First-Time Buyer UK: How Much Deposit Do You Need in 2025?

Saving for your first home deposit is one of the biggest financial challenges for UK buyers. With average house prices at £272,000, a typical 10% deposit means saving £27,200 – a daunting figure for most. However, you can get on the property ladder with as little as 5% (£13,600), though larger deposits secure better mortgage rates and lower monthly payments.

This guide explains exactly how much you need, realistic saving timelines, government schemes that can help, and strategies to reach your deposit goal faster.

Quick Summary

• Minimum deposit: 5% of property price (£13,600 on average UK home)
• Recommended: 10-15% for better rates and product choice
• Sweet spot: 20% unlocks best rates and removes fees
• Average saving time: 3-5 years for most first-time buyers
• Government help: Lifetime ISA adds 25% bonus (max £1,000/year)

Minimum Deposit Requirements

5% Deposit Mortgages

The minimum deposit for most UK mortgages is 5% of the property price (95% LTV).

Pros:

• Get on ladder faster (less to save)
• Buy sooner while prices rise
• Start building equity earlier

Cons:

• Higher interest rates (typically 5.6-6.0%)
• Limited lender choice
• Higher monthly payments
• May require mortgage guarantee

Example: £250,000 property

• 5% deposit: £12,500
• Mortgage: £237,500
• Rate: ~5.8%
• Monthly payment: £1,433 (25 years)

10% Deposit (Recommended)

Most lenders prefer 10% deposits (90% LTV), offering better rates and more products.

Benefits:

• Wider lender selection
• Better interest rates (typically 5.3-5.5%)
• Lower monthly payments
• More negotiating power

Example: £250,000 property

• 10% deposit: £25,000
• Mortgage: £225,000
• Rate: ~5.5%
• Monthly payment: £1,377 (25 years)
• Saves £56/month vs 5% deposit

15% Deposit (Optimal)

A 15% deposit (85% LTV) is the sweet spot for many first-time buyers.

Benefits:

• Significantly better rates (typically 5.0-5.2%)
• Access to premium products
• Lower monthly costs
• Smaller gap to 20% threshold

Example: £250,000 property

• 15% deposit: £37,500
• Mortgage: £212,500
• Rate: ~5.2%
• Monthly payment: £1,300 (25 years)
• Saves £133/month vs 5% deposit

20% Deposit (Best Rates)

A 20% deposit (80% LTV) unlocks the very best mortgage rates and terms.

Benefits:

• Lowest interest rates (typically 4.7-4.9%)
• No high LTV fees
• Best product range
• Lowest lifetime cost

Example: £250,000 property

• 20% deposit: £50,000
• Mortgage: £200,000
• Rate: ~4.9%
• Monthly payment: £1,193 (25 years)
• Saves £240/month vs 5% deposit
• Saves £72,000 over 25 years!

Deposit Requirements by Property Price

Property Price	5% Deposit	10% Deposit	15% Deposit	20% Deposit
£150,000	£7,500	£15,000	£22,500	£30,000
£200,000	£10,000	£20,000	£30,000	£40,000
£250,000	£12,500	£25,000	£37,500	£50,000
£272,000 (UK avg)	£13,600	£27,200	£40,800	£54,400
£300,000	£15,000	£30,000	£45,000	£60,000
£400,000	£20,000	£40,000	£60,000	£80,000

Key insight: Each additional 5% deposit typically reduces your interest rate by 0.2-0.3%, saving thousands over the mortgage term.

Regional Variations

Deposit requirements vary dramatically by region:

London (Average: £530,000)

• 5% deposit: £26,500
• 10% deposit: £53,000
• 15% deposit: £79,500
• Reality: Most need dual income + years of saving

South East (Average: £370,000)

• 5% deposit: £18,500
• 10% deposit: £37,000
• 15% deposit: £55,500
• Reality: Challenging but achievable in 3-5 years

North West (Average: £230,000)

• 5% deposit: £11,500
• 10% deposit: £23,000
• 15% deposit: £34,500
• Reality: More accessible, possible in 2-3 years

Scotland (Average: £194,000)

• 5% deposit: £9,700
• 10% deposit: £19,400
• 15% deposit: £29,100
• Reality: Most affordable, achievable in 2-3 years

Wales (Average: £209,000)

• 5% deposit: £10,450
• 10% deposit: £20,900
• 15% deposit: £31,350
• Reality: Good affordability, 2-4 years typical

