Saving for a first home is one of the biggest financial milestones in the UK. The deposit you put down shapes your mortgage rate, monthly payments, and how much risk you carry if house prices move. Yet “how much deposit do I need?” rarely has a single answer — it depends on property price, lender criteria, and whether you qualify for first-time buyer relief.
5%, 10%, or 20% — what is the difference?
Deposits are usually expressed as a percentage of the property price. That percentage determines your loan-to-value (LTV) ratio — the share of the home financed by the mortgage.
- 5% deposit (95% LTV): Lower barrier to entry, but fewer products and typically higher interest rates. More exposure if values fall.
- 10% deposit (90% LTV): A common target for first-time buyers; wider lender choice than 5%.
- 20% deposit (80% LTV): Often unlocks better rates and lower monthly costs; recommended if you can reach it without draining emergency savings.
On a £250,000 home, a 5% deposit is £12,500; 10% is £25,000; 20% is £50,000. The jump is substantial, which is why many buyers start at 10% and remortgage later when they have more equity.
Why LTV matters for your mortgage
Lenders price risk by LTV bands. Moving from 95% to 90% or 85% can reduce the interest rate enough to save thousands over the term. Use our mortgage affordability calculator to see how deposit size changes monthly payments and total interest — small rate differences compound over 25 or 30 years.
Remember to budget for legal fees, surveys, and moving costs on top of the deposit. A common mistake is saving exactly 10% of the purchase price and having nothing left for completion day.
Stamp duty for first-time buyers
In England and Northern Ireland, first-time buyers currently pay no stamp duty on the first £300,000 of a property up to £500,000 (with reduced rates on the portion above £300,000). Scotland and Wales use different schemes (LBTT and LTT) with their own thresholds.
Stamp duty is not part of your deposit, but it must be paid around completion — plan for it in your cash timeline so you are not caught short.
Help to Buy ISA and Lifetime ISA
The Help to Buy ISA closed to new applicants, but existing accounts can still receive contributions until a deadline and be used for a first purchase subject to rules. The Lifetime ISA (LISA) offers a 25% government bonus on savings up to £4,000 per year for eligible first-time buyers (or retirement), provided you use it for a qualifying home and meet minimum account age requirements.
Bonuses and penalties apply if you withdraw for other reasons, so read the terms carefully. A LISA can accelerate a deposit but is not right for everyone — especially if you might buy within a year or need flexible access to cash.
How much should you aim for?
A practical approach:
- Set a target property price range in your area.
- Calculate 10% (minimum) and 20% (stretch) deposit amounts.
- Add £3,000–£5,000+ for fees, survey, and moving.
- Keep an emergency fund separate from your house deposit.
Use the savings goal calculator to work backwards from your target date — how much to save each month to hit 10% on a £200,000 flat by a given year.
There is no perfect deposit for every buyer, but more equity generally means lower costs and more options. Save with a clear LTV target, understand stamp duty relief, and stress-test the mortgage before you fall in love with a particular kitchen.