For many people buying their first home, one of the biggest challenges is saving a first time buyer mortgage deposit. With rent, bills and everyday living costs to cover, building up thousands of pounds towards a house can feel like a huge hurdle.
So, how much deposit does a first-time buyer actually need?
Generally, a 5% deposit is a useful starting point, but it isn’t the only option. Depending on your circumstances, there are now mortgage options available with different deposit requirements – including some 100% mortgages where no traditional cash deposit may be required.
Watch: How Much Deposit Does a First-Time Buyer Need?
Prefer to watch? We explain first-time buyer deposits, including 0%, 5%, 10% and larger deposits in our latest video.
Prefer to watch rather than read? Hit play above. We explain the different deposit levels, 100% mortgages, mortgage rates, negative equity and some of the different ways first-time buyers could potentially boost their deposit.
How Much First-Time Buyer Mortgage Deposit Do You Need?
Many first-time buyers aim for a deposit of at least 5% of the purchase price.
As a simple example, if you’re buying a £200,000 home:
5% deposit = £10,000
Mortgage required = £190,000
However, having a 5% deposit doesn’t automatically mean you’ll be able to borrow the other 95%.
A mortgage lender will also consider things such as your income, regular expenditure, existing credit commitments, credit history, mortgage term and the property you’re buying when assessing how much you could borrow.
That’s why we encourage first-time buyers to look at deposit and mortgage affordability together.
Can you get a mortgage with no deposit?
Potentially, yes.
100% mortgages, sometimes referred to as zero-deposit mortgages, are available in the UK mortgage market.
Rather than providing a traditional 5% or 10% deposit, a 100% mortgage could potentially allow an eligible buyer to borrow the full purchase price.
However, these products aren’t available from every lender and can have specific eligibility requirements.
Depending on the lender, this could include your income, affordability, credit history and potentially your previous history of paying rent.
So having little or no deposit doesn’t necessarily mean you can’t buy a home.
It means it’s particularly important to understand which mortgage options could actually be available to you.
Is a Bigger Mortgage Deposit Better for First-Time Buyers?
Generally, increasing your deposit means you’re borrowing a smaller percentage of the property’s value.
Mortgage products are often arranged into loan-to-value (LTV) bands, such as:
5% deposit → 95% LTV
10% deposit → 90% LTV
15% deposit → 85% LTV
20% deposit → 80% LTV
A larger deposit could potentially give you access to a wider choice of mortgage products and more competitive rates.
But that doesn’t necessarily mean you should put every penny of your savings into the property.
You may also need money for solicitors, surveys, moving costs and other expenses associated with buying your first home.
What about gifted deposits?
Your entire deposit doesn’t necessarily have to come from your own savings.
Some first-time buyers receive help from parents, grandparents or other family members through a gifted deposit.
Lenders will normally have requirements around documenting where the money has come from and confirming that it is genuinely a gift.
There can also be other circumstances worth exploring. For example, we’ve helped tenants investigate buying a property directly from their landlord where a discount may form part of the transaction.
The important thing is not to assume you can’t buy simply because you haven’t saved a huge deposit yet.
Not sure how much deposit you’ll need?
Need help with your first time buyer mortgage deposit?
At Mewstone Mortgage Advice, we can look at your income, commitments and available deposit…
This is where speaking to a mortgage adviser before you start seriously looking at properties can help.
At Mewstone Mortgage Advice, we can look at your income, commitments, credit history and available deposit and help you understand:
How much you could potentially borrow, what deposit you may need and what sort of property budget could be realistic.
We’re independent, whole-of-market mortgage advisers based in Plymouth, helping first-time buyers across Plymouth, the South Hams and throughout the UK.
Once you understand your deposit, the next step is understanding your Mortgage Agreement in Principle.
Want more first-time buyer help?
🎥 Watch the full First-Time Buyer Deposit video above
📘 Download our FREE First-Time Buyer Guide
mewstonemortgageadvice.co/ftb1
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Your home may be repossessed if you do not keep up repayments on your mortgage.