How Much Deposit Do You Need for a Mortgage?

The amount of deposit you need for a mortgage in the UK typically ranges from 5% to 20% of the property price, depending on the lender and your financial circumstances. A 10% deposit is standard, but you can go lower—or higher—and each choice affects your interest rate, monthly payment, and how easy it is to get approved.

How Much Deposit Do You Actually Need?

Most UK lenders require a minimum deposit of 5% of the property price. That means on a £200,000 house, you need £10,000. But here's the catch: the less you put down, the higher your interest rate will be, because the lender is taking more risk.

Here's how it breaks down by deposit size:

5% deposit — Highest interest rates. You'll pay 0.5–1.5% more than someone with a 20% deposit. Only available to first-time buyers on most lenders now.
10% deposit — Standard for first-time buyers. Rates are reasonable, and this is usually the first target many savers hit.
15% deposit — Better rates, fewer lender restrictions. You're starting to look more attractive to mortgage providers.
20% deposit — Best rates available. Lenders compete for you. You're also no longer in "high loan-to-value" territory, which opens up more products.

The technical term is loan-to-value (LTV). A 10% deposit on a £200,000 house is a 90% LTV. A 20% deposit is 80% LTV. Lenders group mortgages into LTV bands (90%, 85%, 80%, 75%, 70%, 60%), and each band has its own pricing. The difference between 90% and 80% LTV on a £250,000 mortgage can be £50–£150 per month — that's £600–£1,800 per year you're paying extra.

You can calculate how different deposit amounts affect your total cost using our mortgage calculator. Try it with your actual figures: it'll show you both the monthly payment and the total interest you'll pay over the full term.

What If You Can't Afford a Large Deposit?

Not everyone has saved 20%. If you're a first-time buyer with 5–10%, you're not alone. Here's what you need to know.

Lender restrictions tighten below 15% LTV. At 90% LTV (10% deposit), you'll have a smaller choice of lenders, and some might require:

A larger emergency fund ("reserve funds")
A guarantor or family loan agreement
Proof of stable income for the last 3 years
A credit score in good standing (not perfect, just good)

Check credit score requirements for mortgage approval if you're unsure where you stand.

First-time buyer schemes can help. If you're buying your first home, you might qualify for:

Mortgage Guarantee schemes — the government guarantees part of your mortgage if your deposit is under 15%, letting lenders offer better rates than they would otherwise
Lifetime ISAs — save up to £4,000/year and get a 25% government bonus (£1,000/year). You can use this for a first-time purchase.

It's worth checking with a mortgage broker who specialises in first-time buyers. They know which lenders are most flexible with smaller deposits.

Family loans and gifts. If a parent or family member gifts you money for a deposit, most lenders will accept it — but they'll require a signed letter confirming it's a gift, not a loan you'll repay. This matters because lenders want to know your actual debt obligations.

For a fuller picture, see our first-time buyer mortgage guide and mortgage affordability calculator.

How Your Deposit Size Affects Your Monthly Payment

Let's use a real number. Imagine you're buying a £250,000 house and want a 25-year mortgage at 5.2% fixed rate (a realistic 2026 rate).

5% deposit (£12,500) — You borrow £237,500. At 5.8% (higher rate), your monthly payment is £1,407.
10% deposit (£25,000) — You borrow £225,000. At 5.4% (standard rate), your monthly payment is £1,327.
20% deposit (£50,000) — You borrow £200,000. At 4.9% (best rate), your monthly payment is £1,186.

The difference between 5% and 20% deposit is £221 per month. Over 25 years, that's £66,300 more in total payments—mostly because of the higher interest rate you'll get, not just the larger loan size.

That's why savers often say saving another £25,000 for a bigger deposit is worth the wait. Every £10,000 you add to your deposit typically saves you £30–£50/month in payments, depending on rates.

Use our mortgage calculator to see these numbers with your own figures and rates. Adjust the deposit slider and watch both the monthly payment and total interest cost move.

Why Lenders Care So Much About Your Deposit

Here's the lender's perspective. If you default on a 90% LTV mortgage and the house value drops 10%, the lender loses money — they'll recover only 80% of what they lent. At 80% LTV, the house could drop 20% in value and they'd still break even. That's why higher deposits get lower rates: less risk equals less cost for the lender to carry.

Loan-to-value bands matter more than you might think. Moving from 90% LTV to 85% LTV can drop your rate by 0.4–0.5%. That's worth £40–£60/month on a typical mortgage—more than many arrangement fees.

Affordability: Deposit Size Isn't the Only Question

You can afford a larger deposit in theory but still shouldn't stretch. Lenders will typically offer you up to 4.5× your annual salary (some go higher). But just because they will doesn't mean you should.

