The honest answer: 5% is the minimum, 10% is standard, 15-25% gives you real choice. Every step up the deposit ladder unlocks a better mortgage rate and lower monthly payment — but takes longer to save. This guide walks through what each deposit level buys you in 2026: lender access, rate competitiveness, affordability, monthly payment, and the trade-offs that matter.

What is a deposit?

Your deposit is the portion of the property price you pay in cash. The rest comes from the mortgage. So on a £250,000 property with a 10% deposit, you put down £25,000 and borrow £225,000.

Lenders express the mortgage size relative to the property as "loan-to-value" (LTV). A 10% deposit means 90% LTV. Lower LTV = lower risk = lower rate.

The LTV-to-rate relationship in 2026

Typical 5-year fixed residential mortgage rates by LTV band in mid-2026:

Deposit	LTV	Typical 5yr fix rate	Monthly on £200k mortgage
5%	95%	5.49%	£1,227
10%	90%	5.09%	£1,179
15%	85%	4.79%	£1,144
20%	80%	4.59%	£1,121
25%	75%	4.39%	£1,099
40%	60%	4.19%	£1,078

Each LTV step typically saves £15-£30 a month on a £200k mortgage. Over a 5-year fix that's £900-£1,800 — meaningful but not transformative. The bigger benefit at lower LTVs is lender choice and approval probability.

5% deposit — the entry point

£12,500 on a £250,000 property.

Pros

• Minimum cash outlay — fastest route to buying.
• Available from most high-street lenders.
• Government Mortgage Guarantee Scheme (where active) supports 95% LTV products.
• Lets you enter the market at current prices rather than waiting.

Cons

• Highest mortgage rate band (typically +1.0-1.5pp vs 75% LTV).
• Tighter affordability check — lender has less buffer.
• Negative equity risk if property prices fall 5%+ after purchase.
• No cash buffer for unexpected upfront costs.
• Limited product range vs 75% LTV.
• Down-valuations more painful — small rate impact on small equity stake.

Who 5% works for

• Young buyers with stable income and limited savings.
• Renters paying high rent vs market mortgage payments.
• Buyers who would otherwise be priced out by continued house price growth.

10% deposit — the standard target

£25,000 on a £250,000 property.

Pros

• Most popular UK first-time buyer level.
• Better rates than 5% — typically 20-40bps lower.
• Full lender choice — almost all high-street and specialist lenders.
• Small cash buffer beyond minimum.
• Lower risk of negative equity in modest market dips.

Cons

• Still higher rates than 75% LTV.
• Less attractive than 15%+ to lenders.
• Takes meaningfully longer to save than 5%.

Who 10% works for

Most first-time buyers. Balances time to save with mortgage cost and lender choice.

15% deposit — the rate sweet spot

£37,500 on a £250,000 property.

Pros

• Materially better rates than 90% LTV (typically 30-50bps).
• Strong lender appetite — broad product choice.
• Reasonable buffer for upfront costs and small market dip.
• Lower stress-tested affordability — more borrowing capacity.

Cons

• Takes 50% longer to save than 10%.
• Cash tied up in deposit not invested elsewhere.
• Marginal rate benefit vs 10% in tight rate environments.

Who 15% works for

Buyers with established savings and stable income. Often the right balance for mid-to-late 30s buyers who've been saving 2-3 years.

20% deposit — strong position

£50,000 on a £250,000 property.

Pros

• Strong rate band.
• Materially lower monthly payment.
• Strong negative equity buffer.
• Broader specialist lender access.
• Less affordability scrutiny than higher LTV.

Cons

• Substantial cash commitment.
• Opportunity cost — the £50,000 isn't earning investment returns.
• Takes 2-4 years to save from scratch for most households.

Who 20% works for

Second-time buyers using existing equity, or first-time buyers with substantial pre-existing savings.

25% deposit — premium position

£62,500 on a £250,000 property.

Pros

• Among the lowest rates on the market.
• Maximum lender choice.
• Strong negative equity buffer.
• Lower mortgage capital reduces total interest paid over the term.
• Faster path to mortgage-free.

Cons

• Large cash commitment.
• Substantial opportunity cost on uninvested capital.
• Many first-time buyers cannot reach without remortgaging family.

Who 25% works for

Cash-rich buyers, downsizers, and inheritance recipients. Also the standard BTL minimum.

The 25-year cost difference

Compare total interest paid on a 25-year £225,000 mortgage at different LTVs:

LTV	Rate (yr 1-5)	Monthly	5-year interest
95%	5.49%	£1,381	£57,330
90%	5.09%	£1,327	£53,160
85%	4.79%	£1,288	£50,000
80%	4.59%	£1,263	£47,920
75%	4.39%	£1,237	£45,830

The 5-year interest difference between 95% LTV and 75% LTV is around £11,500 on a £225k loan. Over the full 25-year term, assuming rates stay similar, the gap widens to about £60,000.

How to choose the right level for you

Three factors should drive the decision:

1. Time horizon: Can you wait another 1-2 years to save 5-10% more? Or is the market moving faster than you can save?
2. Income stability: If income is stable, higher LTV is tolerable. If income is variable, larger deposit gives more affordability headroom.
3. Opportunity cost: Saved money at 5% AER vs mortgage at 5% rate is roughly cost-neutral. Saved money at 4.5% AER vs mortgage at 5.5% loses you 1% a year.

