How Much Deposit Do You Need to Buy a House? | Updated Guide by Mortgage Bridge
One of the first questions most buyers ask is how much deposit do you need to buy a house. The answer is not always straightforward, as deposit requirements vary depending on lender criteria, mortgage type, credit history, and personal circumstances.
In the UK, the size of your deposit plays a key role in how mortgages are assessed. It affects loan-to-value ratios, product availability, interest rates, and overall affordability. This updated guide explains typical deposit requirements, how deposits are calculated, and what lenders usually look for when assessing a mortgage application.
This article provides general information only and does not offer regulated mortgage advice.
What Is a Mortgage Deposit?
A mortgage deposit is the amount of money you contribute towards the purchase price of a property. The mortgage covers the remaining balance.
For example:
- Property price: £250,000
- Deposit: £25,000
- Mortgage: £225,000
In this example, the deposit represents 10% of the property value.
Deposits are usually paid from savings or other acceptable sources and must be clearly evidenced during the mortgage application process.
How Much Deposit Do You Typically Need to Buy a House?
In the UK, mortgage deposits are usually expressed as a percentage of the property’s purchase price.
Common deposit levels include:
- 5% deposit – Often the minimum for residential mortgages, subject to strict criteria
- 10% deposit – Widely available and commonly used
- 15% to 20% deposit – Provides access to a broader range of lenders
- 25% deposit or more – Often required for buy-to-let mortgages
While 5% deposit mortgages exist, they are not suitable for every borrower or property and often come with tighter affordability and credit checks.
Understanding Loan-to-Value (LTV)
Loan-to-value (LTV) is the percentage of the property value that you are borrowing.
For example:
- 95% LTV = 5% deposit
- 90% LTV = 10% deposit
- 85% LTV = 15% deposit
Lower LTV mortgages generally offer:
- More product choice
- Lower interest rates
- Greater lender flexibility
Your deposit directly determines your LTV, which is why deposit size is so important.
Minimum Deposit Requirements Explained
5% Deposit Mortgages
Some lenders offer mortgages with a 5% deposit, typically aimed at first time buyers. These mortgages usually involve:
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- Higher interest rates
- Stricter affordability checks
- Stronger credit history requirements
Availability can vary depending on market conditions.
10% Deposit Mortgages
A 10% deposit is often seen as a more achievable and stable starting point. Many lenders offer products at this level, and interest rates are usually more competitive than at 95% LTV.
Larger Deposits
Deposits of 15% or more generally improve lender choice and affordability. Larger deposits reduce lender risk and may provide access to better rates and terms.
Deposit Requirements for First Time Buyers
First time buyers often ask how much deposit they need to buy their first home. While 5% deposits are sometimes possible, many first time buyers aim for 10% or more to improve lender choice.
Some first time buyer-specific schemes, such as shared ownership or Right to Buy, may reduce the upfront cash required, but these schemes have eligibility criteria and long-term considerations.
Deposit Requirements for Buy-to-Let Properties
Buy-to-let mortgages usually require larger deposits than residential mortgages.
Typical buy-to-let deposit requirements are:
- 25% minimum in many cases
- Sometimes higher, depending on lender and property type
Buy-to-let affordability is often assessed using rental income, but deposit size remains a key factor.
Can the Deposit Come from Different Sources?
Yes, deposits can come from various sources, provided they are acceptable to the lender and properly evidenced.
Common deposit sources include:
- Personal savings
- Gifted deposits from family
- Equity from an existing property
- Proceeds from selling assets
Lenders usually require confirmation that gifted deposits are non-repayable and that the person gifting the funds will not have an interest in the property.
How Long Do You Need to Have Your Deposit?
Lenders often want to see that deposit funds have been held for a period of time, typically shown through bank statements.
This helps lenders:
- Verify the source of funds
- Meet anti-money laundering requirements
- Confirm funds are genuinely available
Sudden large deposits may require additional explanation or documentation.
Does a Bigger Deposit Always Mean a Better Mortgage?
A larger deposit can improve mortgage options, but it is not the only factor lenders assess.
Lenders also consider:
- Income and affordability
- Credit history
- Employment stability
- Property type
A large deposit does not override affordability or serious credit issues, but it can improve overall lender confidence.
How Deposit Size Affects Interest Rates
Generally, the lower the LTV, the lower the interest rate offered. This is because the lender’s risk reduces as the deposit increases.
For example:
- 95% LTV mortgages often have the highest rates
- 90% and 85% LTV products are usually more competitive
- Rates may improve again at 75% LTV and below
Rate differences can significantly affect monthly repayments over time.
Saving for a Deposit
Saving for a deposit is often one of the biggest challenges for buyers.
People commonly save through:
- Regular monthly savings
- Lifetime ISAs or other savings accounts
- Reducing existing spending commitments
Consistency and evidence of saving behaviour can also support a mortgage application.
Deposit vs Other Buying Costs
It is important to remember that the deposit is not the only cost involved in buying a house.
Other costs may include:
- Solicitor fees
- Valuation fees
- Survey costs
- Stamp Duty Land Tax (where applicable)
- Removal and moving costs
Being financially prepared means budgeting beyond just the deposit.
Common Misunderstandings About Deposits
“You Always Need 20%”
While larger deposits help, many buyers purchase with less than 20%.
“The Deposit Is the Only Thing That Matters”
Income, affordability, and credit history are equally important.
“Any Source of Money Is Acceptable”
Lenders apply strict checks on where deposit funds come from.
How Deposit Requirements Can Change
Mortgage deposit requirements can change over time based on:
- Market conditions
- Lender risk appetite
- Economic factors
What is available today may not be available in the future, which is why up-to-date guidance is important.
Summary
So, how much deposit do you need to buy a house? In most cases, buyers need between 5% and 20% of the property price, depending on mortgage type, lender criteria, and personal circumstances. While smaller deposits can work, larger deposits usually provide more flexibility and access to better mortgage products.
Understanding how deposits affect loan-to-value, affordability, and interest rates can help you set realistic expectations and plan more effectively.
This article provides general information only. For personalised guidance, 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.