How much deposit do I need for a house?

• Minimum deposit is often 5% of purchase price, but 10-20% deposits get you better rates and more lender options.
• New builds need higher deposits: 10-15% for houses, 15-25% for flats due to potential value drops.
• Larger deposits = lower interest rates, smaller monthly payments, and easier mortgage approval.
• Deposits can come from savings, family gifts, inheritance, or property sales - gifts need a signed letter.
• No-deposit mortgages exist but are rare, risky, and usually need guarantors with higher interest rates.

Most lenders will require a deposit of at least 5% of the property’s purchase price. Meaning for a property priced at £300,000 you’d need at least a £15,000 mortgage deposit.

Though you’ll typically find better mortgage rates and more options with larger deposits of 10%, 15%, or 20%.

What exactly is a house deposit?

A house deposit (or mortgage deposit) is the amount of money you pay upfront towards purchasing a home. It’s your initial contribution towards the purchase price, with the remainder covered by your mortgage.

Your deposit funds can come from various places, including personal savings, a gift from family or friends, inheritance, or the sale of a previous property.

How your deposit size affects your mortgage

Your deposit impacts both your mortgage options and the interest rate you’ll pay. Lenders view larger deposits as lower risk, which translates to better deals for you.

With a smaller deposit, you’ll typically face higher interest rates and fewer lender choices.

Learn more: Mortgages explained

Are larger deposits better?

The larger deposit you can put down the easier you’re going to make life in the long-term:

• Better mortgage rates: The larger your deposit, the lower your loan to value (LTV) will be. Your LTV is simply the amount you owe divided by what your home is worth. Lower LTV ratios typically qualify for better interest rates.
• Lower monthly repayments: The less you borrow, the cheaper your monthly repayments are going to be. Saving for a bigger deposit can save you thousands a year in monthly repayments.
• More lender choice: A bigger deposit means you’re more attractive to lenders. You’ll have access to a wider range of mortgage lenders and products, giving you more negotiating power and better terms.
• Higher chance of being accepted: Lenders view larger deposits as lower risk, making you a more attractive borrower increasing your chances of mortgage approval.

The minimum deposit you need for a house is typically 5% of the property’s purchase price. This means you can borrow up to 95% of the home’s value through your mortgage, making homeownership accessible even if you haven’t saved a huge deposit.

95% mortgage availability

While 95% mortgages (requiring just a 5% deposit) are available from most major UK lenders, they're not always easy to secure. You’ll need to have a steady household income and good credit scores to be accepted for these high loan-to-value mortgages.

Example of a 5% deposit

On a £200,000 property, a 5% deposit would be £10,000, allowing you to borrow £190,000. However, remember that with such a small deposit, you'll face higher interest rates and stricter lending criteria. You'll also need to budget for additional costs like stamp duty, legal fees, and moving expenses on top of your minimum deposit.

New build properties typically require higher deposits than existing homes. For new build houses, you’ll usually need at least 10-15% deposit, while new build flats often require 15-25% due to lenders’ concerns about potential value drops in the early years.

If you’re buying off-plan (before construction is complete), some lenders may be even more cautious due to the additional risks involved.

However, there are ways to get a new build mortgage with a smaller deposit. The Deposit Unlock government scheme allows buyers to purchase a new home from a participating developer with a 5% deposit.

True ‘no deposit mortgages’ or ‘100% mortgages’ are very rare nowadays, but some major lenders may offer them for buyers that meet very strict criteria. 100% mortgages carry significant risks – if property prices fall, you could easily find yourself in negative equity, where your home is worth less than your mortgage debt. There are typically two options for no deposit mortgages:

Guarantor mortgages

You need a guarantor (like a family member or close friend) who’ll be responsible for paying the mortgage if you can’t. The guarantor will need to use their own property or savings to secure your loan.

Your guarantor becomes liable for the mortgage if you can’t pay, meaning they could lose their savings or have their home repossessed if you do not keep up with payments.

Family offset mortgages

Similarly to guarantor mortgages, your relatives would need to use their savings to “offset” against your mortgage without transferring the cash. Your family member is likely required to keep a certain amount of money in a designated savings account that they cannot touch for a set period.

But again, not keeping up with payments could mean your family lose this money and become liable.

It’s important to note that no deposit mortgages will come with higher interest rates as the loan is a bigger risk for lenders, meaning that monthly payments could be pretty steep.

Once you’ve saved your deposit, you’re ready to start the actual buying process. The key next steps are getting a mortgage in principle to confirm your budget, viewing properties, getting an offer accepted on a house, and instructing a conveyancer.

The whole process from instructing a conveyancer to completion typically takes 8-12 weeks, so having your deposit ready puts you in a strong position to move quickly when you find the right property.

Learn more: A guide to buying your first home

Who do I need to pay the mortgage deposit to?

You pay your deposit to your conveyancing solicitor, who holds it securely until completion day. They then transfer it directly to the seller's solicitor as part of the final purchase transaction.

Can my parents contribute towards my deposit?

Yes, parents can gift money towards your deposit. Most lenders accept gifted deposits from family members, but you'll need to provide a gifted deposit letter confirming the money doesn't need to be repaid and won't affect the property ownership.