What deposit do you need as a first-time buyer?

What is a first-time buyer deposit?

A first-time buyer deposit is the upfront cash paid toward a property's purchase price. The mortgage you get from a lender needs to cover the rest. So for a £250,000 home with a 10% deposit, the buyer pays £25,000 upfront and borrows £225,000.

How much deposit do first-time buyers need?

Typically, first-time home buyers put down at least 10% to 20% of the purchase price as a deposit, but most lenders will also accept a minimum deposit of 5% of the property price. So on a £250,000 home, that works out to £12,500.

In our latest First-Time Buyer Index report, we found that our average first-time buyer deposit now sits at £42,324 - equivalent to more than a full year’s take-home pay (£39,668)! As a percentage, first-time buyers were putting down 15% as a deposit. 

However, the amount you choose to save will come down to your personal circumstances, like what you want to achieve, how quickly you want to buy and how much you can save.

A 5% deposit gets someone onto the property ladder quickly, but you’ll be offered significantly higher interest rates than you would with a 10% or 20% deposit. Plus, the smaller the deposit, the higher the chance of negative equity, which is when the outstanding balance of the mortgage loan is higher than the current market value of the property. 

A 10% deposit unlocks better interest rates than a 5% deposit. At 15% or more, buyers can access some of the most competitive deals available on the market.

The difference in rates can be significant. A buyer with a 5% deposit might pay around 5.4% interest on a two-year fixed mortgage*, while someone with 10% down could secure a rate closer to 4.99%. Over 35 years, that gap could add up to thousands of pounds!

So while 5% is the minimum, many first-time buyers aim for 10% to 15% when circumstances allow.

*Best rate available from our panel of over 100 lenders, based on a 35 year mortgage term, with a 2 year fixed rate. Accurate May 2026.

How deposit size affects your mortgage

The amount of deposit you have directly impacts the mortgage amount you need. A larger deposit means borrowing less for a mortgage, which usually translates to lower monthly repayments as you could get a lower interest rate, so you could end up paying less interest over the length of the loan. This is because your deposit impacts factors like your Loan to Value.

Loan to value explained

Loan to value, often shortened to LTV, is the percentage of a property's value covered by the mortgage. To calculate it, divide the mortgage amount by the property price and multiply by 100.

For example, a £180,000 mortgage on a £200,000 property equals a 90% LTV. The remaining 10% is the deposit.

Lenders use LTV to assess risk. A lower LTV means the buyer has more skin in the game, which makes the loan less risky for the lender. Less risk for the lender typically means better terms for the borrower.

Lenders tend to assign different mortgage rates to different LTV bands, typically 95% LTV, 90% LTV, 85% LTV etc.

If you’re between two LTV bands, for example, you have a 7% deposit saved, you'll generally be assessed using the higher LTV band. So in the example, this would be the 95% LTV band (5% deposit), not 90% LTV (10% deposit). 

This means you'll likely be offered higher interest rates and potentially fewer mortgage options than if you were in the lower LTV band. This is why it can sometimes be worth saving a bit more to get to the next LTV band.

However, it isn’t always worth doing this. Speaking to an expert mortgage advisor can help you work out if saving for months or years more just to get to the next LTV banding is actually worth it when it comes to monthly costs.  

How a deposit impacts your borrowing power

A larger deposit doesn't increase how much a lender will offer based on income, as affordability calculations will remain the same regardless of your deposit size. However, a bigger deposit does expand the range of properties within your reach by reducing the mortgage amount required. 

If a buyer can borrow £200,000 based on their income, a £50,000 deposit means they can look at properties up to £250,000. A £30,000 deposit limits them to £230,000.

Some lenders also view larger deposits more favourably during affordability assessments, particularly for buyers with complex income or less-than-perfect credit histories.

What is the average first-time buyer deposit?

The average first-time buyer deposit in the UK sits at approximately £53,000, according to recent UK Finance data. 

In our latest First-Time Buyer Index report, we found that the average first-time buyer deposit now sits at £42,324 - equivalent to more than a full year’s take-home pay! But where someone buys makes a big difference.

In London, where average house prices exceed £530,000, first-time buyers are putting down over £110,000 as a deposit on average. Outside the capital, particularly in the North of England and Wales, average deposits fall closer to £30,000 to £40,000.

These averages can feel intimidating, but they include buyers across all deposit sizes. Many first-time buyers successfully purchase with far less than the average, especially when using government schemes or family support, which is something we specialise in here at Tembo.

