When thinking about buying your first home, it’s important to get to grips with how mortgage deposits work, including how much you’ll need to save and the rules around gifted deposits.
Mortgages are generally available at up to 95% loan-to-value (LTV), meaning it’s possible to get on the property ladder with a deposit of 5% of the purchase price and a mortgage covering the remaining 95%.
Here’s how much cash you’d need to put down on a £200,000 property, based on different deposit sizes:
- 5% deposit: £10,000
- 10% deposit: £20,000
- 15% deposit: £30,000
How much will you need to save?
To calculate how much you might need to save for your mortgage deposit, there are two things you should consider: typical property prices and monthly repayment costs.
Property prices in your area
You can get a rough idea of local house prices from property portals such as Rightmove and Zoopla, and by speaking to local estate agents.
The figures you’ll see on portals and agent websites are asking prices, so they might be a little higher than what the properties are really worth.
For more concrete information, you can check how much homes in the area have sold for using the Land Registry’s price paid tool.
How much you can afford in repayments
With each monthly mortgage repayment, you’ll have to pay interest as well as some of the loan itself. The bigger the deposit, the smaller the loan and the less interest you’ll pay.
On top of the rate, you’ll need to think about factors such as mortgage fees, early repayment charges, and how many years you want to pay back the loan over (the mortgage term). All of this is explained in our guide to finding the best mortgage deals.
To work out how much a mortgage could cost you each month, use our mortgage repayment calculator.
If the repayments for a low-deposit mortgage are too high for you, you’ll either need to save a bigger deposit or look into alternatives, such as guarantor mortgages.
- Find out more: the costs of buying a house
What’s the average first-time buyer deposit?
The table below shows the average size of a first-time buyer deposit in each of the UK’s regions. It is based on data from Halifax, released in January 2023.
Reasons to save a bigger mortgage deposit
While you might be able to buy a home with a deposit of 5%, there are plenty of reasons to save more if you can:
- Cheaper monthly repayments: it might sound obvious, but the bigger your mortgage deposit, the smaller your loan will be and the cheaper your monthly repayments.
- Better mortgage deals: a larger deposit will make you less risky for mortgage lenders and, as a result, they’ll generally offer you lower interest rates. For example, when we checked in April 2024, 90% mortgages were generally around 0.3 to 0.4 percentage points cheaper than 95% deals.
- Improved chance of being accepted: all lenders conduct affordability checks to work out whether you can afford the mortgage repayments, based on your income and outgoings. If you only put down a small deposit, it’s more likely you will fail these checks because you’ll need to spend more on your mortgage each month.
- Bigger buying budget: lenders typically offer a loan of up to four-and-a-half times your annual salary, so if your salary is relatively low and you can’t borrow enough, you might need a larger deposit.
- Less risky: if you own more of your home outright, you’re less likely to fall into negative equity, where you owe more on your mortgage than your property is worth. Being in negative equity can make moving house or switching mortgage difficult.
Find out more: how to save for a mortgage deposit
Mortgage deposit calculator
Saving for a deposit can seem like a never-ending journey. We’ve created a deposit calculator to give you an idea of when you’ll have saved enough to buy a home in your area.
Simply answer the questions below to see how long it might take.
Exchange deposits
When exchanging contracts on a property, you’ll usually pay a deposit as part of legally committing to the purchase.
The standard amount for an exchange deposit is 10% of the property price – but if you’re planning on buying with a 5% deposit, that can usually be negotiated by your solicitor or conveyancer. Let them know as early in the buying process as possible so they can warn the seller’s conveyancer.
The exchange deposit has been a sticking point with some people who have wanted to use the bonus earned on their Help to Buy Isa at this stage of buying their first home. As the bonus is only paid on completion, you can’t use it as an exchange deposit, so will need to have money from an alternative source.
If this is going to be difficult for you, your conveyancer might be able to negotiate a further reduction to the exchange deposit.
Your options if you’re struggling to save
Help is at hand if you’re struggling to save up a big enough deposit for your first home, with a number of schemes aimed at supporting those trying to get on the ladder:
- First Homes scheme: allows first-time buyers in England to get a 30% discount when buying a new-build home. Councils can set their own eligibility rules (e.g. limiting properties to local buyers or prioritising key workers). The government has specified that a quarter of all affordable housing sold by developers must fall under the First Homes initiative.
- Lifetime Isa: is a tax-free savings or investment account designed to help those aged 18-39 at the time of opening save for their first home or retirement. It offers a 25% bonus, with the government paying up to £1,000 a year if you save the maximum £4,000. The maximum house purchase price is limited to £450,000.
- Guarantor mortgages: parents and grandparents can help their child buy a home by using their property or savings as collateral.
- Right to Buy: gives council tenants the opportunity to buy their home at a discount of up to 70% off the purchase price, up to a total of £116,200 in London and £87,200 elsewhere in England. If you have spent at least three years living in a council house or flat in England, you’re eligible.
- Shared ownership: you buy a share of a property (usually from 25%) from a housing association and pay rent on the remainder. This allows you to get a foot in the door, but you’ll need to do your sums, as the combined cost of your mortgage, rent and service charge can quickly add up.
Can you get a mortgage without a deposit?
Unlike traditional home loans, a 100% mortgage covers the full cost of the house, meaning you don’t need a deposit.
A guarantor mortgage is also a form of 100% mortgage. There are few of these deals around, and they carry a significant risk of negative equity – when the value of your property decreases and you end up owing more on your mortgage than your property is worth – so you and your family should take professional advice before applying.
- Find out more: 100% mortgages advice guide
What size deposit is needed for buy-to-let mortgages?
Landlords wanting to get a buy-to-let mortgage usually need a deposit of at least 15% of the property’s value. But as with residential mortgages, the higher the deposit, the better the deal you’re likely to get.
Lenders ask for a higher deposit because buy-to-let properties are deemed a riskier investment. As you won’t be living there yourself and will likely need rent from tenants in order to keep up with your repayments, there’s more that could go wrong.
- Find out more: buy-to-let mortgages explained
Mortgage deposit FAQs
Click below for answers to some of the most frequently asked questions about property deposits.