How much deposit do you need for a mortgage?
A mortgage is likely to be the single largest financial commitment you ever make. There’s a wide range of mortgage products out there, with varying interest rates and repayment options available.
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How much deposit do you need for a mortgage? (Part 1)
Podcast approved by The Openwork Partnership on 23/10/2025.
How much deposit do I need for a mortgage? What’s the average first-time buyer deposit?
You typically need a mortgage deposit of at least 5% of the property value. But a larger deposit of 10% or more can help you access better interest rates.
The average UK first-time buyer deposit is around 20%. A bigger deposit reduces the lender’s risk, leading to a lower Loan to Value ratio. Of course, that will attract better mortgage rates and smaller monthly payments.
What does a bigger house deposit mean for my Loan to Value (LTV)?
A larger house deposit lowers your Loan to Value, making it a lower risk to lenders and potentially securing a more competitive mortgage interest rate.
Loan to Value is the percentage of the property value that you’re borrowing on your mortgage. It’s calculated by dividing the mortgage amount by the property value. A higher LTV means you’re borrowing a larger proportion of the property value, which typically results in higher interest rates and monthly payments.
How much should I save for a deposit? How can I save for a deposit?
The minimum deposit can be zero with certain products, but these attract the highest interest rates – you’ll need an excellent credit score and there are specific criteria. We’ve done a previous podcast on zero deposit mortgages that may be useful.
There is one mainstream lender as we speak today in October 2025 that will accept a £5,000 deposit, regardless of the property value. That’s subject to their terms and conditions.
However, I would strongly recommend saving for a minimum of 5% or ideally 10% – then we will have access to almost all the lenders, and can seek more competitive rates.
Can I get a mortgage with a 0% deposit? What’s the minimum deposit for a house?
The minimum deposit for a house could be 0%. But with 5% you will have a greater choice of mainstream lenders.
Again, you probably need to have a close to excellent credit score, with no missed payments etc. For a lender to be happy to lend more, they will be less tolerant of any issues on your credit file.
Can you buy a house with a 5% deposit? How much can I borrow with a 5% mortgage deposit?
With a 0% deposit we currently only have one lender, at the time of recording in October 2025. For this product you need to meet specific criteria and have an excellent credit score.
With a 5% deposit, almost all lenders would be able to offer you something. Again, though, you need a very good or excellent credit score.
Can you get a mortgage with a 10% deposit?
Lenders would be more tolerant of your credit file with a 10% deposit. It doesn’t necessarily mean that you can get a mortgage with bad credit but with 10%, mainstream lenders would have a greater chance of offering something to you. Some lenders would be more tolerant of anything that’s happened in your financial past.
Will I need another deposit when moving house?
If you’re moving house, you’ll be able to use the equity from your home towards your next deposit.
If you buy a more expensive property, obviously, you may need a bigger deposit to cover the difference in property prices. It really depends on the specific circumstances.
You may need to pay fees to set up a new mortgage, if your current lender doesn’t allow porting. Porting is where your current mortgage is transferred to the new property – subject to affordability.
Who do I pay my mortgage deposit to?
You pay your mortgage deposit to your conveyancer. We can recommend two or three leading conveyancers in our area, with competitive fees.
The conveyancer transfers the deposit to the seller’s solicitor on the day of the exchange. This money is the exchange deposit, and is a legally binding part-payment of the property purchase price. It demonstrates your commitment to the purchase.
Can my parents contribute towards my deposit? Should I borrow money from my family for a bigger deposit?
Yes, your parents or family members can contribute towards your deposit. It’s called a gifted deposit.
You’re also allowed to borrow money from your family for a bigger deposit. But if you’re making monthly payments back to your family, that may be factored into how much you can borrow on your mortgage. It could have an adverse effect on your overall affordability.
Bear in mind that lenders can insist on written confirmation from the gifting party that they won’t have any interest in the property, nor expect their money back. Paying the money back would be seen by the lender as another debt, and would be taken into consideration.
Is there anything to add before we return for part two?
The most important thing when talking about deposits is that it’s always worth saving more towards your property purchase.
The best way to accumulate funds for a deposit is to programme your mindset to put aside specific sums each month. Even a modest amount, transferred each month to a savings account will help. It’s much simpler to do that these days, with banking apps allowing you to move money between your accounts.
Key Takeaways:
- You typically need a mortgage deposit of at least 5% of the property value, but a larger deposit (10% or more) can lead to better interest rates.
- A bigger deposit reduces the lender’s risk, resulting in a lower Loan to Value (LTV) ratio, which attracts better mortgage rates and smaller monthly payments.
- While zero deposit options exist, they come with higher interest rates and require an excellent credit score and specific criteria.
- Saving for a minimum of 5% or ideally 10% deposit provides access to almost all lenders and more competitive rates.
- Parents or family members can contribute to your deposit (gifted deposit), but borrowing money from them and making monthly payments back could affect your overall mortgage affordability.
Approved by The Openwork Partnership on 23/10/2025.
YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
Speak To an Expert
How much deposit do you need for a mortgage? (Part 2)
We continue the conversation on mortgage deposits with Michal Iwinski. Episode two of two, recorded in October 2025.
Podcast approved by The Openwork Partnership on 21/10/2025.
Can I use a loan for my mortgage deposit?
Yes, under the right circumstances it is possible to use a personal loan for a deposit. But, like any shortcut, it comes with a catch.
If you take out a personal loan to fill the gap, lenders will look at your application less favourably. They prefer the mortgage to be the only significant debt you’re paying off. Starting your financial commitment with other debts doesn’t put you in the best position.
A personal loan will also show up on your credit report, which ultimately affects your credit worthiness. If your credit rating is a little weak, it’s more difficult to get a mortgage.
Whether or not a mortgage provider will still lend to you will depend on your personal circumstances. If you don’t have any other debts, and your income is more than enough to cover both the loan and the mortgage payments, they might be willing.
Remember that a loan will have interest to pay on it, and the rates are likely to be higher than those on your mortgage. You could be entering into two significant debts at the same time, so you need to be prepared to pay both.
At Aries Financial, we would advise you against a personal loan for your deposit and explore other options to achieve your plans.
Can I use my Help to Buy ISA for my deposit?
Yes, and the government bonus will be added towards your overall deposit. But it will not help you towards your exchange deposit. That’s very important.
When calculating your mortgage, your lender will want evidence of the funds you have available. This would include the amount saved in your Help to Buy ISA. The Help to Buy scheme has ended now, but some people do still have these accounts [Information correct at the time of recording in October 2025].
Will a bad credit score mean I need a larger deposit?
A bad credit score is likely to require a larger deposit, yes, because lenders will view you as a higher financial risk. A larger down payment reduces the amount you need to borrow. This increased deposit provides more security to the lender, by giving you more equity in the property and reducing the size of the mortgage. However, each lender has a different appetite.
Can I buy a home without a deposit?
Yes, there is a 100% Loan to Value with one lender at the moment in October 2025. To qualify for this mortgage you need to meet specific criteria.
There is also one lender that will accept a £5,000 deposit towards a property purchase, regardless of the value. Again, this is subject to terms and conditions.
Can you get a Buy to Let mortgage without a deposit?
No, it’s impossible. For a Buy to Let mortgage, you typically need at least 25%. With 25% you’ll have a wide selection of lenders that are happy to consider your application.
We do have lenders that accept 20% or even 15%, but these lenders also look at the energy rating of the property, the type of property, whether you have an existing portfolio or you’re starting out – so it really depends.
A 25% deposit would make it more likely your application will be accepted. With a higher deposit, your monthly payment would be lower and you’d have greater returns from the rent.
With Buy to Let, lenders are less focused on your earnings and debts, because it’s a different way of repayment. The rent from the property repays the mortgage. Instead, lenders look at the difference between your monthly payments and an expected income from the property.
But some lenders still insist on you earning a minimum income each year – often £25,000 or £30,000. They still look at you as an individual, not just the property.
What is shared ownership and what deposit do I need for it?
Shared ownership is a government scheme to help you to buy a house by purchasing a share. Usually you buy between 10% to 75% of the property, paying rent on the rest.
You only need a deposit for the share you’re buying – typically 5% to 10% of that value – which makes home ownership more affordable. Later, you can increase your share through a process called staircasing. You can buy more shares to own more of the property.
What is Deposit Unlock? What deposit do I need for it?
Deposit Unlock is a scheme that allows you to buy a new build home with a minimum deposit of 5%, by providing mortgage indemnity insurance. That reduces the risk for the lender in offering high Loan to Value mortgages.
This scheme applies when you purchase a new build home from a participating house builder. You could be a first-time buyer or home mover, and you would need to secure a mortgage from a participating lender, which also requires a mortgage broker. [Information correct at the time of recording in October 2025].
How can a mortgage broker help? Have you got any final thoughts?
As always, a mortgage broker can help you explore the options available to you, and advise on how to move forward. We can also help you to plan ahead if your financial situation is not quite there yet.
Key Takeaways:
- It’s possible to use a personal loan for a mortgage deposit, but lenders may view this unfavourably due to increased debt and potential impact on creditworthiness.
- Help to Buy ISAs can contribute to your overall deposit, including the government bonus, but not towards the exchange deposit.
- A bad credit score is likely to necessitate a larger deposit, as lenders perceive higher financial risk.
- Some options exist for buying a home with a low or no deposit, such as a 100% Loan to Value mortgage or a £5,000 deposit, subject to specific criteria.
- Buy to Let mortgages typically require a minimum of 25% deposit, with some lenders accepting 15% or 20% under specific conditions. Shared ownership and Deposit Unlock schemes offer alternative routes to homeownership with lower deposit requirements.
Approved by The Openwork Partnership on 21/10/2025.
YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
MOST BUY TO LET MORTGAGES ARE NOT REGULATED BY THE FINANCIAL CONDUCT AUTHORITY.