% to 75%) and pay rent on the balance. Your deposit will only be limited to the share you buy.
• First Homes Scheme: This government scheme offers a 30% to 50% discount to local key workers and first-time buyers on new build properties.
• Deposit unlock: This is a developer-led scheme where you can get a mortgage with 5% deposit on certain new builds.

Work with an experienced mortgage broker to help you to know more about lower deposit mortgage lenders and their criteria.

How much deposit do I need for a home mover (residential)?

If you are looking for a home mover mortgage in the UK, things are a little different. Here, your deposit isn’t sitting in your bank account. It often comes from the equity in your property (its value minus your outstanding mortgage).

While the minimum deposit remains 5%, most home movers can put in 15% to 25%, if they have enough in built-up equity.

However, the biggest challenge in this situation is often the timing. If your cash is locked in your current house, you won’t be able to pay the deposit until you sell it or release it by remortgage your property.

How much deposit do I need for a buy-to-let mortgage?

The minimum deposit for a buy-to-let (BTL) mortgage is higher than the rest. It ranges between 20% and 40%. If you are a first-time landlord, lenders may ask for a deposit of 25% or 30% until you have a proven track record.

The most competitive buy-to-let deposit is 25%. If you’re investing in a rental property in West London, our mortgage broker in Hounslow can help you find the most competitive BTL deals in the area.

The main reason behind such high rates is the lender’s insecurity. As rental income is involved, something that is not directly under your control, your lender will need more security to approve your mortgage application.

You must also meet the interest coverage ratio (ICR) requirements for a buy-to-let mortgage. Ensure that your rental income covers at least 125% to 145% of your mortgage interest. Your lender may ask for an even higher deposit if your rent isn’t high enough.

How much deposit do I need for a limited company BTL, holiday let, or second home?

Here are the deposit requirements for all three arrangements:

Limited company BTL

Also called a special purpose vehicle (SPL), this BTL mortgage is owned by a limited company. It usually requires a minimum deposit of 25%.

Holiday let mortgage

This mortgage is taken to buy properties for renting them out to tourists on a short-term basis. They demand a deposit of at leas 25% to 30%. Lenders are more cautious here because of the seasonal (and uncertain) cash flow.

Second homes

If you are planning to buy a weekend getaway home or a property for a family member, you would need at least 15% to 25% as a deposit. Also note that you will need to pay an additional 5% stamp duty surcharge on this property.

How to save up for a mortgage deposit faster?

Along with the question, “How much deposit do I need?” mortgage borrowers (especially first-time buyers) also commonly ask for tips to save up faster for their deposits.

Here is what you can do:

Open Lifetime ISA

This is a savings account for adults between 18 and 39 years old. If you are under 40, the government will add a 25% bonus to your savings (up to £1,000 per year). Use this money to build your deposit.

Go for joint pooling

You can always get your first property as a joint buyer. Pool your deposit with your partner, friends, or family members to get your dream home in the UK.

Take gifted deposits

Mortgage lenders in the UK are perfectly okay with gifted deposits. Parents usually offer a deposit gift to their children. Get your “Gifted Deposit Letter” for confirmation.

Deposit sources that lenders accept

Lenders are always cautious about where your deposit comes from.

Here are the most acceptable deposit sources for any mortgage in the UK:

• Personal savings (with at least 3 to 6 months of bank statements to show)
• Lifetime ISA
• Sale of existing property
• Gifted deposit from a family member (with documentation)
• Inheritance
• Sale of investments
• Premium bonds winnings

On the other hand, these deposit sources are often contentious:

• Personal loans
• Credit cards
• Cryptocurrency
• Gambling winnings
• Cash payments without a bank trail

Deposit and other mortgage costs you should budget for

If you are asking, “How much deposit do I need?” it is likely that the cost of your mortgage matters a lot.

You will need to budget for these costs along with your mortgage deposit:

• Stamp duty: Always check the latest 2026 thresholds, especially if you are a first-time buyer.
• Conveyancing: Around £1200 to £2,000.
• Hidden costs: Also factor in expenses like removal costs, building insurance, furniture expenses, and more.

As a thumb rule, for a £250,000 property with a 10% deposit, we recommend saving an additional £5,000 to £8,000 for fees and moving costs.

Why do you need a mortgage broker?

A skilled local mortgage broker knows the lenders that offer low deposits and the government schemes you can benefit from. At Fee Free Mortgage Broker MariannaFS, our independent mortgage brokers in the UK will help you find the right lender, get the most suitable mortgage deals, make your application, and explore schemes you are eligible for.

Our fee-free mortgage brokers have expertise in first-time buyer deals, buy-to-let mortgages, home mover mortgages, and limited company BTL mortgages. They also conduct personalised deposit gap assessments, telling you exactly how much more deposit you need to get to a better LTV band.

Call us on 02080902043 or just send us a WhatsApp message for a free deposit and affordability consultation.

Frequently asked questions

Can I get a mortgage for less than 5% deposit?

While some schemes like Skipton Track Record offer 100% mortgages, or Santander 98% LTV mortgage, these deals are very rare. Contact your mortgage broker for personalised help.

Does a bigger deposit help me borrow more?

Indirectly, yes. Higher deposit means higher income multiple up to 5.5 times. It reduces your LTV and the risk for your lender. However, the amount you can borrow also depends on other factors, such as your credit score, profession, etc.

Can I use a loan to make my mortgage deposit?

Lenders generally do not accept loans as credible mortgage sources. It is always better to show them that you have the financial discipline to save.

What is a “concessionary purchase”?

This is a deal where your family member sells you a property for less than its actual market value. You can use this discount for your mortgage deposit.