Government Schemes to Boost Your Deposit

Lifetime ISA (LISA)

The most powerful first-time buyer savings tool:

How it works:

• Save up to £4,000/year
• Government adds 25% bonus (£1,000 max)
• Can use for house purchase or retirement (age 60+)
• Property must cost under £450,000

Example:

• Year 1: Save £4,000 → Get £1,000 bonus = £5,000
• Year 2: Save £4,000 → Get £1,000 bonus = £10,000 total
• Year 3: Save £4,000 → Get £1,000 bonus = £15,000 total
• Year 4: Save £4,000 → Get £1,000 bonus = £20,000 total

After 4 years: £20,000 saved (£16k yours + £4k bonus)

Restrictions:

• Age 18-39 to open
• Must be first-time buyer
• 25% penalty if withdrawn for other purposes
• Property under £450,000

Shared Ownership

Buy a share (25-75%) of a property:

How it works:

• Buy 25-75% share
• Pay rent on remaining share
• "Staircase" to buy more later
• Lower deposit requirement

Example: £200,000 property

• Buy 50% share: £100,000
• 5% deposit on share: £5,000
• Mortgage: £95,000
• Pay rent on other £100,000

Pros:

• Much lower initial deposit
• Get on ladder in expensive areas
• Increase ownership over time

Cons:

• Pay rent on unsold share
• Limited properties available
• Restrictions on selling
• May pay for repairs/maintenance

First Homes Scheme

30-50% discount on new-build homes:

Eligibility:

• First-time buyer
• Local connection to area
• Household income under £80k (£90k in London)
• Property under £250k after discount (£420k London)

Example:

• Market value: £250,000
• 30% discount: -£75,000
• Purchase price: £175,000
• 5% deposit: £8,750 (vs £12,500 at full price)

Help to Buy Equity Loan (Closed)

Note: The Help to Buy equity loan scheme closed to new applications in October 2023. However, if you already have one, you can still staircase or sell.

How Deposit Size Affects Monthly Payments

Using a £300,000 property example over 25 years:

Deposit	LTV	Rate	Monthly Payment	Total Interest
£15k (5%)	95%	5.8%	£1,719	£230,700
£30k (10%)	90%	5.5%	£1,653	£225,900
£45k (15%)	85%	5.2%	£1,560	£213,000
£60k (20%)	80%	4.9%	£1,432	£189,600

Savings from 20% vs 5% deposit:

• Monthly: £287 less
• Annually: £3,444 less
• 25 years: £86,100 less!

Realistic Saving Timelines

Saving £10,000 Deposit

On £25,000 salary (£1,793/month take-home):

• Save £200/month: 50 months (4.2 years)
• Save £300/month: 33 months (2.8 years)
• Save £400/month: 25 months (2.1 years)

With LISA bonus:

• Save £333/month (£4,000/year)
• Get £1,000 bonus
• Total: £5,000/year
• Reach £10k in 2 years

Saving £25,000 Deposit

On £35,000 salary (£2,393/month take-home):

• Save £400/month: 62 months (5.2 years)
• Save £600/month: 42 months (3.5 years)

With LISA bonus + partner:

• You save £333/month (LISA)
• Partner saves £333/month (LISA)
• Combined: £666/month = £8,000/year
• Bonuses: £2,000/year
• Total: £10,000/year
• Reach £25k in 2.5 years

Saving £40,000 Deposit

Combined £60,000 salary (£4,086/month take-home):

• Save £1,000/month: 40 months (3.3 years)
• Save £1,500/month: 27 months (2.2 years)

With dual LISA + additional savings:

• Both max LISAs: £8,000 + £2,000 bonus = £10k/year
• Additional £500/month: £6,000/year
• Total: £16,000/year
• Reach £40k in 2.5 years

Deposit Saving Strategies

1. Open a Lifetime ISA Immediately

Action:

• Open before age 40
• Contribute £4,000/year max
• Get £1,000 government bonus

Benefit: Free £4,000 over 4 years

2. Regular Saver Accounts

Current best rates (December 2024):

• First Direct: 7% on up to £300/month
• Nationwide: 6.5% on up to £200/month
• Santander: 5.5% on up to £200/month

Strategy: Open multiple accounts, max them all

Example:

• First Direct: £300/month @ 7% = £3,726/year
• Nationwide: £200/month @ 6.5% = £2,479/year
• Total saved: £6,205 in year 1

3. Automate Savings

Set up standing orders on payday:

• £X to LISA
• £X to Regular Saver
• £X to Emergency Fund

Out of sight = out of mind = saved!

