The honest answer is 5% of the purchase price — that is the practical minimum for a mainstream mortgage in 2025/26, and 95% loans are widely available again. But "the minimum you can buy with" and "the deposit that gets you a decent deal" are different numbers, because lenders price loans in steps, not smoothly.
This guide explains loan-to-value bands and the rate cliffs between them, what deposits first-time buyers actually put down, how gifted deposits work without tripping the checks, and how to work out both your savings timeline and your realistic budget.
LTV: the number lenders actually care about
Lenders think in loan-to-value (LTV): the mortgage as a percentage of the price. A £237,500 loan on a £250,000 home is 95% LTV — a 5% deposit. The lower the LTV, the more equity cushions the lender if prices fall and it has to repossess and sell, so the better the rate you are offered.
Crucially, pricing moves in steps at standard thresholds — 95%, 90%, 85%, 80%, 75% and 60% LTV — not gradually. Nudging your deposit from 9% to 10% of the price can cut your rate meaningfully; going from 10% to 12% often changes nothing at all until you reach 15%. If you are near a boundary, even a small extra sum — or a slightly cheaper property — can drop you into the next band.
What the bands do to your monthly payment
Here is the effect on a £250,000 home over 25 years, using illustrative 2025/26-shaped rates (95% LTV at 5.5%, 90% at 5.0%, 75% at 4.5%). The bigger deposit wins twice: you borrow less, and you pay a lower rate on what you do borrow.
The gap between a 5% and a 25% deposit in this example is roughly £417 a month — about £5,000 a year — which is why the classic advice is to buy when 10% is realistic rather than waiting years for 25% while paying rent. There is a genuine trade-off between saving longer for a better band and the rent (and price growth) you pay while waiting; the calculator below helps you see your own timeline.
Ignores savings interest (a Lifetime ISA bonus or decent rate shortens this) and assumes prices stand still — they may not. Illustration only.
What buyers actually put down
Averages here mislead, because London skews everything, and because second-steppers roll equity forward. Among first-time buyers, lender data for 2024 put the average deposit around £61,000 — roughly a fifth of the average first home’s price — but that average conceals a wide spread: plenty of buyers outside the South East complete with 5–10% deposits of £10,000–£25,000, while London deposits routinely exceed £100,000.
The useful takeaway is not the average but the mechanism: your deposit percentage sets your rate band, and your cash also has to cover stamp duty, legal fees, survey and moving costs on top. Do not put every pound into the deposit and leave nothing for the other costs — they cannot go on the mortgage.
Gifted deposits: the rules of the game
A large share of first-time deposits include family money, and lenders are comfortable with it — provided it is a genuine gift, not a loan. Expect the giver to sign a letter confirming the money is a gift with no repayment expected and no stake in the property, and to provide ID and bank statements for anti-money-laundering checks. Tell your broker and solicitor about the gift at the start; a deposit whose source changes story mid-application is a classic cause of delay.
Two wrinkles worth knowing. First, inheritance tax: gifts generally leave the giver’s estate only if they survive seven years, so large gifts have estate-planning consequences — one for the family to take proper advice on. Second, if the giver wants repayment or a share, that is not a gift; lenders treat it entirely differently, and some will not lend at all. Be straight about which it is.
Where to save it — and the £450k catch
If you are a first-time buyer aged 18–39, a Lifetime ISA adds a 25% government bonus to up to £4,000 of savings a year — free money with two sharp edges: the property must cost £450,000 or less, and withdrawing for any other reason costs a 25% penalty that takes back slightly more than the bonus. Our first-time buyer schemes guide covers the rules in full.
Beyond the LISA, the boring advice is the right advice: a separate easy-access savings account at the best rate you can find, automated on payday, with the deposit money never mixed with spending money. Lenders will want to see the balance building steadily — a tidy savings history is itself quiet evidence of affordability.
Work backwards from a real budget
The deposit question only makes sense alongside the borrowing question: your budget is roughly (what a lender will offer) + (deposit) − (buying costs). Lenders offer up to about 4.5× gross household income, trimmed by their affordability and stress tests, so a household on £55,000 with £25,000 saved is realistically shopping around £240,000–£260,000 once costs are set aside — not the £272,500 that naive arithmetic suggests.
Run your own numbers below, and pressure-test them against MoneyHelper’s independent budgeting guidance before you start booking viewings — knowing your ceiling before you fall for a home £30,000 above it saves real heartache.
A rough ceiling, not an offer — lenders stress-test your outgoings, debts and credit history, so real criteria vary widely. Not financial advice.
Sources: MoneyHelper — saving for a deposit · GOV.UK — Lifetime ISA · GOV.UK — Stamp Duty Land Tax