How Much Mortgage Deposit Do You Really Need in the UK?

The deposit is the single biggest barrier to buying a home in the UK. This guide explains how much you really need, where to get it, and how to maximise the government help available.

How Much Deposit Do You Need?

The minimum deposit for a UK mortgage is 5% of the purchase price. But the minimum isn't the optimum — the bigger your deposit, the better your mortgage rate. Here's how LTV bands affect rates in 2026:

• 95% LTV (5% deposit): Highest rates, fewest lenders, strictest criteria.
• 90% LTV (10% deposit): Slightly better rates, more lenders available.
• 85% LTV (15% deposit): Competitive rates, most first-time buyers aim here.
• 80% LTV (20% deposit): Good rates, more flexibility.
• 75% LTV (25% deposit): Excellent rates.
• 60% LTV (40% deposit): Best rates available.

On a £250,000 property, the difference between a 95% LTV mortgage (5.8% rate) and an 85% LTV mortgage (5.0% rate) is about £100/month — £30,000 over a 25-year term. A bigger deposit doesn't just reduce the loan; it reduces the rate on the loan you do take.

The Lifetime ISA: Free Government Money

If you're 18-39 and saving for your first home, a Lifetime ISA (LISA) is the best savings vehicle available. You can contribute up to £4,000 per year (which counts towards your £20,000 ISA limit), and the government adds a 25% bonus — so £4,000 becomes £5,000. That's free money.

Over 5 years of maxing out a LISA, you'd contribute £20,000 and receive £5,000 in government bonuses. If the LISA is invested in a Stocks & Shares LISA earning 5% per year, the total after 5 years would be about £29,000 — £4,000 in growth on top of the contributions and bonus. The LISA can be used for a first home up to £450,000.

How Long Will It Take to Save?

Saving £37,500 (15% of £250,000) on a take-home salary of £2,500/month, saving £500/month, takes about 6 years and 3 months. Saving £750/month takes about 4 years and 2 months. Saving £1,000/month takes about 3 years and 2 months. The faster you save, the sooner you buy — and the less time house prices have to rise ahead of you. Use our Budget Calculator to find how much you can afford to save each month.