4. Side Income

Boost savings with extra income:

• Freelancing: £200-500/month
• Uber/Deliveroo: £400-800/month part-time
• Selling items: £100-300 one-time
• Online tutoring: £300-600/month

£300/month side income = £3,600/year extra

5. Reduce Expenses

Common savings:

• Gym to home workout: £50/month
• Meal prep vs eating out: £150/month
• Switch subscriptions: £30/month
• Cheaper mobile plan: £20/month
• Total: £250/month = £3,000/year

6. Windfalls to Deposit

Direct all unexpected money to deposit:

• Tax refunds
• Work bonuses
• Birthday money
• Inheritance

7. Partner Contributions

Buying with a partner:

• Split deposit 50/50
• Or contribute proportionally to income
• Both max Lifetime ISAs

8. Gifted Deposits from Family

Many first-time buyers receive help:

• Average gifted deposit: £20,000-£25,000
• Must be genuine gift (not loan)
• Need solicitor's "gifted deposit letter"
• Lender will verify source

Reality: 34% of first-time buyers receive family help (2024)

Using Our Mortgage Calculator

Work out what you can afford:

1. Enter target property price
2. Input your deposit amount (5%, 10%, 15%, 20%)
3. See impact on:
   • Monthly payments
   • Interest rates available
   • Total amount repayable
   • Affordability check

Calculate Your Mortgage →

Common Deposit Mistakes to Avoid

Mistake 1: Waiting for the "Perfect" Amount

Problem: Waiting for 20% while prices rise 3%/year Reality: 10% deposit often sufficient Solution: Buy when you have 10-15% if market rising

Mistake 2: Not Using Lifetime ISA

Problem: Missing £1,000/year free money Reality: 4 years = £4,000 lost Solution: Open LISA immediately if under 40

Mistake 3: All Savings in Cash

Problem: Inflation erodes value Reality: Cash loses ~3-4% annually to inflation Solution: Consider S&S ISA for long-term (5+ years)

Mistake 4: Forgetting Purchase Costs

Additional costs beyond deposit:

• Stamp duty: £0-£2,500 (first-timers)
• Solicitor fees: £1,000-£2,000
• Survey: £400-£1,500
• Moving costs: £500-£1,500
• Total: £1,900-£7,500

Budget for these separately!

Frequently Asked Questions

Q: Can I buy with just 5% deposit? A: Yes, but expect higher rates (5.6-6.0%), limited choice, and larger monthly payments. Consider saving for 10% if possible for better terms.

Q: How long does it take to save £20,000? A: On average salary (£30k), saving £500/month takes 40 months (3.3 years). With Lifetime ISA bonus, reduce to 3 years. With partner both using LISA, just 2 years.

Q: Should I wait for 20% deposit? A: Not necessarily. While 20% gets best rates, house prices typically rise 2-3% annually. Buying with 10-15% often makes more sense than waiting years.

Q: Can my parents gift me a deposit? A: Yes. Must be a genuine gift (not loan), documented with solicitor's letter. Lender will verify source. Average gifted deposit is £20,000-£25,000.

Q: What if I can only save 5%? A: You can still buy! 95% mortgages available but at higher rates. Consider Lifetime ISA for 25% bonus to boost savings faster.

Q: Does Lifetime ISA count as my deposit? A: Yes! LISA funds (your savings + government bonus) can be used directly for house purchase. Property must be under £450,000 and your first home.

Q: How much deposit do I need in London? A: With average prices at £530,000, expect £26,500 (5%) to £106,000 (20%). Most London buyers need dual income and longer saving period (4-6 years).

Q: Can I use Help to Buy anymore? A: No, the equity loan scheme closed October 2023. Existing loans continue, but no new applications accepted. Consider Shared Ownership or First Homes instead.

Related Resources

• Mortgage Calculator - Calculate monthly payments
• Mortgage Affordability Guide - How much you can borrow
• First-Time Buyer Stamp Duty - Save up to £8,750
• Stamp Duty Calculator - Calculate property tax

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Official Sources:

• GOV.UK: Lifetime ISA
• MoneyHelper: Saving for Your Deposit
• ONS: House Price Index

Last updated: December 9, 2024
Disclaimer: Deposit requirements and schemes subject to change. Lifetime ISA rules and penalties apply. Mortgage availability depends on credit score and affordability. UK Calculator is not a mortgage or financial adviser.