How much deposit do you need for a first mortgage?
The deposit is the sum you put in upfront, the part of the property's purchase price you pay yourself rather than borrowing. As a first-time buyer in the UK, the minimum deposit you will typically need is 5% of the property's value. However, the size of your deposit has a significant impact on the interest rate you will be offered, so saving more will nearly always save you money over the life of the mortgage.
5% deposit
A 5% deposit gets you onto the ladder with a 95% loan-to-value (LTV) mortgage. Rates at this tier are higher than at lower LTVs, and the number of lenders willing to lend at 95% is smaller. That said, the Mortgage Guarantee Scheme (covered below) has made 95% mortgages more accessible since 2021. On a £250,000 property, a 5% deposit means putting down £12,500.
10% deposit
A 10% deposit (90% LTV) unlocks a wider range of products and noticeably better rates. This is the threshold at which many mainstream lenders become comfortable, and the difference in monthly repayments compared to a 5% deposit product can be meaningful over a 25- or 30-year term. On a £250,000 property, a 10% deposit is £25,000.
25% deposit or more
Borrowers with a 25% deposit (75% LTV) or greater access the most competitive rates on the market. While this is a high bar for most first-time buyers, it illustrates why every extra pound saved in your deposit can reduce your long-term borrowing costs. Many buyers aim for somewhere between 10% and 20% as a practical balance between saving time and rate benefit.
Lender rates are banded at LTV thresholds, typically 95%, 90%, 85%, 80%, and 75%. Even moving from 91% LTV to 90% LTV can unlock a meaningfully cheaper rate. If you are close to a threshold, it is worth pausing to save the extra amount before applying.
How much can you borrow as a first-time buyer?
Most mortgage lenders in the UK base their maximum lending on a multiple of your income. The standard income multiple is 4 to 4.5 times your gross annual salary. Some lenders will stretch to 5 times income, and in certain circumstances up to 5.5 times, but these higher multiples are usually reserved for applicants with larger deposits, strong credit profiles, or professional careers such as doctors, solicitors, and accountants.
If you are buying jointly, lenders will typically assess affordability based on both incomes combined. A couple earning a combined £80,000 could potentially borrow between £320,000 (at 4x) and £400,000 (at 5x), depending on the lender and their individual affordability assessment.
It is important to note that income multiples are a starting point, not the final word. Lenders run a detailed affordability assessment that takes into account your monthly outgoings, credit commitments, childcare costs, and discretionary spending. The actual amount you can borrow may be higher or lower than a simple income multiple suggests.
The figure a lender will offer you and the figure you should actually borrow are not necessarily the same thing. Always stress-test your monthly repayments against a rate 2–3% higher than the current rate before committing.
Understanding loan-to-value (LTV)
Loan-to-value (LTV) is the ratio of the mortgage amount to the property's purchase price, expressed as a percentage. It is one of the most important numbers in the mortgage process because lenders use it to price risk, the lower your LTV, the less risk the lender takes on, and the better your rate will generally be.
The formula is straightforward: if you are buying a £200,000 property with a £20,000 deposit, you need to borrow £180,000. Dividing £180,000 by £200,000 gives 0.9, or 90% LTV.
| Deposit | LTV | Typical rate tier | Example (£250,000 property) |
|---|---|---|---|
| 5% | 95% | Highest rates, fewest lenders | £12,500 deposit |
| 10% | 90% | Competitive, wide lender choice | £25,000 deposit |
| 15% | 85% | Better rates, good selection | £37,500 deposit |
| 25% | 75% | Best available rates | £62,500 deposit |
The first-time buyer mortgage process, step by step
Understanding what happens and in what order will remove much of the anxiety that surrounds buying your first home. The process typically takes three to six months from start to completion, depending on the complexity of your purchase and the speed of the chain.
What government schemes are available to first-time buyers?
The UK government has introduced several schemes over the years to help first-time buyers get onto the property ladder. Availability and terms can change, so always confirm the current status of any scheme before relying on it in your planning.
Mortgage Guarantee Scheme
The Mortgage Guarantee Scheme allows lenders to offer 95% LTV mortgages with more confidence, because the government provides a guarantee on the portion of the loan above 80% LTV. This makes 95% mortgages available from a wider range of lenders than would otherwise offer them. The scheme is available on properties up to £600,000 and applies to both first-time buyers and home movers.
