If you’re a first-time buyer, the whole home-buying process may feel daunting with so many elements to consider and large sums of money involved. One of the largest costs to consider is your house deposit!
Don’t worry, you’re not alone. Saving up enough money for a deposit remains to be the biggest hurdle among prospective buyers. But the question is: how much deposit do you actually need to buy a property?
We’re here to give you the low-down on how much money you need to save for your new property purchase and what value of property your savings will actually get you.
To do so, we’ve broken down everything you need to know about house deposits for first-time buyers in the UK and have also shared our own expert advice to make saving for a deposit that little bit easier.
What’s in this article?
- Key takeaways
- What is a house deposit?
- Average deposit for a house in the UK
- Can you really buy a house with a 5% deposit?
- What are the benefits of saving for a bigger house deposit?
- First-time buyer mortgage examples
- How does the Shared Ownership Scheme impact my deposit?
- How does the Deposit Unlock Scheme impact my deposit?
- Average deposit for a house in the UK by region
- Our top tips for saving for your house deposit
Key takeaways
- The minimum deposit required to purchase a property is 5%; however, it’s recommended that you invest between 15% and 20% of the total property value
- One key benefit of investing a larger deposit in a house is accessing better mortgage interest rates and having lower monthly repayments
- The Shared Ownership and Deposit Unlock schemes can make it easier to purchase your first property with lower deposit requirements
- London has the highest average deposit for first-time buyers in the UK and the North East of England has the lowest
- Setting clear savings goals and budgets, choosing a good savings account, and exploring government schemes can help you towards saving for your first house deposit
- OnTheMarket has thousands of new homes for sale, perfect for first-time buyers looking to get on the property ladder.
What is a house deposit?
Let’s start with the basics. A house deposit, also known as a down payment, is a lump sum of money that a buyer provides upfront when purchasing a property. It’s the equity (ownership) you have of the property since the remaining cost of the property is covered through loans.
Average deposit for a house in the UK
In 2024, most banks prefer that first-time buyers have a 10% deposit as a minimum. Although a 10% deposit is the minimum and putting in less cash may sound appealing, saving up more money to put towards your deposit means the potential for lower interest rates and smaller monthly repayments. This is certainly something you’ll thank yourself for in the long run!
Can you really buy a house with a 5% deposit?
Under the Mortgage Guarantee Scheme, it’s possible to get a mortgage with just a 5% deposit from participating lenders. Unfortunately, this scheme only runs until 30 June 2025. The Mortgage Guarantee Scheme was launched to help first-time buyers get on the property ladder, with an estimated 75% of renters constrained by hefty deposit requirements, rather than the monthly repayments.
With a 5% mortgage (95% loan-to-value), you can purchase a residential home in the UK with a value of up to £600,000, depending on your annual income. So, how much can you borrow with a 5% mortgage deposit?
Typically, banks will lend up to 4.5 times your annual salary, or combined salary if you’re buying with someone else. So, let’s say you’re looking to buy a property that costs £250,000 with a 5% deposit (£12,500), you’ll need to earn approximately £53,000 at least per year.
Note that if you do purchase with a 5% deposit, you are only eligible for a repayment mortgage and you’ll also need to pass the lender’s credit and loan-to-income checks.
Learn more about the steps involved in getting a mortgage.
Is there such a thing as a 100% mortgage?
A 100% mortgage? No deposit? That sounds too good to be true! Well, while it’s very uncommon, 100% mortgages are not unheard of.
Prior to 2008, 100% mortgages were fairly common. However, in 2023, Skipton Building Society became the first major lender to relaunch the 100% mortgage post-2008 with their Track Record Mortgage. The scheme was designed for renters who have a 12-month track record of rent payments with a deposit of 5% or less, even zero. But is this the best course of action?
With a 100% mortgage, the borrower starts with no equity in the property and may find themselves in negative equity when it comes to selling, owing more on the mortgage than the property is worth. They may also have limited mortgage options and higher interest rates, making repayments more challenging to keep up with.
First-time buyer mortgage examples
If you’re looking to buy a property valued at £250,000, here’s a breakdown of the amount of money you’ll need to save depending on the percentage deposit you have:
| Property value (GBP) |
Deposit (%) |
Deposit amount (GBP) |
Approximate monthly repayments (Based on 30-year loan term and 5.25% interest rate) |
| £250,000 | 5 | £12,500 | £1,782.75 |
| £450,000 | 10 | £45,000 | £2,890.48 |
| £250,000 | 15 | £37,500 | £1,514.05 |
| £250,000 | 20 | £50,000 | £1,428.75 |
And, if you live in London, this example is probably more relevant to you:
| Property value (GBP) |
Deposit (%) |
Deposit amount (GBP) |
Approximate monthly repayments (Based on 30-year loan term and 5.25% interest rate) |
| £450,000 | 5 | £22,500 | £3,055.25 |
| £450,000 | 10 | £45,000 | £2,890.48 |
| £450,000 | 15 | £77,500 | £2,732.70 |
| £450,000 | 20 | £90,000 | £2,575.55 |
*Please note that these are estimates and monthly repayments will vary depending on your lender.
