How Much Deposit Do I Need For a House?

Looking to get yourself on the property ladder, but unsure how much you need to save for your deposit? You’re not alone. 

With conflicting figures floating around, it can be confusing trying to work out exactly how much you’ll need to save up. 

This blog goes through everything you need to know about house deposits – including the minimum required, zero deposit mortgages, how to figure out what’s affordable for you, and some alternative ways to buy without saving a huge lump sum.

How Much is a House Deposit in the UK?

Generally, house deposits in the UK vary between 5% and 20% of the overall property price. 

While many lenders expect around 10%, the exact amount depends on many factors, such as:

• Whether you’re a first-time buyer
• If it’s a buy-to-let property 
• Your income and affordability 
• Government schemes (like Help to Buy or Shared Ownership)
• Your credit score
• Loan-to-value (LTV) ratio (the amount you borrow vs. the property’s value)

What is the Minimum Deposit to Buy a Property?

In the UK, the minimum amount you should expect to pay for a deposit is 5% of the total property price. However, some lenders will require a higher percentage (around 10%).

Looking at the example of a 5% deposit, if you were a first-time buyer purchasing a house for £200,000, your deposit would need to be £10,000. Here’s an image below to summarise this:

Here’s a quick breakdown of how deposit amounts can vary:

• First-time buyers – Often accepted with a 5 – 10% deposit.
• Buy-to-let mortgages – Typically require at least a 25% deposit.
• Lower deposit = higher interest – Lenders generally charge higher rates for smaller deposits due to increased risk and a higher Loan-to-Value (LTV) ratio. 

In short, the bigger the deposit, the better rate you will get on your mortgage from your lender. 

Can You Still Get a Mortgage With a Gifted Deposit?

Absolutely – gifted deposits are completely acceptable to most lenders.

Many first-time buyers need to rely on a little help from their parents or other family members in order to buy a house. 

This can come in the form of a gifted deposit, with no expectation of repayment.

Lenders will usually ask for a signed letter confirming that the money is a gift, not a loan.

Can You Get a 0% Deposit?

It’s possible to buy a home without a deposit – some lenders have zero deposit mortgages (also known as 100% LTV mortgages), which means you can buy the property without any down payment. 

However, in recent years, these have been much more difficult to obtain – changes were made to regulations in the UK after the global financial crash in 2008. 

0% deposits will likely require a guarantor (someone who agrees to be legally responsible for another person’s financial obligations). 

This can prove to be risky for the guarantor. There are two main ways this works:

1. Through the guarantor’s savings: The lender would set up a savings account as security, and the guarantor would be unable to access the set amount of savings for a period of time (usually several years). 
2. Through the guarantor’s own property: A charge on their property will be placed against a percentage of the loan borrowed, which puts both properties at risk if repayments are missed. 

What’s the Best House Deposit Amount? 

To acquire the best mortgage rates, many experts say the ideal deposit amount is around 20% of the property value. 

This gives lenders more confidence, often unlocking lower interest rates and better loan terms.

However, of course, this is unrealistic for many people (especially first-time buyers) and can take many years to save up for. 

Thankfully, many lenders accept deposits as low as 5 – 10%, depending on your credit history and income.

What is the Average House Deposit in the UK?

According to Lloyds Banking Group, in 2024, the average deposit for a house was around 20% of the purchase price. 

In real figures, this equates to around £61,000, which has actually increased by 14% since 2023, reflecting the ongoing rise in property prices.

But, remember, the average isn’t the same as the minimum – most lenders only require a 10% deposit (or less!) to purchase the property. 

What Deposit Amount Can You Afford?

Figuring out a realistic deposit isn’t just about aiming for the biggest possible number. You’ll want to assess your full financial picture.

We’d recommend looking into these factors:

• Overall savings and salary: Take a good look at your finances. How much are you bringing in each month? How much of that can you save? What are your outgoings? Try and look at the whole picture, and how much you can realistically put aside each month.
• Future financial goals: Planning for a wedding, baby or a big trip soon? Understanding what money you need to keep back will determine your deposit amount (and, in turn, your property budget). 
• Debt level: Do you have any outstanding debt? Any old credit cards that need paying off? Your credit score will be a contributing factor to your mortgage application, so consider repaying any outstanding debt as soon as possible. 
• Lender requirements: More often than not, lender requirements will determine how much of a deposit you’ll need. Shop around to see what you’re working with, as some offer better deals than others.
• Extra costs: You should also consider all other costs of buying a property, like stamp duty, legal fees, surveys, moving costs and furnishing your property. It all adds up!

• Market conditions: Wider economic trends will also impact your deposit amount. For example, in a more cautious market, lenders may request higher deposits to avoid as much risk as possible. 
• Property price: And, of course, the main influencer of what deposit you’ll pay – your budget. Higher-priced properties will generally require larger deposit amounts, so keep that in mind when considering your savings and income. 

Pros and Cons of Putting Down a Smaller Deposit

Like anything in life, there are advantages and drawbacks to putting down a smaller deposit on your property.

When Do You Pay Your Mortgage Deposit? 

Typically, the deposit is paid on the exchange day, or when the contracts are swapped between the buyer and seller. 

Once the deposit is paid and the papers are finalised, this makes the sale legally binding. 

Although you won’t need to pay your deposit until right at the end of the process, you will need to provide proof of funds beforehand. 

Ways to Avoid Paying High Deposits

While there isn’t a way to buy a property without a deposit, there are some ways you can avoid parting with large chunks of change to get on the property ladder. 

Shared Ownership 

This is a viable option for renters looking to peel themselves away from the renting market, and get their foot in the door owning property. 

However, instead of owning the property in full, you will own a share of the property (usually between 25% – 75%), and continue to pay rent on the rest. 

This can allow you to avoid paying a large deposit, so it’s worth considering if you’re really itching to start your homeownership journey. 

Home Equity Loans

Home equity loans (also called second charge mortgages) can help top up your deposit, giving you access to better mortgage deals.

For example, if you’ve fallen in love with a property that is just beyond your budget, and the lender’s interest rates on your 5% deposit aren’t sustainable, you could consider a home equity loan.

Of course, any loan will come with other considerations – you’ll need to be approved and account for making repayments towards the loan. But it could be a temporary solution to getting on the property ladder. 

Be sure to consult a financial advisor before choosing this option.

Thorough Research 

Not all lenders are created equal. Some specialise in low-deposit mortgages or cater to specific situations, like self-employed buyers.

Take time to compare interest rates, loan terms and deposit requirements across multiple lenders.

It’s all a case of weighing up the pros and cons, and how the lower deposits could affect your overall interest and repayment costs over time. 

Our Final Thoughts

Deposits can be a blocker for many people to buy property, especially if they’re first-time buyers. 

Whether you’re starting from scratch or looking to move up the ladder, getting the right advice can make all the difference.

For professional support and advice about selling your home or buying a property, you can always rely on an expert team of estate agents on the Wirral, like Liam Gretton. 

Contact a member of our friendly team to get the ball rolling today.