First-Time Buyers
How Much Deposit Do You Need for a Mortgage?
Most home buyers need at least a 5% deposit, but the right figure depends on what you are buying and your circumstances. Buy-to-let, some new-build flats and past credit problems usually need more.
Written and reviewed by Davi Thakar, CeMAP qualified mortgage and protection adviser Updated
Your mortgage deposit is the part of the purchase price you pay from your own money. The rest is your mortgage. Lenders describe the split as loan-to-value (LTV): a 10% deposit means a 90% LTV mortgage.
For most people buying a home to live in, the minimum is 5%. That is only the starting point. What you are buying, how you earn and your credit history all change the deposit a lender will want, and the size of your deposit changes the rates you are offered.
Buying your first home? Our first-time buyer deposit guide covers gifted deposits, the Lifetime ISA and first-time buyer schemes in detail. This guide covers every type of buyer.
Typical deposits by type of buyer
| Your situation | Typical minimum deposit | What affects it |
|---|---|---|
| Buying your first home | 5% | Credit history, affordability, property type |
| Moving home | 5%, usually funded by your equity | How much equity you have after selling costs |
| Buying a new-build house | 5% to 10% | Some lenders cap new-build lending lower than for older homes |
| Buying a new-build flat | Often 10% to 15% | Lenders tend to be more cautious with new-build flats |
| Self-employed | 5% | Accepted income evidence matters more than the deposit itself |
| Past credit problems | Often 10% to 25% | How recent and how serious the issues are |
| Interest-only mortgage | Often 25% or more | Lenders also need a credible repayment plan |
| Buy-to-let | Usually 25% | Rental income, property type and whether you buy through a company |
| Holiday let or HMO | Often 25% to 30% | Specialist lending criteria |
These are typical positions across the market. Individual lenders set their own rules, and some go further either way.
How your deposit changes your mortgage rate
Lenders price their mortgages in LTV bands, usually in steps of 5%. Each step down in LTV tends to bring lower rates and more lenders to choose from. The biggest improvements often come when you move from 95% to 90% LTV, and again at 85%, 75% and 60%.
Illustrative example: the cost of a higher LTV
On a £200,000 repayment mortgage over 25 years, a rate of 5.5% costs about £1,228 a month. At 4.5% it costs about £1,112 a month. That difference of about £117 a month adds up to around £35,000 over 25 years if the rates stayed the same.
The rates are illustrative only. Actual rate gaps between LTV bands change with the market.
A bigger deposit is not always the best use of your money, though. Keep enough back for buying costs, an emergency fund and any work the property needs. Use our mortgage calculator to compare monthly payments at different deposit levels.
Moving home: your equity is your deposit
When you sell, the money left after repaying your mortgage and paying your selling costs becomes your deposit.
Illustrative example: a home mover’s deposit
You sell for £280,000 and owe £150,000 on your mortgage. After around £5,700 of estate agent and legal costs, you have about £124,300 of equity. On a £400,000 purchase that is a deposit of around 31%, which puts you in a much better LTV band than you had as a first-time buyer.
Remember that home movers pay standard Stamp Duty, so budget for it on top of your deposit. If your current deal has an early repayment charge, ask whether you can port your mortgage to the new property. Our moving home advice explains the options.
Buy-to-let deposits
Most buy-to-let lenders want a deposit of at least 25%, and the rental income usually has to cover the mortgage payment by a set margin. Limited company purchases, HMOs and holiday lets often need more. A larger deposit can help where the rent is modest compared with the price. See our buy-to-let mortgage advice.
New-build homes
Some lenders set a lower maximum LTV for new builds than for older homes, particularly for flats. Developer incentives can also affect the price a lender uses. Schemes such as Deposit Unlock allow a 5% deposit on some new-build homes from participating developers. Read our new-build mortgage guide.
