What is the new £5,000 deposit mortgage for first-time buyers?

What is the Lloyds £5K deposit mortgage?

The Lloyds £5K deposit mortgage is a first-time buyer mortgage that requires a minimum deposit of £5,000 regardless of the property price (up to £300,000). It's a 5-year fixed rate repayment mortgage, meaning your monthly payments stay the same for the first five years and you're paying down the loan balance throughout.

Who is eligible?

To qualify for the Lloyds £5K deposit mortgage, you'll need to meet the following criteria:

• At least one applicant must be a first-time buyer. Joint applicants where one person has previously owned a property may still qualify, as long as one applicant meets the first-time buyer definition.
• Your deposit must be at least £5,000 from your own savings. Gifted deposits do not qualify, the money must come from funds you've saved yourself.
• The property must be your sole residence. You cannot own any other property, including a second home or buy-to-let.
• The property value must be between £102,000 and £300,000. The minimum borrowing amount is £97,000, and the maximum is £295,000.
• The mortgage must be on a repayment basis. Interest-only is not available.
• The property cannot be a new build, new build conversion, or renovation project.
• The property cannot be bought through Help to Buy, shared ownership, shared equity, or Right to Buy schemes.
• The property cannot be a shared property, it must be owned outright by the applicants.

Lloyds will also carry out a credit check and affordability assessment as part of the application. Meeting the above criteria doesn't guarantee approval, the amount you can borrow will depend on your income, credit history, and outgoings.

How much can I borrow?

Through the Lloyds £5K deposit mortgage, eligible borrowers can borrow up to £295,000, on properties worth up to £300,000. There is no fixed income multiple, as Lloyds assesses affordability individually based on your income, credit score, and monthly commitments.

Because your deposit is small relative to the property value, your loan-to-value (LTV) ratio will be high, in many cases above 95%. This is higher than the standard maximum LTV on most mortgage products, which is why the product is positioned as a dedicated low-deposit route rather than a standard mortgage.

Why it could work for first-time buyers

The headline advantage is speed. With a £5,000 target rather than a percentage of the purchase price, many buyers can reach the minimum deposit considerably faster than they would saving for a conventional 5% or 10% deposit. On a £250,000 home, that's the difference between saving £5,000 and £12,500.

The 5-year fixed rate adds a layer of certainty that matters in the current market. With the Bank of England base rate held at 3.75% in June 2026, and the potential for further movement later in the year, knowing your interest rate and monthly payments won't change for five years makes household budgeting considerably more predictable.

What to watch out for

• Higher interest rates. Borrowing above 95% LTV typically means paying a higher interest rate than buyers with larger deposits. This translates directly to higher monthly repayments — and more interest paid over the life of the mortgage. Before applying, it's worth modelling whether a few more months of saving to reach a 5% or 10% deposit would reduce your overall cost enough to be worth the wait.
• Negative equity risk. When you borrow a very high proportion of your home's value, a modest fall in property prices could leave you in negative equity — where you owe more on your mortgage than your home is currently worth. This matters if you need to move or sell before your equity has grown.
• No gifted deposits. Unlike many other low-deposit products, the £5,000 must come from your own savings. If family members have offered to contribute to your deposit, this route isn't available to you — though it's worth exploring Income Boost or guarantor mortgage options that use family support in a different way.
• The property cap is restrictive. The £300,000 maximum property value rules out much of London and parts of the South East. In these areas, even modestly priced homes often exceed £300,000, making the product effectively unavailable to buyers in higher-cost regions.
• New builds are excluded. If you're looking at new build homes — a common choice for first-time buyers due to lower maintenance costs and energy efficiency — this product can't be used. The Freedom to Buy scheme similarly excludes new builds; for new build purchases, you'll need to explore other routes.

How does this compare to other low deposit mortgage options?

The Lloyds £5K deposit mortgage sits alongside - rather than replacing - other low-deposit routes for first-time buyers:

If the £300,000 property cap rules you out, or you're using a gifted deposit, other low deposit solutions are likely more suitable. Speak to an affordability specialist like Tembo about what options are available to you. Get started here.