Mellow Financial
The honest answer is 5%. For most first time buyers, that's the smallest deposit mainstream lenders will accept. On a £250,000 home, that's £12,500.
But "how much do I need?" and "how much should I put down?" are two different questions. And the October Budget has just added some new options. So let me walk you through it.
The minimum: 5%
A 5% deposit means you borrow 95% of the price. Lenders call this 95% loan to value, or LTV.
Plenty of lenders offer 95% mortgages. You'll usually pay a higher rate than someone with a bigger deposit, and the lender will look more closely at your income and credit file. But it's a well trodden route onto the ladder.
There are also a small number of 100% mortgages, where you don't need a deposit at all. They tend to come with conditions, such as a record of paying your rent on time, and the choice is narrow. They can work for the right person, but they're not the norm.
Why a bigger deposit can help
Mortgage rates are priced in bands. The common ones are 95%, 90%, 85%, 75% and 60% LTV. Each time you drop into a lower band, you usually get more lenders to choose from and lower rates.
Here's what those bands look like on a £250,000 home:
- 5% deposit: £12,500 (95% LTV)
- 10% deposit: £25,000 (90% LTV)
- 15% deposit: £37,500 (85% LTV)
- 25% deposit: £62,500 (75% LTV)
The move from 5% to 10% is often where people notice the biggest change in rate. But I'd never tell someone to keep renting for years just to save an extra 5%. Rent is money you don't get back, and prices and rates can move while you wait. It's a balance, and it's different for everyone.
A bigger deposit also gives you a cushion. If prices dip, you're less likely to owe more than your home is worth. That matters when you come to move or remortgage.
Budget for the other costs too
Your deposit isn't the only money you need. Leave room for:
- Solicitor or conveyancer fees
- A survey on the property
- Any lender product fee (some can be added to the loan)
- Removals and the basics for your new place
- Stamp duty, if the price is high enough
On stamp duty, first time buyers in England and Northern Ireland pay nothing on the first £300,000. You pay 5% on the part between £300,001 and £500,000. Above £500,000, the relief doesn't apply and you pay normal rates on the whole price. So a £350,000 first home has £2,500 of stamp duty. Scotland and Wales have their own taxes and rules.
Where your deposit can come from
Lenders want to know where your deposit came from. Most of the time it's simple:
- Your own savings. Expect to show bank statements.
- A gift from family. Many lenders accept this. They'll usually want a signed letter confirming it's a gift, not a loan, plus the giver's ID and proof of where the money came from. Some lenders accept gifts from a wider circle of people than others.
- A Lifetime ISA. More on this below.
The key is a clear paper trail. Large cash deposits or unexplained transfers slow things down, so keep your accounts tidy in the months before you apply.
What the October Budget changed
The Budget on 28 October brought three changes worth knowing about.
1. Lifetime ISA charge cut for homes over £450,000
With a Lifetime ISA you can save up to £4,000 a year and the government adds a 25% bonus, up to £1,000 a year. You must open it before you turn 40, and buy at least 12 months after your first payment. The home must cost £450,000 or less.
Until now, if your home cost more than that, you paid a 25% charge to take the money out. That wiped out the bonus and some of your own savings too. From 29 October 2026, that charge is 20% instead. You lose the bonus, but you get your own money back. The £450,000 limit itself hasn't changed.
2. A new First Time Buyer ISA from April 2029
The government plans to replace the Lifetime ISA for new savers with a First Time Buyer ISA from 6 April 2029. If you already have a Lifetime ISA, you can keep using it. The details are still being finalised, so I'll cover it properly nearer the time.
3. Your First Home: 2.5% deposit on new builds in England
This is the big one. It's a new government-backed scheme for first time buyers buying a new build home in England. You put down as little as 2.5%. The government lends you 20% as an equity loan. A mortgage covers the rest.
On a £200,000 new build, that would be a £5,000 deposit, a £40,000 equity loan and a £155,000 mortgage.
The equity loan is interest free for the first five years, then charges start to build up. There are household income caps and price caps that vary by area. The first loans are due to complete from April 2027.
It could be a real help if saving a bigger deposit feels out of reach. But an equity loan is still borrowing you'll need to repay, and it's tied to the value of your home. Get advice before you commit, and make sure you understand what happens after year five.
What I'd do now
- Add up what you have, including any family help, and what you can realistically save each month.
- Find out which LTV band that puts you in, and how close you are to the next one.
- Check your credit file and keep your bank statements tidy.
- If you're under 40 and a year or more from buying, see whether a Lifetime ISA makes sense for you.
- Get an Agreement in Principle, so you know what you can borrow as well as what you can put down.
The takeaway
You can buy your first home with 5%, and in some cases less. A bigger deposit usually means a better rate, but waiting has its own cost. The right number is the one that gets you a mortgage you can comfortably afford, at a time that works for you.
If you'd like to talk through your own numbers, book a free call with me. No pressure, just a straight conversation about where you stand.
Figures and rules are correct at the time of writing (3 November 2026) and can change. Your home may be repossessed if you do not keep up repayments on your mortgage.