Shared Ownership
Shared Ownership lets you buy a share of a property, typically between 10% and 75%, and pay rent on the remaining share owned by a housing association. You only need a deposit on the share you are buying, which makes it more accessible for buyers who cannot afford to purchase outright. Over time, you can buy additional shares in the property through a process called staircasing.
Shared Ownership properties are leasehold and there are eligibility criteria, including household income limits, typically set at £80,000 per year outside London and £90,000 in London. There are also service charges and restrictions on subletting, so it is important to understand all costs before proceeding.
First Homes Scheme
The First Homes scheme offers newly built homes to eligible first-time buyers at a discount of at least 30% compared to the market value. The discount is locked into the property, meaning that when you come to sell, the buyer must also be a first-time buyer who meets the eligibility criteria, and the discount is applied again. Income caps and local connection requirements may apply depending on the local authority.
Fixed rate vs tracker mortgage, which is right for you?
When choosing a mortgage product, one of the most important decisions is whether to take a fixed rate or a tracker (variable) rate. Both have advantages and the right choice depends on your financial situation, risk appetite, and expectations about future interest rates.
Fixed rate mortgages
With a fixed rate mortgage, your interest rate, and therefore your monthly repayment, stays the same for a set period, typically two, three, or five years. This gives you certainty and budgeting stability, which is particularly valuable for first-time buyers managing a new set of household costs. The trade-off is that if market rates fall, you will not automatically benefit, and if you need to leave the deal early you may face early repayment charges.
Tracker mortgages
A tracker mortgage follows an external rate, usually the Bank of England base rate, plus a set margin. If the base rate falls, your payments fall too. If it rises, so do your repayments. Tracker mortgages often have lower starting rates than their fixed equivalents at any given time, but they carry the risk of payment increases. Some trackers have no early repayment charges, which can be useful if you anticipate moving or remortgaging soon.
For most first-time buyers, the predictability of a fixed rate, especially a two or five year fix, makes it the more popular choice. A broker can model the long-term cost of each option based on current rate expectations and your individual circumstances.
What documents do you need to apply for a mortgage?
Lenders need to verify your identity, income, and the source of your deposit before they will approve a mortgage application. Having these documents ready before you apply will speed up the process considerably.
| Document type | What lenders typically require |
|---|---|
| Proof of identity | Valid passport or driving licence |
| Proof of address | Utility bill or bank statement dated within 3 months |
| Payslips (employed) | Last 3 months' payslips |
| P60 | Most recent P60 from employer |
| Self-employed accounts | Last 2–3 years' SA302s or accountant-certified accounts |
| Bank statements | Last 3 months' personal bank statements |
| Proof of deposit | Savings statements showing deposit build-up, or gift letter if gifted |
If your deposit is being gifted, by a parent or family member, for example, most lenders will require a signed gift letter confirming the money does not need to be repaid and that the donor has no claim on the property. Your broker will be able to provide the correct wording.
If you are self-employed, sole-trader, or a company director, lenders will typically want two to three years of accounts or SA302 tax calculations. Some specialist lenders will consider one year's accounts for the right applicant. A broker with access to the whole market can identify the most suitable lender for your situation.
How a mortgage broker helps first-time buyers
Navigating the mortgage market for the first time is genuinely complex. There are thousands of mortgage products available from dozens of lenders, each with their own lending criteria, rate structures, and fees. Making the wrong choice, even a marginally less competitive rate, can cost thousands of pounds over the life of a mortgage.
A whole-of-market mortgage broker like The Mortgage Consultancy searches the entire market on your behalf, not just a panel of preferred lenders. We identify not just the lowest headline rate but the best overall deal when fees, incentives, and lender criteria are taken into account. We also manage the application process from start to finish, liaising with the lender, solicitor, and estate agent on your behalf.
For first-time buyers in particular, having an experienced broker to guide you through each stage, from structuring your AIP to explaining the mortgage offer, removes a great deal of stress and significantly reduces the risk of an application being declined due to avoidable errors.
Learn more about our residential mortgage service for first-time buyers, or use our mortgage calculator to get a sense of your monthly repayments before you speak to us.
Ready to get your first mortgage?
Speak to one of our advisers for a no-obligation conversation about your options. We are whole-of-market and have been helping first-time buyers for over 25 years.