How Much Deposit Do You Need to Buy Your First Home?
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The deposit is the biggest hurdle most first time buyers face, and it is also the one people worry about most. The good news is that you may need less than you think. Most first time buyers in Lancashire and Greater Manchester buy with a 5% deposit, and there are now products and schemes that let some buyers get on the ladder with even less.
This guide explains exactly how much you need, the routes that can reduce it, how the size of your deposit affects your mortgage, and the practical ways to get there faster. As a whole-of-market broker, we help first time buyers work out a realistic deposit plan every day. If you would rather talk it through, get in touch and we will give you a clear figure to aim for.
5% is usually the minimum
| Property price | 5% deposit | 10% deposit | 15% deposit |
|---|---|---|---|
| £150,000 | £7,500 | £15,000 | £22,500 |
| £200,000 | £10,000 | £20,000 | £30,000 |
| £250,000 | £12,500 | £25,000 | £37,500 |
| £300,000 | £15,000 | £30,000 | £45,000 |
As a general rule, you will need a minimum deposit of 5% of the property's purchase price to buy your first home. On a £200,000 property that is £10,000. Most high street lenders offer 95% mortgages to first time buyers, so a 5% deposit opens the door to homeownership.
That said, 5% is the usual floor, not the target. A handful of lenders now go further, with products that need as little as a £5,000 deposit or, for some renters, no deposit at all. We cover those below. And the more you can put down, the better your mortgage terms tend to be. We will come back to why that matters.
Can I buy with less than a 5% deposit?
Yes, in some cases. The market has changed, and there are now a few routes onto the ladder for buyers who do not have a full 5% saved:
Low-deposit mortgages. Some lenders now offer products that need as little as a £5,000 deposit rather than a full percentage of the price. These typically lend at a higher loan-to-value, so the rates are usually higher than on a 90% or 95% mortgage, and the rules vary a lot between lenders. Some require the £5,000 to be your own savings, others accept a family gift. Some cap the property price or exclude new builds. This is exactly where whole-of-market advice earns its keep. We will tell you which of these products you actually qualify for, and whether the smaller deposit is worth the higher rate for your circumstances.
No-deposit mortgages for renters. A small number of lenders offer track-record mortgages aimed at people with a strong history of paying rent on time. These can accept less than 5%, or in some cases no deposit at all, usually where you can evidence 12 months of rent paid over an 18-month period. They are not right for everyone, but for long-term renters who struggle to save while paying rent, they can be the route that finally works.
Concessionary purchase (buying below market value). If a landlord sells to a sitting tenant, or a family member sells to a relative, they may agree a price below the property's market value. The discount can then count as some or all of your deposit. For example, a home worth £200,000 sold to you for £180,000 means the £20,000 discount can act as a 10% deposit. Not every lender accepts this, but some do, and it is a genuinely useful route that is often overlooked.
These products come and go, and their criteria change often. The figures and rules above are a general guide, not a live product list. Speak to us and we will tell you exactly what is available to you right now.
Why a bigger deposit gets you a better mortgage
Your deposit determines your loan-to-value, or LTV. This is the size of your mortgage as a percentage of the property value. A 5% deposit means a 95% LTV mortgage. A 15% deposit means an 85% LTV mortgage.
Lenders price their deals in LTV bands, and the lower your LTV, the lower the risk to the lender, so the better the interest rate you are offered. The main bands are 95%, 90%, 85% and 80%. Crossing from one band into a lower one, for example moving from a 5% to a 10% deposit, can noticeably reduce your monthly repayments over the life of the mortgage.
This is the trade-off with the low-deposit products above: a smaller deposit gets you on the ladder sooner, but usually at a higher rate. Sometimes that is the right call, and sometimes waiting a few months to reach a lower LTV band saves more in the long run. This is exactly the kind of decision we help first time buyers weigh up. To understand how the rate itself works once you have your deposit, read our guide to mortgage rates explained.
Where your deposit can come from
Lenders accept deposits from several sources, but they will want to see where the money came from as part of their anti-money-laundering checks. The main sources are:
Your own savings. The most straightforward source. Money saved in a bank account, ISA or savings account.
A Lifetime ISA (LISA). Designed specifically for first time buyers. You can save up to £4,000 a year and the government adds a 25% bonus, up to £1,000 a year. The property must cost £450,000 or less and you must have held the LISA for at least 12 months before using it. For many first time buyers this is the single most effective savings tool available. Read our full guide to using a Lifetime ISA to buy your first home.
A gifted deposit. Money given by a family member, often parents or grandparents. This is common and perfectly acceptable to most lenders, but the person gifting will usually need to sign a letter confirming the money is a gift and not a loan, and that they have no stake in the property. They cannot normally live in the home or hold a legal interest in it. We can guide your family through exactly what lenders need.
A concessionary purchase or gifted equity. As above, buying below market value from a family member or landlord, with the discount acting as your deposit.
