How much deposit do you need to buy a house in 2026?

"How much deposit do I need?" is the first question every first-time buyer asks — and the answer they get is usually too vague to act on. This guide breaks it down by property price, by lender expectations, and by what actually changes when your deposit goes up.

The honest minimum: 5%

You can buy a home in 2026 with a 5% deposit through a 95% loan-to-value mortgage. Several major lenders run permanent 5%-deposit products, and the Mortgage Guarantee Scheme supports more. On a £250,000 property that is a £12,500 deposit.

5% works. It is not optimal. The interest rate on a 95% mortgage in 2026 is materially higher than at 90% or 85% LTV — typically 0.3 to 0.6 percentage points more, which over a 25-year term costs a five-figure sum in interest.

The sweet spots: 10% and 15%

10% LTV (a 90% mortgage) is the first material rate improvement, and the first point where most mainstream lenders compete strongly. Below 90% LTV is where rates start to look like the headline numbers in news coverage.

15% (an 85% mortgage) is the next step. Then 25% (75% LTV). Below 75% LTV, rate improvements become marginal — you are paying for capital with diminishing return.

Worked example: how deposit size changes monthly cost

On a £250,000 property over 25 years (illustrative rates, not a quote):

Deposit	Loan	Indicative rate	Approx. monthly cost
5% (£12,500)	£237,500	5.4%	£1,442
10% (£25,000)	£225,000	5.0%	£1,317
15% (£37,500)	£212,500	4.8%	£1,218
25% (£62,500)	£187,500	4.6%	£1,054

The numbers are illustrative — actual rates vary daily — but the pattern is durable: every step up in deposit reduces both the rate and the loan balance, compounding the saving.

What counts as deposit (and what doesn't)

Lenders want to see the deposit clearly evidenced. Standard sources include:

• Your own savings. Easiest. Lenders want to see the buildup, typically 3 to 6 months of statements.
• Lifetime ISA. Counts in full, including the 25% government bonus. You can use the LISA for a first home up to £450,000.
• Gifted deposit. Money from family is permitted but must be a genuine gift, not a loan. Lenders require a signed gifted-deposit letter.
• Sale of an existing asset. Permitted with paperwork. A car sale, for example, needs evidence.

What does not count: an unsecured loan (lenders treat this as additional debt that worsens affordability, not deposit). Repaid pay-day loans within the past few months also raise flags.

Don't forget the costs on top of the deposit

The deposit is not the only money you need at completion. Budget separately for stamp duty (often zero for first-time buyers under £300,000 — see our SDLT guide), solicitor fees, survey, valuation, and the cost of moving in. Rule of thumb: add £3,000 to £6,000 on top of the deposit for a typical first-time purchase outside London.

Should you wait to save more, or buy now?

There is no universal answer. The trade-off is:

• Wait and save: bigger deposit, better rate, lower monthly cost, but rent paid in the meantime and the property may rise (or fall) in price.
• Buy now: on the ladder, building equity through repayment, but locked into a higher rate.

The right answer depends on your local market trajectory (rising, flat, falling) and rent vs mortgage cost in your area. Rightmove estimates and area "average price" figures are not reliable inputs for this decision — check actual Land Registry comparables.

Frequently asked questions