Buy to Let Mortgage Deposit: How Much Do You Need? Clear Guide & Examples

Buy to Let Mortgage Deposit: How Much Do You Need? Clear Guide & Examples

Whether you’re becoming a landlord for the first time or expanding an existing portfolio, understanding how much deposit is required is one of the most important parts of planning your investment. Deposit expectations for buy-to-let (BTL) properties differ significantly from standard residential mortgages because lenders take rental income, market conditions and risk levels into account.

This guide breaks down the key requirements, typical deposit percentages, and the factors that may influence the lender’s final decision. This article provides general information only and does not offer regulated mortgage advice.

What Is the Typical Buy to Let Mortgage Deposit?

Most buy-to-let lenders require a minimum deposit of 20–25%, meaning the majority of products fall at:

  • 75% LTV (25% deposit)
  • 80% LTV (20% deposit) — limited availability

Some specialist lenders may offer slightly lower deposits in niche cases, but these are less common and usually involve stricter stress tests.

Why BTL Deposits Are Higher Than Residential Deposits

BTL mortgages carry more perceived risk because:

  • Rental income can fluctuate
  • Void periods can affect repayments
  • Landlord responsibilities add complexity
  • Market conditions can impact yield
  • Investment borrowing is treated more cautiously

A higher deposit reduces lender exposure and helps ensure the rental income meets stress-testing requirements.

Deposit Requirements by LTV Band

80% LTV (20% deposit)

  • Limited number of lenders
  • Requires strong rental performance
  • More suited to experienced landlords

75% LTV (25% deposit)

  • Most widely available option
  • Standard for first-time landlords
  • Often considered the industry benchmark

70% LTV (30% deposit)

  • More products available than 80% LTV
  • Useful for applicants with complex profiles or limited rental coverage

65% LTV (35% deposit) and below

  • Offers the strongest pricing
  • Easier to meet rental stress tests
  • Opens doors to lenders with stricter criteria

Buy to Let Deposit Examples

Here’s how deposit amounts look at different property prices:

£180,000 property

  • 20% deposit: £36,000
  • 25% deposit: £45,000
  • 30% deposit: £54,000

£250,000 property

  • 20% deposit: £50,000
  • 25% deposit: £62,500
  • 30% deposit: £75,000

£300,000 property

  • 20% deposit: £60,000
  • 25% deposit: £75,000
  • 30% deposit: £90,000

These demonstrate the higher upfront capital often required for buy-to-let borrowing.

How Rental Income Affects Deposit Size

Lenders calculate rental affordability using Interest Coverage Ratios (ICRs) and stress rates. Typically, they require rental income to cover the mortgage interest by:

  • 125% to 145% for limited companies
  • 140% to 170% for individual landlords (basic-rate taxpayers)
  • Even higher coverage for higher-rate taxpayers

If rental income falls short of required coverage:

➡️ A larger deposit may be needed to reduce the loan amount.
➡️ Alternatively, a longer-term or fixed rate may improve stress test results.

Deposit Requirements for First-Time Landlords

First-time landlords often face:

  • Stricter affordability checks
  • Limited lender choice
  • Possible restrictions on high LTV borrowing

Many lenders request 25% deposits for new landlords, though some may consider 20% if the applicant has strong personal income and a clean credit file.

Buy to Let Mortgage Deposit for Limited Company vs. Personal Name

Buying through a limited company (SPV)

  • Deposit expectations usually start at 25%
  • Rental stress tests may be more favourable
  • Popular for long-term tax planning (seek independent tax advice)

Buying in personal name

  • Deposit depends heavily on personal income tax bracket
  • Some lenders require higher rental coverage for higher-rate taxpayers

Does Credit History Affect Buy to Let Deposits?

Yes. Credit profile plays a major role in determining:

  • Lender choice
  • Deposit expectations
  • Accessibility of higher LTV products

Applicants with historic adverse credit — defaults, CCJs, arrears — may need:

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  • Higher deposits (30–40% depending on severity)
  • Specialist lending routes
  • Strong rental income to meet affordability thresholds

Property Type and Deposit Requirements

Some property types require higher deposits, such as:

1. HMOs (Houses in Multiple Occupation)

Deposits typically 25–35% due to increased complexity.

2. Multi-unit blocks (MUBs)

Often require 30%+ deposits.

3. New-build flats

May require 25–35%, depending on lender appetite.

4. Non-standard construction

Varies widely; specialist lenders may require higher deposits.

Portfolio Landlords: Do You Need a Bigger Deposit?

Not always, but lenders assess:

  • Rental performance across existing properties
  • Portfolio loan-to-value
  • Experience level
  • Personal income (to stress test a void period)

Portfolio owners with strong track records often secure standard 25% deposits, but weaker performance may require higher equity.

How to Strengthen Your BTL Deposit Position

(General Information Only)

1. Build savings proactively

Regular contributions to dedicated savings accounts help landlords accumulate capital faster.

2. Improve rental yield forecasts

Higher projected yield supports affordability and may allow lower deposit options.

3. Reduce personal financial commitments

Lower outgoings can improve stress test outcomes for some lenders.

4. Consider property location carefully

Areas with stronger rental demand help meet ICR requirements more easily.

5. Explore limited company structures

Some investors use SPVs for improved rental coverage, subject to professional tax advice.

Summary

Your required buy to let mortgage deposit depends on:

  • Lender criteria
  • Rental income strength
  • Credit profile
  • Property type
  • Experience as a landlord

In most cases, expect to provide:

  • 20–25% deposit for standard buy-to-let purchases
  • 25–35% deposit for HMOs, new-builds, or complex cases
  • Larger deposits if rental income or credit history limits borrowing
  • Greater flexibility with lower LTV applications

With the right preparation and realistic financial planning, many landlords secure competitive buy-to-let mortgages even with challenging deposit requirements.

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

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Important information: Mortgage Bridge provides information only and acts as a mortgage introducer. We do not provide mortgage advice or make lender recommendations. We can introduce you to an FCA-regulated mortgage adviser who can provide personalised mortgage advice.