Beyond the deposit — total cash needed

Many first-time buyers focus entirely on the deposit. The actual cash needed at completion is:

Item	Typical cost (£250k purchase)
Deposit (10%)	£25,000
SDLT (first-time buyer)	£0
Conveyancing + searches	£1,800
Mortgage product fee	£1,000
Lender valuation	£300
Your own survey (Level 2)	£600
Removal costs	£800
First-year buildings insurance	£450
Immediate setup (essential furniture, utilities)	£1,500
Total cash at completion	£31,450

So a 10% deposit buyer realistically needs £30,000-£32,000 in cash, not just £25,000. Plan for the buffer or have a stretch source (LISA, family contribution, second job).

Government schemes

Lifetime ISA (LISA)

The most useful deposit savings product. Save up to £4,000/year; government adds 25% (so £1,000/year). Withdraw for first home purchase up to £450,000 only. Penalty 25% on non-qualifying withdrawals.

Help to Buy ISA (closed to new applicants but still funded for existing holders)

No new accounts but existing holders can continue saving and claim the bonus until 2030.

Shared Ownership

Buy 25-75% of a property; rent the rest. Smaller mortgage and deposit (typically 5-10% of just your share). Beware service charge plus rent stack of total cost.

First Homes

New-build properties sold at 30-50% discount to local market value. Eligibility based on local income limits.

Deposit sources

Acceptable sources for residential mortgages:

• Savings: Standard, requires 3-6 months bank statements.
• Help to Buy ISA / LISA: Standard, with the platform's certificate.
• Sale of another property: Common for second-time buyers.
• Gift from family: Standard with gifted deposit letter; donor cannot have beneficial interest.
• Inheritance: With probate documents.
• Bonus or commission: Banked first; treated as savings.

Some sources can complicate the application:

• Cryptocurrency proceeds — fiat-convert and let funds season 3-6 months.
• Family loans — most lenders won't accept.
• Personal loans — accepted by some but reduces affordability.
• Cash payments into bank account — trigger AML queries.

How deposit interacts with monthly affordability

A bigger deposit doesn't just unlock lower rates — it also reduces the loan amount, which compounds the monthly saving. Worked example at £250,000 property:

Deposit	Loan	Rate (5yr fix)	Monthly (25yr repayment)
£12,500 (5%)	£237,500	5.49%	£1,457
£25,000 (10%)	£225,000	5.09%	£1,326
£37,500 (15%)	£212,500	4.79%	£1,216
£50,000 (20%)	£200,000	4.59%	£1,122
£62,500 (25%)	£187,500	4.39%	£1,029

The gap between 5% and 25% deposit is £428/month — £5,100/year, or £25,500 over a 5-year fix. Over a 25-year mortgage, the cumulative saving is materially larger, though some of it represents capital repayment rather than interest saved.

The deposit-affordability trade-off in 2026

Affordability stress tests are calibrated for current rate environments, so larger deposits unlock more borrowing capacity even before rate considerations. A buyer with £37,500 deposit can typically borrow £200,000-£240,000; the same buyer with £25,000 deposit might be capped at £180,000-£220,000 due to tighter LTV affordability rules.

This means deposit size affects both what you can afford (maximum borrowing) and what it costs (monthly payment). The trade-off is rarely symmetric: jumping from 5% to 10% deposit dramatically opens lender choice; jumping from 20% to 25% has smaller marginal benefit.

Frequently asked questions

How much deposit do I need to buy a house in the UK?

The minimum is 5% (95% LTV). Most lenders prefer 10% (90% LTV); the most competitive rates start at 15% (85% LTV) and improve further at 20% and 25%.

Is 5% deposit enough?

Yes — 95% LTV mortgages are available from most major lenders. The trade-off is higher rates (typically 0.5-1.0pp more than 75% LTV) and stricter affordability checks.

Does a 10% deposit get better rates?

Yes — moving from 95% LTV to 90% LTV typically saves 20-40 basis points on the mortgage rate, equivalent to £30-£60/month on a £200,000 mortgage.

What does LTV mean?

Loan-to-Value — the size of the mortgage as a percentage of the property value. A £150,000 mortgage on a £200,000 property is 75% LTV (you deposit 25%).

What's the best deposit level for rates?

60% LTV (40% deposit) typically unlocks the lowest rates. Below 60% LTV gains are smaller. For most first-time buyers, 15-25% deposit balances cash-out vs rate access.

Can I borrow my deposit?

Generally no for residential mortgages. Lenders need to see a sustainable deposit source. Family gifts are accepted with a gifted deposit letter; family loans typically aren't.

How much should I save beyond the deposit?

Allow £4,000-£8,000 beyond the deposit for SDLT (if applicable), conveyancing, survey, mortgage product fee, lender valuation, removal costs, and immediate setup.

Is 25% deposit overkill?

For first-time buyers, no — 25% deposit opens the most lender choice and competitive rates. The opportunity cost is the time taken to save the larger amount vs entering the market sooner.

Deposit and chain position

A larger deposit can also strengthen your offer position. Sellers considering multiple offers often prefer larger deposits because they correlate with smoother completion: more cash buffer for unexpected costs, less likely to be derailed by down-valuation, and stronger affordability headroom. In competitive markets, a higher-deposit offer at the same price often wins the chain.

Region-specific deposit reality

The same deposit percentage means different cash amounts across the UK:

Region	Avg FTB property	10% deposit	15% deposit
London	£450,000	£45,000	£67,500
South East	£320,000	£32,000	£48,000
South West	£275,000	£27,500	£41,250
East Midlands	£215,000	£21,500	£32,250
North West	£190,000	£19,000	£28,500
North East	£155,000	£15,500	£23,250

London buyers face a 3× larger deposit demand than equivalent North-East buyers for the same percentage — making LTV strategy especially relevant in higher-priced regions.

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Last reviewed: 6 June 2026.