Whatever the source, we will make sure it is evidenced correctly before your application goes in, so there are no awkward surprises later
Schemes that reduce the deposit you need
Alongside the products above, several schemes are designed to help first time buyers buy with less:
Mortgage Guarantee Scheme. Supports 95% mortgages, helping buyers with only a 5% deposit access lending from participating banks.
Shared Ownership. You buy a share of a property, typically between 25% and 75%, and pay rent on the rest. Because you are only buying a share, the deposit needed in cash is far smaller. You can buy further shares later, a process called staircasing.
First Homes Scheme. Offers eligible first time buyers a discount of 30% to 50% on the market price of a new-build home, which reduces both the price and the deposit needed.
Eligibility and availability vary, and some schemes are region-specific. We will tell you which ones you actually qualify for rather than leaving you to work through the small print. Read our full guide to first time buyer schemes.
What if I do not have the full deposit yet?
This is one of the most common conversations we have, and it is rarely bad news. If you are not quite at your target, there are usually options:
A low-deposit or no-deposit product may suit you, as covered above.
A family member may be able to help, whether through a gift, a guarantor mortgage, or a joint borrower sole proprietor (JBSP) mortgage that lets them boost your borrowing without going on the deeds.
A family springboard or offset mortgage lets a relative put savings up as security, rather than you finding a bigger cash deposit.
A slightly cheaper property, or a different area, may bring the deposit within reach.
A focused savings plan may get you there faster than you expect.
The worst thing you can do is assume you cannot buy and stop looking. We would far rather you speak to us early, so we can give you a realistic plan and a target to aim at. Knowing the number turns a vague worry into a clear goal.
Practical tips to save your deposit faster
Saving a deposit takes discipline, but a few sensible moves make a real difference:
Open a Lifetime ISA if you are eligible. The 25% government bonus is effectively free money towards your first home. Few other savings routes match it. See our Lifetime ISA guide for how it works.
Automate your saving. Set up a standing order into a dedicated savings account on payday, so the money is gone before you can spend it.
Check your credit while you save. A strong credit file widens your lender choice when you are ready to buy. When you enquire with us, we include a free credit report so you know where you stand. Read our guide to credit scores and mortgages.
Do not forget the other costs. Your deposit is not the only thing to save for. Budget for solicitor fees, surveys and moving costs too. Our guide to the costs of buying your first home covers the full picture.
Frequently Asked Questions
How much deposit do I need as a first time buyer?
Most first time buyers need a minimum deposit of 5% of the property's purchase price. On a £200,000 home that is £10,000. A larger deposit of 10% or more usually unlocks lower interest rates and a wider choice of lenders. Some lenders now offer products needing as little as £5,000, and a few offer no-deposit options for renters. Speak to us for a figure based on your circumstances.
Can I buy a house with a £5,000 deposit?
Possibly. Some lenders now offer first time buyer mortgages that need only a £5,000 deposit rather than a full 5%. They lend at a higher loan-to-value, so rates are usually higher, and criteria vary. Some require your own savings, others accept a family gift, and some cap the property price or exclude new builds. As a whole-of-market broker we can tell you which of these you qualify for and whether it is the right deal overall.
Can I get a mortgage with no deposit?
In some cases, yes. A small number of lenders offer track-record mortgages for renters, which can accept less than 5% or no deposit, usually where you can evidence 12 months of rent paid over an 18-month period. They are not right for everyone, but for long-term renters who find it hard to save, they can be the route that works.
Can my parents gift me a deposit?
Yes. Gifted deposits from family are common and accepted by most lenders. The person gifting will usually need to sign a letter confirming the money is a gift, not a loan, and that they hold no stake in the property. We can guide your family through exactly what the lender needs.
What is a concessionary purchase?
It is where you buy a property below its market value, usually from a family member or a landlord selling to a sitting tenant. The discount can count as some or all of your deposit. For example, a home worth £200,000 sold to you for £180,000 gives you a £20,000, or 10%, deposit. Not every lender accepts this, but some do.
Does a bigger deposit mean a cheaper mortgage?
Usually, yes. Lenders price deals in loan-to-value bands. A larger deposit means a lower LTV, which typically means a lower interest rate and lower monthly repayments. Moving from a 5% to a 10% deposit can make a meaningful difference over the life of the mortgage.
What is a Lifetime ISA and should I use one for my deposit?
A Lifetime ISA lets first time buyers save up to £4,000 a year, with the government adding a 25% bonus of up to £1,000 a year. The property must cost £450,000 or less and you must hold the LISA for at least 12 months before using it. For many first time buyers it is the most effective way to boost a deposit.
How much deposit do I need in Lancashire?
Because property prices across much of Lancashire sit below the England average, the cash deposit needed is often lower than national figures suggest. In towns like Chorley, Leyland and Bamber Bridge, a 5% deposit can be very achievable. We advise first time buyers across Lancashire and Greater Manchester and can give you a local, realistic figure.
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