How much deposit do I need?
Your deposit is one of the biggest factors in your mortgage. It affects which lenders will accept you, what interest rate you’ll pay, and how much your monthly payments will be. This guide explains how much you need, how to save it, and what options exist if you’re struggling to hit the target.
In this guide
What is the minimum deposit for a mortgage in the UK?
The absolute minimum deposit accepted by UK mortgage lenders is 5% of the property’s purchase price. On a £250,000 home, that’s £12,500. Several mainstream and specialist lenders offer 95% LTV products, though your rate will be higher than if you had a larger deposit.
While 5% is technically possible, many buyers find that saving a little more opens up significantly better rates and more lender options.
How does deposit size affect your interest rate?
LTV tiers and what they mean
95% LTV
5% deposit
Highest rates — limited lender options
90% LTV
10% deposit
Significantly more lenders and better rates
85% LTV
15% deposit
Another meaningful rate improvement
75% LTV
25% deposit
Access to the most competitive rates in the market
The biggest rate jumps typically happen between 95% and 90% LTV, and again between 80% and 75%. Even a small increase in your deposit can move you into the next tier and save thousands over the mortgage term.
How to save for a deposit
- Government adds 25% to your savings (up to £1,000/year free)
- Save up to £4,000 per tax year
- Property must be £450,000 or less
- Fixed monthly deposits build the habit
- Some accounts offer bonus rates for consistent saving
- Set up a standing order on payday so savings happen automatically
- Review subscriptions and direct debits
- Consider a side income or overtime
- Temporarily reduce discretionary spending and redirect to savings
Gifted deposits: using family money
- A signed gift letter confirming the money is a gift, not a loan
- The letter must state that no repayment is expected and the giftor has no interest in the property
- Proof of the giftor’s identity (passport or driving licence)
- Evidence of where the gifted funds came from (bank statements showing the source)
What deposit sources do lenders accept?
Accepted vs potentially problematic sources
Generally accepted
- Personal savings (with bank statement trail)
- Gifted funds from family (with gift letter)
- Inheritance (with probate documentation)
- Sale proceeds from another property
- Redundancy payments
- Investments, ISAs, or pension lump sums
May cause issues
- Cash savings with no bank statement trail
- Cryptocurrency (some lenders accept, many don’t)
- Gambling winnings (requires evidence of legitimate source)
- Overseas funds (additional checks and potential delays)
- Loans (must be declared and factored into affordability)
- Recent large deposits with no clear explanation
How long does it take to save a deposit?
Saving timeline examples (10% deposit)
~4 years
Saving £500/month
Targeting a £250,000 property (£25,000 deposit)
~2 years
Saving £1,000/month
Same target with higher savings rate
~18 months
With LISA bonus
Saving £1,000/month plus £1,000/year government bonus
These are simplified examples — your actual timeline depends on your income, expenses, and local property prices. A mortgage broker can help you set a realistic target based on your current situation.
Builder deposits and new-build incentives
Some house builders offer incentives to first-time buyers, including contributions towards your deposit, paid stamp duty, or free upgrades. These can be valuable but come with caveats.
Lenders may treat builder incentives as a price reduction rather than a genuine deposit contribution. If a builder offers a 5% “gifted deposit” on a £300,000 property, the lender may value the home at £285,000 (the “true” price) and calculate your LTV accordingly.
Always discuss builder incentives with your broker before committing, so you understand how they’ll affect your mortgage application.
Get deposit advice from Clearview
At Clearview Mortgage Solutions, we help first-time buyers at every stage — including working out how much deposit you need, which LTV tier to target, and how to evidence your funds for the lender.
Contact us for a free, no-obligation chat about your deposit and buying plans.
Related guides
More guides in our first-time buyer mortgage hub.
Speak to an Expert
Our calculators give you a useful estimate, but your actual mortgage and protection options depend on your full circumstances, credit history and lender criteria. Clearview Mortgage Solutions’ FCA regulated—our CeMAP-qualified advisers are on hand to explain how each calculator applies to you and to help you compare real mortgage quotes from 90+ UK lenders.
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