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When thinking about buying your first home, it's important to get to grips with how mortgage deposits work, including how much you'll need to save and the rules around gifted deposits.
Mortgages are generally available at up to 95% loan-to-value (LTV), meaning it's possible to get on the property ladder with a deposit of 5% of the purchase price and a mortgage covering the remaining 95%.
On a £200,000 property, a 5% deposit would be £10,000, a 10% deposit would amount to £20,000, and a 15% deposit would be £30,000.
Here, we explain how to work out how much you'll need to save for your first home, how to speed up the process and the benefits of saving a bigger deposit.
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There are various costs to factor in when buying a home, but your deposit is by far the biggest thing you'll be saving towards.
To calculate how much you might need to save for your mortgage deposit, there are two things you should consider: typical property prices and how much you will be able to borrow.
You can get a rough idea of local house prices in the area you want to buy in from property portals such as Rightmove and Zoopla, and by speaking to local estate agents.
The figures you'll see on portals and agent websites are asking prices, so they might be a little higher than what the properties are worth. For more concrete information, you can check how much homes in the area have sold for using the Land Registry's price paid tool.
Say you were looking at homes worth around £200,000, you'd need at least a 5% deposit to get a 95% mortgage. This would mean you'd need to put down £10,000 and borrow £190,000 with a mortgage.
Mortgage lenders will typically offer a mortgage worth four and half times your salary.
So if you earn £43,000, you might be able to borrow £193,500, which is enough to buy a £200,000 home with a 5% deposit.
However, if you earn less, you will likely need to save a larger deposit or find a cheaper property.
For example, if you earn £35,000, you might only be able to borrow £157,500 and if you only had a £10,000 deposit, you wouldn't have enough to buy a property worth £200,000.
The table shows the average size of a first-time buyer's deposit by nation and region, based on Halifax data.
| Region | Average first-time buyer house price 2024 | Average first-time buyer deposit 2024 | Average deposit as % of purchase price |
|---|---|---|---|
| East Midlands | £249,130 | £40,402 | 16% |
| East of England | £346,523 | £56,526 | 16% |
| London | £511,514 | £124,688 | 24% |
| North East | £180,834 | £30,678 | 17% |
| Northern Ireland | £194,323 | £37,898 | 20% |
| North West | £230,161 | £39,574 | 17% |
| Scotland | £200,356 | £43,537 | 22% |
Source: Halifax, rolling 12 months to 31 December 2024
The data shows first-time buyers are typically putting down deposits worth over 15%, rather than 5%.
While you might be able to buy a home with a deposit of 5%, there are plenty of reasons to save more if you can:
Saving for a deposit can seem like a never-ending journey. We've created a deposit calculator to give you an idea of when you'll have saved enough to buy a home in your area.
After working out how much you ideally need to save, you should set a plan for how to achieve it. Here are some ideas:
The lifetime Isa (Lisa) is a tax-free savings or investments account designed to help those aged 18-39 at the time of opening to buy their first home or save for retirement.
It offers a 25% bonus of up to £1,000 a year if you save the maximum £4,000.
However, there is a penalty if you withdraw the money saved for anything other than buying a home or your retirement and the maximum house purchase price is limited to £450,000.
For many, rent will be the biggest expense on the list. You might be able to cut costs by moving to a different area or into a flatshare.
An increasing number of people saving for their first home are choosing to move back in with their parents. Assuming this move will mean you pay below-market rent (or even none if you're very lucky) and spend less on bills and food, you could save hundreds every month and reach your deposit goal much faster.
If lowering your rent is not an option, there are plenty of other bills that could be reduced:
It might be a cliche, but making small changes to your everyday outgoings really can add up over time.
Check your bank statement and have a look at what you're spending on – some banking apps automatically break spending down into categories, which makes the process easier.
Perhaps you hadn’t realised that the daily cup of coffee you buy costs you £600 a year, or that you’ve been spending £150 on clothes every month.
Identifying any areas you can cut back on – eg taking coffee from home in a thermos flask, or limiting yourself to one new clothing item a month – can free up substantial amounts of cash to be stashed away in your deposit fund.
Use loyalty cards and consider taking out a cashback credit card, which will enable you to earn a percentage of what you spend in the form of credit on your bill.
To max out the benefits of a cashback card you should use it for all your everyday spending but pay off the balance in full every month, as the interest you’ll be charged could outweigh the cashback you earn.
Using a credit card responsibly will also help to improve your credit score, important for when you apply for a mortgage.
Increasing your income is another way to boost your deposit savings.
There are countless ways you could do this, from freelancing in your spare time or setting up an Etsy shop to renting out games consoles or selling stuff you no longer use.
Be aware that you may have to submit a self-assessment tax return and pay income tax on extra money you have coming in.
Even if you meticulously stick to all of your budgeting plans, sometimes reaching your savings target can remain out of reach. The good news is that there are other options:
Allows first-time buyers in England to get a 30-50% discount when buying a new-build home or a home which someone else has bought through the scheme. Councils can set their own eligibility rules (for example, limiting properties to local buyers or prioritising key workers).
Many parents want to help their children get on the property ladder, and there are several ways to do this.
Some first-time buyers are in the fortunate position of being offered a cash deposit from their parents, either as a gift or a loan. This will need to be declared to the mortgage provider, and you'll need to fill out official documents confirming the arrangement.
If a gifted deposit isn't an option, it's worth exploring guarantor mortgages. These enable you to borrow with a small - or even no deposit, provided your parent or family member offers their property or savings as security against the loan. The family member has to be willing to cover the mortgage if you miss a payment.
It’s becoming increasingly popular for siblings and groups of friends to buy property together.
Some mortgage providers offer joint mortgages to groups of up to four people. They’ll usually only take the income of the two highest earners into account, but everyone is equally responsible for making the repayments.
If anyone wants to leave the property or sell the house, things can get a little complicated, so make sure you take legal advice before buying.
Shared ownership schemes allow you to buy a share of a property (usually between 25% and 75%) and pay rent on the rest.
This allows you to get a foot in the door, but you'll need to do your sums, as the combined cost of your mortgage, rent and service charge can quickly add up.
Allows council tenants to buy their home at a discount of up to 70% off the purchase price. If you've spent at least three years living in a council house or flat in England, you might be eligible.
Unlike traditional home loans, a 100% mortgage covers the full cost of the house, meaning you don't need a deposit.
A guarantor mortgage is also a form of 100% mortgage. There are few of these deals around, and they carry a significant risk of negative equity, so you and your family should take professional advice before applying.
By the time you're ready to start house-hunting, you'll probably have a good idea of the areas you might want to buy in.
If you have a few different places on your shortlist, check out house prices, quality of life, schools and more to help you choose the best place to live.
You'll need to register with estate agents before going on viewings, and it could also be worth getting a mortgage agreement in principle (AIP). This is a document confirming that a mortgage lender would be willing to lend you a certain amount, and can be helpful in confirming your budget and proving that you're a serious buyer.
Finding the right kind of mortgage for you depends on a range of circumstances, so it’s always worth doing your homework.
There are several different types of mortgage, and it's well worth taking professional advice on the best option for you.
We'd recommend talking to an independent mortgage adviser, also known as a mortgage broker. Look for one that's 'whole-of-market' - this means they can look at all the deals available, rather than a limited range.
Don't automatically go with your own bank, as they may not offer the cheapest or most suitable deals.
Answers to some of the most frequently asked questions about property deposits.
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