The deposit settles two questions in one go. Whether you can buy at all is a yes/no. What rate you pay if you do is a sliding scale—and the difference between the best and worst rate band, compounded over thirty years, is more than most first-timers expect.
This article walks through what UK lenders actually require in 2026, how the loan-to-value bands behave, and what an organised first-time buyer should be aiming for rather than what they think they need.
How the lender sees it
Mortgage rates are priced by loan-to-value (LTV)—the loan as a percentage of the property’s value. A bigger deposit is a smaller loan-to-value, which is lower risk for the lender, which means a lower rate for you.
Standard LTV bands in 2026:
| LTV | Deposit | Rate band (indicative) |
|---|---|---|
| 95% | 5% | Highest |
| 90% | 10% | Step down |
| 85% | 15% | Mainstream |
| 75% | 25% | Strong pricing |
| 60% | 40% | Best rates |
The biggest single rate drop sits between 90% and 85%. The smallest is below 75%—going from a 25% deposit to a 40% one usually saves you 0.05–0.15% in rate, which is rarely worth a year of extra renting.
How much deposit you need by property price
Three worked examples covering the most common first-time-buyer price points.
£200,000 home (Northern England, parts of Wales, Scotland)
| LTV | Deposit | Loan |
|---|---|---|
| 95% | £10,000 | £190,000 |
| 90% | £20,000 | £180,000 |
| 85% | £30,000 | £170,000 |
| 75% | £50,000 | £150,000 |
£350,000 home (Midlands, commuter belt, parts of South West)
| LTV | Deposit | Loan |
|---|---|---|
| 95% | £17,500 | £332,500 |
| 90% | £35,000 | £315,000 |
| 85% | £52,500 | £297,500 |
| 75% | £87,500 | £262,500 |
£500,000 home (London, parts of South East)
| LTV | Deposit | Loan |
|---|---|---|
| 95% | £25,000 | £475,000 |
| 90% | £50,000 | £450,000 |
| 85% | £75,000 | £425,000 |
| 75% | £125,000 | £375,000 |
For homes above £450,000, the Lifetime ISA is unusable for the deposit—withdrawing for a non-qualifying purchase forfeits the bonus and triggers the 25% penalty. Above £500,000 the LISA is closed for that property regardless of how long you have been saving.
What a 5% deposit actually buys you
Five percent will buy you a home. It will not buy you a competitive rate. The historical gap between 95% and 90% products on a typical 5-year fix sits at 0.50–0.80 percentage points, which on a £190,000 loan is £55–£90 a month.
Across thirty years, the difference between a 95% and 90% LTV mortgage on a £200,000 home runs into tens of thousands of pounds in extra interest. The arithmetic almost always argues for waiting six to twelve months to reach 10%, where you can.
The clean exception: if rent is high in a market that is appreciating fast, the cost of waiting can outweigh the rate savings. The maths is local—and worth running on a spreadsheet rather than an instinct.
Where the deposit money can come from
Lenders accept the deposit, with documentation, from these sources:
- Personal savings—bank statements showing 3–6 months of accumulation in your own name.
- Lifetime ISA—the 25% bonus counts as part of the deposit when released by the solicitor.
- Help to Buy ISA—legacy product, still valid for those who hold one and bonused at completion.
- Family gift—needs a signed gifted deposit letter confirming the money is a gift, not a loan, plus the giver’s bank statements and ID.
- Inheritance—documented via probate or solicitor records.
- Sale of an asset—shares, a vehicle, a previous property—evidenced via broker or sale paperwork.
What lenders push back on:
- Loans dressed up as gifts—particularly from family members, where the gifted-deposit letter does not match the underlying intention.
- Crypto proceeds without a clear traceable path through fiat exchanges.
- Sudden large deposits with no documented source. Underwriters notice them every time.
100% mortgages and the renter’s route
A small number of lenders—notably Skipton Building Society—offer 100% LTV mortgages specifically for renters with strong payment histories. The eligibility bar usually requires:
- 12+ months of documented rental payments.
- No missed rent or council tax in the past 12 months.
- Affordability based on monthly rent equal to or higher than the proposed mortgage payment.
The rates are above the 95% LTV menu and the loan size is tightly capped, but for renters with no realistic path to a 5% deposit it is a legitimate route rather than a marketing curiosity.
How long it takes to save a deposit
The planning question most first-timers want answered: how many years of saving am I actually looking at?
If you can save £400/month into a Lifetime ISA—£333 of your own money plus the £83 monthly bonus, capped at £4,000/year:
| Goal home price | LTV | Deposit needed | Years at £400/month |
|---|---|---|---|
| £200,000 | 90% | £20,000 | ~4.0 years |
| £200,000 | 85% | £30,000 | ~6.0 years |
| £350,000 | 90% | £35,000 | ~7.0 years |
| £350,000 | 85% | £52,500 | ~10.5 years |
| £500,000 | 90% | £50,000 | ~10.0 years |
Partner contributions, year-end bonuses, or a Lifetime ISA invested in a stocks-and-shares variant (which has historically grown at around 5% real over long periods) can shorten this materially.
A pragmatic rule: if you are more than five years from buying, the LISA belongs in a stocks-and-shares variant for growth. Inside three years, switch to cash to lock in the deposit.
The deposit is not the whole story
Beyond the deposit, set aside roughly 4% of the property price for fees:
- Solicitor: £1,000–£1,800.
- Survey: £400–£1,200.
- Stamp duty: usually £0 for first-time buyers up to £425,000.
- Mortgage product fee: £0–£999.
- Removals and post-move basics: £500–£2,000.
For a £250,000 home, that is roughly £10,000 on top of the deposit. For a deeper walkthrough of every cost in the application, including which sit on the lender’s side and which on the conveyancer’s, see first-time buyer mortgages: a 2026 walkthrough.
A concrete sequence (not a personality quiz)
If you are starting from zero deposit:
- Open a Lifetime ISA today if you are under 40.
- Set up a £333/month direct debit to maximise the £1,000 annual bonus.
- Aim for at least a 10% deposit before applying—the rate band difference compounds.
- If you are 5+ years out, hold the LISA in a stocks and shares variant for growth.
- Don’t take on new credit (car finance, store cards, BNPL) for at least 12 months before applying.
The deposit is the most concrete part of buying a first home. Most other moving parts depend on it—and most of the bad outcomes start from underestimating the second-order costs that ride on top.
Frequently asked questions
- What is the minimum deposit for a UK first-time buyer in 2026?
Most lenders want 5% as a floor, which buys a 95% loan-to-value mortgage at the highest rate band on the menu. A handful of niche products go to 100% LTV for renters with strong payment histories, and the Mortgage Guarantee Scheme exists to keep lenders comfortable at 95% rather than to drop the rate for you.
- How much deposit do I need for a £300,000 home?
At 5% LTV, £15,000. At 10%, £30,000. At 15%, £45,000. At 25%, £75,000. The rate band you land in depends on which of those you can credibly reach, and the gap between bands can outrun the rent you paid while saving the difference.
- Is a 5% deposit a good idea?
It will get you a home, but you pay for it in the rate. If a six-to-twelve-month delay would let you reach 10%, the rate saving over the life of the mortgage usually outweighs the rent paid in the meantime. The exception is a sharply rising local market, where waiting costs you the home itself.
