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Guide · 5 minute read

How much deposit do I need to buy a house?

A 5% deposit is the realistic minimum for most UK buyers: £12,500 on a £250,000 home. With 10% you unlock noticeably cheaper rates, and each extra 5% steps the rate down again. The deposit is also not the whole upfront bill.

The 5% floor

Mortgages are priced by loan-to-value (LTV), the loan as a percentage of the property's value. A 5% deposit means borrowing the other 95%, and 95% LTV is where mainstream lending starts. Below that you are looking at niche products, family-assisted deals or simply waiting.

Getting in at 5% is a legitimate strategy, especially when rents are high and prices in your area are rising faster than you can save. The trade-offs are honest ones: the highest rates on the market, a bigger loan to service, and a thin equity cushion, so a dip in prices can leave you owing close to (or more than) the home is worth when your fixed deal ends.

Why 10% is the first big upgrade

Lenders price in 5% LTV bands: 95, 90, 85, 80, 75 and so on down to 60. Cross a boundary and you qualify for the next, cheaper shelf of products. The single biggest step is usually from 95% to 90%, which is why "save a 10% deposit" is such common advice. After that the steps get smaller but keep coming until around 60% LTV, where pricing more or less flattens out.

The exact gap moves with the market. As a feel for the shape (these numbers are purely illustrative, not quotes): if the average five-year fix sits around 5.5% to 5.6%, a 95% LTV deal might price nearer 6%, a 90% deal a few tenths below that, and a 75% deal a few tenths below that again. Always compare live rates when you are actually buying.

Worked example: a £250,000 home

| Deposit | LTV | Loan | | --- | --- | --- | | 5% (£12,500) | 95% | £237,500 | | 10% (£25,000) | 90% | £225,000 | | 15% (£37,500) | 85% | £212,500 |

Put illustrative rates on the first two rows: £237,500 over 25 years at 6.1% costs about £1,545 a month, while £225,000 at 5.7% costs about £1,409. That £136 a month gap (over £8,000 across a five-year fix) comes partly from the smaller loan and partly from the cheaper band. Run your own numbers in the mortgage affordability calculator, which also stress-tests the payment at a higher rate the way lenders do.

The costs that are not the deposit

Budget for these on top, with typical ranges:

• Stamp duty. Nothing for a first-time buyer at £250,000, because relief covers the first £300,000 in England and Northern Ireland. A non-first-time buyer pays £2,500 at this price. Check yours with the stamp duty calculator; Scotland and Wales have their own taxes.
• Legal and conveyancing, typically £1,000 to £2,000 including searches.
• Survey, roughly £400 to £1,000 depending on the level of report.
• Mortgage fees: many deals carry a product fee, often around £1,000, sometimes traded for a higher rate.
• Moving, anywhere from a few hundred pounds for a van to over £1,000 for a full removal firm.

For a first-time buyer at £250,000, a sensible buffer is £2,500 to £4,500 beyond the deposit. Money you spend here cannot also be deposit, so save for both.

The LISA: a 25% accelerator

If you are 18 to 39 and a first-time buyer, a Lifetime ISA adds a 25% government bonus to everything you pay in, up to £4,000 per tax year (so up to £1,000 of free money a year). Saving £10,000 of a £12,500 deposit through a LISA gets the bonus to cover the rest.

The catches matter. The home must cost £450,000 or less, your first LISA payment must be at least 12 months before you buy, and the funds go via your conveyancer. Withdraw for any other reason and a 25% charge applies, which takes back more than the bonus (you lose about 6.25% of your own money). The LISA calculator shows what your monthly amount turns into, bonus included.

A deposit is only half the gate

Lenders also cap the loan at a multiple of income, commonly around 4 to 4.5 times. Borrowing £237,500 at 4.5 times needs roughly £53,000 of household income, however large your deposit is. If the income multiple is your binding constraint, a bigger deposit raises your budget pound for pound; if income comfortably covers the loan, extra deposit mainly buys a cheaper rate instead.

Once you have a target figure, the savings goal calculator turns it into a monthly amount and a date, which is the form a deposit plan actually needs to take.

Common questions

Can I buy a house with a 5% deposit in the UK?

Yes. 95% LTV mortgages are mainstream, though they carry the highest rates and stricter affordability checks. On a £250,000 home that is a £12,500 deposit, plus a few thousand pounds for legal fees, survey and moving costs.

Is it worth waiting to save a 10% deposit?

Often, because the jump from 95% to 90% LTV is usually the biggest single rate improvement. But weigh it against rent paid while waiting and the risk of prices rising faster than you save. There is no universal answer.

How much deposit do I need for a £250,000 house?

£12,500 at the 5% minimum, £25,000 for 10%, £37,500 for 15%. Add roughly £2,500 to £4,500 for legal fees, survey, mortgage fees and moving. First-time buyers pay no stamp duty at this price in England and Northern Ireland.

Does a Lifetime ISA count towards a house deposit?

Yes. You can pay in up to £4,000 per tax year and the government adds 25%, up to £1,000 a year. Conditions: you must be a first-time buyer, the home must cost £450,000 or less, and your first LISA payment must be at least 12 months before the purchase.

Do I need a bigger deposit if my income is low?

Usually yes. Lenders cap loans at roughly 4 to 4.5 times income, so a smaller maximum loan means the deposit has to bridge more of the price. A bigger deposit raises your total budget pound for pound when income is the constraint.

Guidance and education, not regulated financial advice.