Stress-test your budget — ask yourself:

What if interest rates rise another 2–3% in five years when I remortgage?
What if my partner's income drops, or I need to take unpaid leave?
What if the boiler breaks, the roof needs tiles, the property tax rises?

A £200,000 mortgage at 5% costs £1,111/month. If rates rise to 7%, that same mortgage costs £1,322/month. Can your budget handle that extra £211/month? If not, you might need a larger deposit to borrow less, or a smaller house.

Our mortgage affordability calculator walks you through this. It lets you see what happens to your payments if rates rise, and whether the mortgage still fits your budget.

Frequently Asked Questions

Q: Can I use my ISA savings as a deposit? A: Yes. ISA savings are yours to use for anything, including a house deposit. Lenders don't distinguish between ISA and regular savings—they just want to see you've got the money and it's been in your account for a reasonable time (usually 3+ months). If you're a first-time buyer, you can also use a Lifetime ISA, which gives you a 25% bonus on withdrawals up to £4,000/year (up to £1,000/year bonus).

Q: What's the difference between a "deposit" and a "down payment"? A: In the UK, we use "deposit" (£10,000 on a £200,000 house). In the US and some other countries, it's "down payment." They mean the same thing—the money you put forward; the lender covers the rest. The term "mortgage deposit" can also refer to funds you put into a savings account when you reserve a property from a developer (usually 5–10%), but this is separate from your mortgage down payment.

Q: If I put down 5%, do I need mortgage protection insurance? A: No, not automatically. However, most lenders require mortgage indemnity insurance (MII) on high-LTV mortgages (typically 85%+ LTV, so 15% or smaller deposits). This protects the lender if you default and the house sells for less than the outstanding mortgage. You pay the premium (typically £500–£3,000), and it's added to your mortgage balance. It doesn't protect you—it protects the lender. Building insurance and life insurance are separate.

Q: Can I borrow my deposit from family? A: You can borrow it, but lenders treat borrowed money differently from a gift. If your parent lends you £25,000 for a deposit, that's now a debt on your record, and the lender will factor it into your affordability assessment. Most lenders prefer a gift letter (confirming it's not repayable) because it improves your debt-to-income ratio. If it must be a loan, document it clearly and show your lender.

Q: What happens if I save 30% or 40% as a deposit? A: That's brilliant. You get the best possible rates, the smallest monthly payments, and maximum flexibility. Larger deposits don't come with downsides—you're just borrowing less, so you'll pay less interest. Some people with substantial deposits still don't put down 40%, because they can invest the extra money at higher returns than their mortgage interest rate. See mortgage vs. investing for that discussion.

Q: Do I need a larger deposit if my credit isn't perfect? A: Generally, yes. A larger deposit reduces the lender's risk, so they're more willing to overlook a slightly patchy credit history. With a 5% deposit and poor credit, you might be rejected. With a 15–20% deposit and the same credit, you'll get approval. Check our credit score guide for mortgages for specifics on what lenders are looking for.

Q: Is a larger deposit worth delaying my purchase? A: It depends on house prices in your area and your personal situation. If house prices are rising faster than you can save, a smaller deposit now might mean you spend less in total (because you're buying sooner at a lower price). If prices are stable or falling, waiting to save more makes sense. Run the numbers with a mortgage affordability calculator—it can show you the impact of house price changes.

Q: Can I get a mortgage with no deposit? A: Not in the UK in 2026. The absolute minimum is 5% for first-time buyers on most mainstream lenders. During the pandemic, a few lenders offered 100% LTV mortgages, but they've all withdrawn. You need at least some skin in the game.

Q: Should I pay off my mortgage early or invest the extra money? A: It depends on your mortgage rate versus investment returns. If your mortgage is at 5% and the stock market historically returns 7%, the maths favour investing. But it's not just maths—it's peace of mind too. See mortgage payoff versus investing for a deeper look, including tax implications (ISA allowances, capital gains, etc.).

What to Do Next

The first step is to understand what you can actually afford, not just what a lender will offer you. Use our mortgage affordability calculator to model different deposit sizes and monthly payments against your income.

Once you've settled on a deposit target and confirmed affordability, the next step is to improve your mortgage application odds. Check your credit score for mortgage requirements and consider getting mortgage pre-approval—lenders will tell you exactly what they'll lend and at what rate, so there are no surprises.

Finally, run your numbers through our mortgage calculator with the actual rates you've been quoted. It takes the guesswork out of comparing different deals from different lenders.

Buying a house is the biggest financial decision most people make. A little homework on your deposit now—and how it affects your rate, payment, and total cost—can save you thousands.