The minimum deposit for a residential mortgage in the UK is 5% of the purchase price. On a £250,000 property that is £12,500. You can borrow the remaining £237,500, which puts you at a 95% loan-to-value (LTV) ratio.
That 95% LTV figure is where things get expensive. Lenders charge higher rates at higher LTV because the risk to them is greater. At 95% LTV there is very little buffer if house prices fall. At 60% LTV the risk is much lower, and lenders price that difference into their rates.
What LTV means for your rate
Mortgage rates are priced in brackets. The main ones for first-time buyers are 95%, 90%, 85%, and 80% LTV. Moving from one bracket to the next can save you hundreds of pounds per year in interest.
A rough illustration: in 2025 a 95% LTV two-year fixed rate might sit around 5.5-6%. The same deal at 85% LTV might be 4.5-5%. On a £200,000 mortgage over 25 years the difference in monthly payments between those two rates is around £100 per month. Over a two-year fixed period that is around £2,400.
The jump from 95% to 90% LTV is usually the most valuable one. Getting from a 5% deposit to a 10% deposit unlocks meaningfully better rates from a much wider range of lenders.
95% (5% deposit), 90% (10%), 85% (15%), 80% (20%), 75% (25%), 60% (40%). Each step down tends to unlock better rates, with the biggest jumps at 90% and 75%.
How to calculate the deposit you need
Start with the property price you are targeting. If you are not sure, use the average for the area you are searching in as a starting point, accepting that individual properties vary.
Then decide which LTV bracket you are aiming for. 10% deposit (90% LTV) is a reasonable minimum target for most buyers. 15% (85% LTV) opens up more options. 20-25% gives you access to the best rates from most lenders.
Do not forget the other costs on top of the deposit: stamp duty, solicitor fees, survey costs, and moving expenses. On a £250,000 property those can add up to £5,000-£10,000 depending on stamp duty. Budget for them separately from your deposit, not out of it.
Module 3 of First Home walks through your deposit target, your LTV bracket, and exactly where the money is coming from. Three free modules to start.
Open the deposit plannerDoes your deposit have to be your own savings?
No. Most lenders accept deposits that include a gift from a parent or family member, provided the donor signs a letter confirming the money is a gift and not a loan. Some lenders have restrictions on how much of the deposit can be gifted, but many accept 100% gifted deposits.
The Lifetime ISA (LISA) can also form part of your deposit. The government adds 25% to everything you put in, up to £4,000 per year, as long as you use it to buy your first home (worth up to £450,000) or for retirement. That is up to £1,000 free per year. The main catch is a 25% withdrawal penalty if you use it for anything other than a first home or retirement, which effectively means you lose some of your own money too, not just the bonus.
Help to Buy ISAs are closed to new applicants but if you have one, the 25% government bonus (up to £3,000) still applies when you complete on a property.
What is a realistic savings timeline?
On a £250,000 property, a 10% deposit is £25,000. If you save £500 per month that takes four years and two months. At £800 per month it takes two years and seven months.
Those numbers assume no investment growth and no house price change, both of which will affect the real figure. The deposit planner in First Home lets you model your actual savings rate and timeline.
If you are saving as a couple, you can combine contributions. Two people saving £500 each halves the timeline. The monthly savings rate matters far more than the interest rate on your savings account, though putting the money in a competitive easy-access account or cash ISA while you save is worth doing.