How to Get a Mortgage with a 5% Deposit

Saving for a deposit is one of the biggest challenges for buyers, but many people are surprised to learn that a mortgage with a 5% deposit is still possible. These products are known as 95% mortgages, and while lenders apply stricter criteria, they remain accessible for first-time buyers and some home movers.

This guide explains how 5% deposit mortgages work, which lenders offer them, what criteria you need to meet, and practical steps to strengthen your application. This article provides general information only and does not offer regulated mortgage advice.

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What Is a 5% Deposit Mortgage?

A 5% deposit mortgage allows you to borrow up to 95% of the property value.

For example:

• Property price: £200,000
• Deposit (5%): £10,000
• Mortgage amount: £190,000

These mortgages reduce the upfront cost of buying but often involve stricter affordability checks and may come with higher interest rates than larger deposit options.

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Who Can Get a 5% Deposit Mortgage?

Many lenders offer 95% mortgages, but they typically require a strong overall financial profile. These mortgages may be available to:

• First-time buyers
• Home movers
• Applicants with stable income
• Applicants with clean or mostly clean credit
• Borrowers with strong affordability and bank conduct

Some lenders accept a 5% deposit only if the property is for residential use, not buy-to-let.

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What Lenders Look for When You Have a 5% Deposit

With a small deposit, lenders take on more risk, so they look carefully at the following:

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1. Income Stability

Lenders prefer applicants who:

• Have been in their job for a steady period
• Earn predictable income
• Have manageable financial commitments

Irregular income may require more documentation.

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2. Bank Statement Conduct

Underwriters check:

• No unarranged overdrafts
• No returned direct debits
• Sensible spending
• Consistent bill payments

Strong bank conduct is essential with a smaller deposit.

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3. Credit History

A clean or near-clean credit file is important. Lenders assess:

• Missed payments
• Defaults
• CCJs
• Payday loans
• Recent borrowing

Minor or older issues may be acceptable depending on the lender.

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4. Affordability

Lenders calculate your maximum borrowing using:

• Income
• Loan and credit commitments
• Household spending
• Student loan repayments
• Dependant costs

Affordability must comfortably support the 95% mortgage loan.

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5. Property Type

Some lenders avoid lending 95% on:

• New-build flats
• Some non-standard construction types

New-build houses may also require a slightly larger deposit.

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How to Improve Your Chances of Getting a 5% Deposit Mortgage

(General Information Only)

Because lenders are cautious with low deposits, strengthening your financial profile is key.

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1. Improve Bank Conduct in the 3–6 Months Before Applying

Avoid:

• Unarranged overdrafts
• Irregular spending spikes
• Missed payments

Aim to show stability and control.

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2. Reduce Outstanding Debt

Lower credit balances can:

• Improve affordability
• Reduce monthly commitments
• Strengthen your overall profile

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3. Check Your Credit Reports

Review all three agencies:

• Experian
• Equifax
• TransUnion

Correct any errors early.

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4. Avoid New Borrowing Before Applying

New loans or credit cards may reduce affordability and raise concerns.

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5. Prepare Clear Financial Documentation

Have ready:

• 3 months of payslips
• 3–6 months of bank statements
• P60
• Employment contract (if recently started)
• Deposit evidence

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6. Consider a Higher Deposit If Possible

Even increasing from 5% to 10% can:

• Lower interest rates
• Increase lender choice
• Improve affordability

But if 5% is your starting point, strong bank conduct matters most.

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Can You Use a Gifted Deposit for a 5% Mortgage?

Yes — many lenders accept a gifted deposit, even at 5%.

The donor may need to provide:

• ID
• Gift letter
• Proof of funds
• Source-of-funds evidence

Gifted deposits from close family members are most commonly accepted.

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Can You Get a 5% Deposit Mortgage with Bad Credit?

It depends on:

• Type of adverse credit
• How recent it is
• Size of the deposit
• Overall financial conduct

Most mainstream lenders are strict with 95% borrowing and may decline recent adverse credit. Some specialist lenders may allow minor historic issues.

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Would a Government Scheme Help?

Several government-backed schemes historically supported low-deposit home buying, such as Help to Buy.

Current options vary by region, but lenders may still offer:

• 95% mortgages under standard criteria
• Special products for first-time buyers
• Family-assisted products like springboard mortgages

These may help reduce deposit requirements.

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Example Scenarios

Scenario 1: First-time buyer with strong income and clean credit

High chance of being accepted by multiple lenders.

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Scenario 2: Applicant with small credit issues two years ago

Possible, but lender choice narrows.

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Scenario 3: Zero-hour contract worker with stable 12-month income history

Some lenders may accept if bank conduct is strong.

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Scenario 4: Recently changed jobs

Accepted by lenders that consider signed employment contracts.

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Scenario 5: Higher outgoings but strong deposit history

Affordability must still be met, regardless of deposit type.

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Summary

Getting a mortgage with a 5% deposit is possible and remains a popular route for first-time buyers. Lenders focus heavily on:

• Income stability
• Credit history
• Bank statement conduct
• Affordability strength
• Property type

With the right preparation and documentation, many buyers secure 95% mortgages successfully even with a small deposit.

This article provides general information only. For personalised guidance, regulated mortgage advice is required.