What are the benefits of saving for a bigger house deposit?
There are numerous benefits to saving for a bigger house deposit, including:
- Borrowing less money, resulting in a lower loan-to-value (LTV) ratio and, typically, better mortgage terms. This could include lower interest rates and reduced fees.
- Lower monthly mortgage payments, providing more room in your budget for savings or other expenses.
- Faster mortgage payoff with a smaller mortgage balance to pay, which means you’ll save more money on interest over the life of the loan.
- Greater equity and financial security in your home from day one, which gives you more flexibility if you need to sell or refinance your home in the future.
How does a larger house deposit impact the loan-to-value (LTV) ratio of my mortgage?
Loan-to-value (LTV) is calculated by dividing the loan amount by the property’s market value and multiplying by 100. For instance, if you have a 10% deposit, your LTV would be 90%.
A large deposit for your house reduces the LTV ratio of a mortgage, which is viewed as more favourable by lenders, potentially leading to better mortgage terms.
What deposit do I need to get a lower interest rate in 2024?
When getting a mortgage on your first home, you’ll find that banks work in interest bands, which means a certain deposit will get you a lower mortgage interest rate. In 2024, you can expect the following bands:
- 90% LTV (10% deposit) – highest interest rate
- 75% LTV (25% deposit) – lower interest rate
- 60% LTV (40% deposit) – lowest interest rate
How does the Deposit Unlock Scheme impact my deposit?
The Deposit Unlock Scheme enables you to buy a new build property with a deposit of just 5% of the property value, which is less than the typical 10% minimum. The maximum loan you can take while using the Deposit Unlock Scheme is £750,000, perfect for first-time buyers.
Average house deposit for a first-time buyer in the UK by region
According to Statista, the average house deposit for a first-time buyer has decreased across all regions in the UK over the past couple of years, going from £62,471 in 2022 to £53,414 in 2023.
| Rank | UK region | Average deposit (GBP) |
| 1 | Greater London | £108,848 |
| 2 | South East | £59,075 |
| 3 | East Anglia | £52,682 |
| 4 | South West | £49,135 |
| 5 | Scotland | £39,691 |
| 6 | West Midlands | £37,459 |
| 7 | Wales | £36,350 |
| 8 | East Midlands | £36,139 |
| 9 | Morth West | £35,581 |
| 10 | Yorkshire and the Humber | £33,208 |
| 11 | Northern Ireland | £31,948 |
| 12 | North East | £29,740 |
Unsurprisingly, the average first-time buyer deposit in Greater London stands as the highest in the UK at £108,848, more than twice the UK average!
Lower than the national average, a first-time buyer deposit in Scotland is around £39,691, closely followed by Wales at £36,350. In Northern Ireland, the average first-time buyer deposit is £31,948. Over three times less than the London average, first-time buyers in the North East can expect an average deposit of £29,740.
Our top tips for saving for your house deposit
Saving up enough money for a deposit on your first property purchase can be challenging, so here are our top tips to help make it slightly easier:
1. Set clear saving goal
Determine how much you need for your deposit and establish a realistic timeline for reaching your goal. Break down the total amount into manageable monthly or weekly savings targets to track your progress effectively. You could even set up automatic transfers into a dedicated savings account to make sure you’re consistent.
2. Create a budget and stick to it
Track your income and expenses to identify areas where you can cut back and allocate more funds towards your savings goal. Consider reducing spending where possible, such as dining out or entertainment, and redirect those savings into your deposit fund. That being said, make sure you find a balance that works for you, so that you’re still enjoying your life while reaching your savings goals!
3. Do your research before choosing a savings account
Make sure to do your research to find the best savings account on the market, one that offers the highest possible interest rates. Higher interest rates will help you save more money in a short period of time, getting you closer to your first property purchase.
4. Explore government schemes
The UK government’s Lifetime ISA (LISA) Scheme helps you save money towards a property deposit and get more for your buck. With a LISA, you can pay up to £4,000 per year into your account and the government will put in 25% to your savings, while your savings also accrue interest. That means you can get up to £1,000 per year alone, outside of interest!
Learn more about government schemes available to first-time buyers.
5. The ‘Bank of Mum and Dad’
If you’re fortunate enough to have family members available to help you out with saving for a house deposit, you’ll be in a better position to receive good interest rates on your mortgage and benefit from lower monthly payments. However, borrowing money from family members should not come without careful consideration.
In addition to creating potential tensions or complex family dynamics, accepting financial assistance may also have legal and tax implications. Make sure to do your research before accepting large sums of money for your deposit.
Read more top tips on how to make your deposit go further.
Are you on the lookout for your dream first home? Browse thousands of new homes for sale across the UK at OnTheMarket.