Do you need a 20% deposit to buy your first home?

No, you don’t need a 20% deposit to buy your first home. While this was once considered the standard, that's no longer the case for most first-time buyers. From our own data, we know that first-time buyers put down 15% deposit on average, but many put down less than this.

Lenders now offer mortgages at 95% loan to value, meaning buyers can purchase with just 5% down. The trade-off is that smaller deposits typically come with higher interest rates and fewer product choices.

Some buyers still aim for 20% because it provides access to the best rates and builds a larger equity cushion from day one. Yet for many, waiting years to reach that threshold means watching property prices rise or staying in expensive rental accommodation longer than planned.

The right deposit amount depends on individual circumstances. There's no single correct answer. The best thing you can do is save as big a deposit as you can, and keep an eye on your buying options to make an informed decision. You might find you can buy a lot sooner than you think! See what you could afford now.

Pros and cons of a bigger first-time buyer deposit

Deciding how much to save involves weighing several factors. The right choice depends on individual circumstances and priorities.

Benefits of a larger deposit

• Potentially lower interest rates, potentially saving thousands over the loan term
• Lower monthly payments: Borrowing less for a mortgage means smaller repayments each month
• More equity from day one: Greater ownership stake and protection against negative equity if property prices fall
• Wider lender choice: More mortgage products become available at lower LTV bands

Drawbacks of saving for longer

• House price increases: Property values may rise faster than savings, moving the goal further away
• Opportunity cost: Delaying ownership could mean staying in renting
• Market changes: Mortgage rates and lending criteria can shift, affecting future affordability

How to save a first time buyer deposit faster

Building a deposit takes time, but several approaches can speed up the process.

1. Open a Lifetime ISA

A Lifetime ISA is a special ISA savings account that allows first-time buyers to save up to £4,000 each tax year towards their deposit, and they’ll get a free 25% government bonus on top, up to £1,000.

2. Use a high-interest savings account

Keeping deposit savings in a competitive account helps your money grow faster. Cash ISAs, Fixed Rate ISAs, and even the Tembo HomeSaver account often offer better rates than standard savings accounts. Even a small rate difference compounds over several years of saving. Explore savings.

3. Get help from a guarantor

Most lenders accept gifted deposits from immediate family members. The gift-giver will need to sign a letter confirming the money is a gift with no expectation of repayment, along with proof of their identity and the source of funds. 
If your parents own their own home and want to help you buy, they could use a Deposit Boost to unlock money from their home, which could be added to your house deposit. This works by using a small mortgage to unlock equity from their home, which they will repay over time. Like any mortgage, they would need to pass affordability checks to ensure they could afford the loan, and would need to make the repayments each month.

4. Boost your income

Side income, overtime, or a salary increase can all accelerate savings. Directing any additional earnings straight into a deposit fund prevents lifestyle creep from absorbing the extra money.

Frequently asked questions about first-time buyer deposits

Can you buy a house with no deposit as a first-time buyer?

No-deposit mortgages are rare in the UK. However, there are ways to get on the ladder with a small deposit. One option is shared ownership. Guarantor mortgages allow family members to use their savings or property as security, which can reduce or eliminate the deposit a buyer provides upfront. The family member takes on risk in exchange for helping the buyer get onto the ladder sooner. 

How long does it take to save a first-time buyer deposit?

The time required varies based on income, expenses, savings rate, and target amount. Using tax-efficient accounts like a Lifetime ISA can shorten the timeline thanks to the government bonus, and some buyers accelerate their savings through gifted deposits from family. 

Our award-winning mortgage team can help you discover how you could make home happen

Can parents gift a deposit to a first-time buyer?

Yes, most lenders accept gifted deposits from immediate family members. The gift-giver will need to provide a signed letter confirming that the money is a gift with no expectation of repayment. Lenders also typically require proof of the gift-giver's identity and the source of funds.

Does a first-time buyer deposit include stamp duty and fees?

No, the deposit covers only part of the property's purchase price. Buyers will want to budget separately for stamp duty (if applicable), solicitor fees, surveys, and moving costs. First-time buyers in England currently pay no stamp duty on properties up to £300,000.

What credit score do first-time buyers need for a small deposit mortgage?

Lenders offering 95% LTV mortgages typically look for a stronger credit history than those offering lower LTV products. Buyers with lower credit scores may find they qualify for better terms with a larger deposit, or they may benefit from working with a specialist lender.