Self-employed buyers
Being self-employed does not, by itself, mean you need a bigger deposit. Many lenders offer the same LTV bands to self-employed applicants who can evidence their income. What matters more is how the lender assesses your accounts or tax calculations. Our self-employed mortgage guide explains the evidence lenders ask for.
Past credit problems
Missed payments, defaults or County Court Judgments can mean a lender wants a larger deposit, particularly if the problems are recent or unresolved. Older, settled issues may have little effect with some lenders. See our bad credit mortgage guide.
Second homes
A second home you will use yourself usually needs a deposit of at least 15% to 25%, depending on the lender. You will also pay Stamp Duty at the higher rates for additional properties.
Do you need a deposit to remortgage?
No cash deposit is needed. Your equity, the value of your home minus what you owe, does the same job. A home worth £300,000 with £210,000 outstanding is at 70% loan-to-value. Our remortgage guide explains how equity affects your rate.
Can you lose your deposit?
Before contracts are exchanged you can usually withdraw without losing your deposit, although you may lose money spent on surveys and legal work. Once contracts are exchanged in England and Wales, the purchase is legally binding, and pulling out normally means losing the deposit paid on exchange and possibly further costs.
Where your deposit can come from
Lenders and conveyancers must check the source of your deposit under anti-money laundering rules. Typical evidence includes:
- Savings: bank statements showing the money building up over time.
- A gift from family: a signed gifted deposit letter and the giver’s bank statements. Read about gifted deposits.
- Equity from a sale: your solicitor’s completion statement.
- Inheritance: probate or estate paperwork and the receipt into your account.
- Investments or a bonus: statements or a payslip showing where the money came from.
Large unexplained transfers can delay an application. Tell your adviser early about any unusual deposit source so it can be evidenced properly.
Borrowing your deposit through a personal loan or credit card is normally not accepted, and it would also reduce how much you can borrow on the mortgage.
Can you get a mortgage with no deposit?
It is uncommon, but there are a few routes:
- 100% mortgages for renters: a small number of lenders have offered these to first-time buyers with a strong record of paying rent.
- Family-backed mortgages: with a Family Springboard mortgage, a relative places savings as security. A guarantor mortgage uses a relative’s guarantee.
- Right to Buy: your discount can count as your deposit. See our Right to Buy guide.
Mortgage deposit FAQs
What is the minimum deposit for a mortgage in the UK?
For a home you will live in, the minimum is usually 5% of the purchase price. Buy-to-let usually needs at least 25%, and some property types or credit histories need more.
Is a 10% deposit better than 5%?
Often, yes. Moving from 95% to 90% loan-to-value usually opens up more lenders and lower rates. Compare the saving with keeping some money back for costs and emergencies.
How much deposit do I need for a buy-to-let mortgage?
Usually at least 25%. The rental income also has to cover the mortgage payment by the lender’s required margin.
Do home movers need a deposit?
Yes, but it usually comes from the equity in your current home after your mortgage and selling costs are repaid.
Do self-employed people need a bigger deposit?
Not automatically. Many lenders offer the same loan-to-value bands if you can evidence your income in the way they require.
Can I use a loan for my mortgage deposit?
Normally not. Lenders generally expect the deposit to come from your own funds, a genuine gift or equity, and a loan would also count against your affordability.
Talk through your deposit
We can tell you which LTV band you are likely to fall into, how your deposit source needs to be evidenced and whether a bigger deposit would actually save you money. Your initial consultation is free.
Talk through your mortgage options
Tell us about your plans and circumstances. Your initial consultation is free.
Talk through your mortgage options
Tell us about your plans and circumstances. Your initial consultation is free.
Written and reviewed by Davi Thakar
Director & Senior Mortgage Broker
CeMAP Qualified Mortgage and Protection Adviser
Davi founded Option Finance with a vision to deliver transparent mortgage advice from a wide panel of lenders. With over 10 years in financial services, he specialises in complex cases including adverse credit, self-employed borrowers with limited trading history, and large buy-to-let portfolios. He works directly on complex cases and explains each option clearly.
Meet Davi Thakar
