First Time Buyer Deposit: How Much Do You Really Need to Get Started?

Saving for a deposit is one of the biggest milestones when preparing to buy your first property. But how much do you actually need — and does a larger deposit make a meaningful difference? The answer depends on property price, mortgage criteria and your financial profile.

This guide breaks down everything you need to know about the first time buyer deposit, how lenders calculate risk, and how your deposit affects affordability. This article provides general information only and does not offer regulated mortgage advice.

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What Is a Deposit and Why Does It Matter?

Your deposit is the upfront amount you put toward the property before the mortgage covers the rest. It affects:

• Your loan-to-value (LTV)
• Which lenders may consider your application
• What interest rates you might be offered
• Affordability checks
• How competitive your mortgage options are

A higher deposit reduces risk for lenders, improving your choices and potentially lowering monthly repayments.

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Minimum Deposit for First-Time Buyers

In the UK, the minimum deposit is typically 5% of the property price.

Examples:

• Property price £150,000 → Deposit £7,500
• Property price £200,000 → Deposit £10,000
• Property price £250,000 → Deposit £12,500

A 5% deposit gives you access to 95% LTV mortgages, which are widely available but more sensitive to credit strength and affordability.

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Deposit Requirements by LTV Band

95% LTV (5% deposit)

• Most accessible for first-time buyers
• Stricter affordability checks
• Best suited to applicants with strong credit and stable income

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90% LTV (10% deposit)

• More lender choice
• Often lower rates than 95% LTV
• Reduced risk for the lender

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85% LTV (15% deposit)

• Increasingly competitive options
• Better tolerance for minor credit issues
• Lower monthly repayments

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80% LTV (20% deposit)

• Strong position for most lenders
• May qualify for more favourable terms
• Helpful for applicants with complex income or historic credit issues

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75% LTV and below (25%+ deposit)

• Most competitive products
• Greater flexibility on income structure and credit background
• Strong affordability outcomes

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How Much Deposit Do First-Time Buyers Typically Save?

UK averages vary, but broadly:

• First-time buyers often put down 10–20%
• Some areas require higher deposits due to property prices
• Government schemes may reduce the deposit needed depending on eligibility

Your ideal deposit depends on your financial situation, goals and the type of property you want to buy.

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How Your Deposit Impacts Mortgage Approval

1. Lender Choice

Higher deposits usually unlock more lenders and products.

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2. Affordability

A lower mortgage amount can improve your affordability calculation, especially if you have:

• Credit commitments
• Variable income
• Higher monthly outgoings

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3. Credit Profile Tolerance

The bigger the deposit, the more relaxed lenders may be about:

• Older defaults
• Historic arrears
• High utilisation
• Previous arrangements to pay

However, lenders still evaluate risk carefully — a large deposit does not override all credit considerations.

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4. Stress Testing

Lenders check whether you could still afford the mortgage if interest rates rise.
A smaller loan means easier stress-test results.

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Common First-Time Buyer Scenarios

Scenario 1: First-time buyer with excellent credit and 5% deposit

Many lenders likely to consider, though affordability will be assessed closely.

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Scenario 2: 10% deposit with minor historic credit issues

More lenders may accept due to reduced risk.

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Scenario 3: 15% deposit with moderate outgoings

This often balances credit and affordability considerations well.

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Scenario 4: 20% deposit but recent credit activity

Lenders may still proceed depending on the issue and the strength of bank statements.

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Scenario 5: Large 25%+ deposit but irregular income

A strong deposit can support complex income applications with certain lenders.

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How to Build a Strong Deposit as a First-Time Buyer

(General Information Only)

1. Use dedicated savings accounts or ISAs

Products such as Lifetime ISAs offer government bonuses, helping your deposit grow faster.

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2. Track your spending

Reducing unnecessary outgoings helps you save consistently.

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3. Avoid major new credit commitments while saving

This supports both affordability and credit stability.

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4. Check your credit files regularly

A clean, stable profile helps when applying with smaller deposits.

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5. Keep finances organised across all accounts

Lenders will review your statements carefully.

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6. Analyse how property price affects deposit targets

Setting realistic goals makes the process easier to manage.

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Does a Bigger Deposit Always Mean Better Rates?

Generally, yes — especially once you drop below key LTV thresholds such as:

• 95% → 90%
• 90% → 85%
• 85% → 80%
• 80% → 75%

Each tier can improve the rates available and broaden lender criteria.

However, your overall financial strength still matters. Lenders balance deposit size with income, credit history and affordability.

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First-Time Buyer Deposit Examples

To illustrate how a deposit influences LTV:

Property Price	Deposit	LTV
£180,000	£9,000	95%
£180,000	£18,000	90%
£180,000	£27,000	85%
£180,000	£36,000	80%

A shift from 95% to 90% LTV can noticeably increase lender choice and improve monthly repayments.

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Summary

Your first time buyer deposit plays a major role in how lenders assess your mortgage application. In summary:

• Minimum deposit is usually 5%
• A larger deposit can improve affordability
• Lender choice expands as LTV decreases
• Deposit size can offset minor credit or affordability challenges
• Careful planning and disciplined savings make the process smoother

Many first-time buyers secure mortgages with a range of deposit sizes, from 5% upwards.

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