How much deposit do you need for a mortgage?

Saving up for your first home or a Buy to Let property? Knowing how much deposit you need can help you set a savings goal to keep you motivated. Find out how much to set aside for your mortgage deposit with our guide

What is a mortgage deposit?

A mortgage deposit is the money you pay upfront when buying a house. If you’ve got your eye on a new home or property, you’ll need a deposit to buy it.

Your deposit is what determines the Loan-To-Value (LTV) ratio of your mortgage. This is the percentage of the property value you’ll need to borrow. Usually, the lower your LTV, the better chance you have of getting offered lower interest rates. So, it may be worthwhile saving for longer to build up a larger deposit.

How much deposit do I need?

The amount you need for a deposit usually depends on the property price and your budget. For a home purchase, you normally need to put down at least 5% or 10% of the total amount.

Let’s say you want to buy a property valued at £200,000, your lender may ask for a 10% deposit. This means you would need a deposit of £20,000. If you can afford to put down a larger deposit, this could help lower your LTV ratio and reduce your monthly payments.

There are also government schemes, such as the Lifetime ISA or Help to Buy ISA, which can help you save more toward your mortgage deposit. If a friend or relative is gifting money toward your deposit, you may need to prove this to the lender with a gifted deposit letter.

Find out more about saving for a deposit. 

What’s an average first time buyer deposit?

The national UK average deposit for first time buyers is around 20%. Deposits vary across the country and national averages can change.

In the South, especially around London, house prices tend to be more expensive so you might need more money for your deposit.

It helps to put down as much as you can comfortably afford as part of your deposit. This way, your monthly mortgage payments will be less and you’ll have a bigger share of equity in your home.

Why save a bigger deposit?

  • It gives you a lower LTV ratio. This can help make you more attractive to lenders. So, you may be able to access better interest rates, terms and other offers or benefits.
  • You’ll own more of your property. A larger deposit gives you more equity in your home. This can protect you from falling into negative equity if your property value declines.
  • Smaller mortgage amount. The more you put down as a deposit, the less you need to borrow. In turn, you may have lower interest rates and smaller monthly payments to pay.

How much can you borrow using your mortgage deposit?

How much you can borrow from the lender will mostly depend on the size of your deposit, and:

  • The amount you earn per year.
  • Your credit score, mortgage application and credit checks.
  • Any financial commitments.

Lenders usually have a maximum amount they can offer you, so factor this in when looking at house prices and deciding what you can afford.

See how much you could borrow

Our mortgage calculators will give you a better idea of how much you could borrow. Test out different amounts to see how a higher or lower deposit can impact your mortgage deal. Then you can work out how much you may still need to save.

Use our mortgage calculator

Already saved enough for your deposit?

It’s time to take the first step towards finding your new home. Apply for an Agreement in Principle (AIP) with us today to confirm how much you could be eligible to borrow. Then you can start your property search.
 

Start Agreement in Principle
 

Other deposit options

You’ll require a different kind of deposit if you’re keen on purchasing a home to rent out, or as part of a shared ownership agreement.

Buy to Let deposit

In the market for a Buy to Let property? With Buy to Let mortgages, the deposit usually needs to be at least 25% of the property value. The value of the deposit you put down depends on the value of the property and how much you can afford as a lump sum.

Learn about Buying to Let

Shared ownership deposit

With a shared ownership mortgage, you buy a portion of a property and pay rent on the rest. This means you'll only take out a mortgage for the part of the property you own which could be useful if you have a smaller deposit.

Explore shared ownership

Lend a Hand mortgage

With our Lend a Hand mortgages, there is no deposit needed. Instead, your family member can put 10% of the property price into a 3 year fixed rate savings account. The property will be in your name, and you’ll make the mortgage repayments. Your family member can get their savings back with interest when the 3 year term is up, as long as your mortgage repayments have all been made.

Explore Lend a Hand mortgages

Frequently asked questions

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Mortgage calculators

View our range of mortgages and see what deposit you’ll need for your new home.

Use a calculator

Speak to someone

Talk to us over the phone or use our mortgage video service.

Contact us

First time buyers help

Looking to take your first step on the property ladder? Find out how mortgages work and what to expect when you get your first one.

First time buyers help hub

First time buyers help

Looking to take your first step on the property ladder? Find out how mortgages work and what to expect when you get your first one.

First time buyers help hub

Important legal information

The content on this page is for reference and does not constitute finance advice.

For impartial financial advice, we recommend government bodies like the MoneyHelper.