Most lenders want a deposit of at least 5% of the price, so £12,500 on a £250,000 home. That's the minimum, though. The bigger your deposit, the cheaper the mortgage rates you're offered, and the biggest jumps in price happen at 10%, 15%, 25% and 40% deposit.
Deposits and loan-to-value
Lenders think in terms of loan-to-value (LTV), the size of the mortgage as a percentage of the property's value. A 10% deposit means a 90% LTV mortgage. Rates are priced in bands, and the bands most lenders use look like this:
| LTV | Deposit | On £200,000 | On £250,000 | On £300,000 | On £400,000 |
|---|---|---|---|---|---|
| 95% | 5% | £10,000 | £12,500 | £15,000 | £20,000 |
| 90% | 10% | £20,000 | £25,000 | £30,000 | £40,000 |
| 85% | 15% | £30,000 | £37,500 | £45,000 | £60,000 |
| 75% | 25% | £50,000 | £62,500 | £75,000 | £100,000 |
| 60% | 40% | £80,000 | £100,000 | £120,000 | £160,000 |
There are other bands in between (80%, 70% and so on), but these are the ones where the pricing usually changes most. If you're a little short of a threshold, it can be worth saving for a few more months to get over it.
Why a bigger deposit gets a cheaper rate
It comes down to risk. If house prices fall and a borrower can't pay, the lender sells the property to get its money back. With a 5% deposit, a small fall in prices wipes out the cushion. With 40% equity, the lender is very well covered. Lenders charge more for the riskier loans, and smaller deposits also mean fewer lenders and deals to choose from.
What the difference looks like
Take a £250,000 home and a 25-year term. The rates below are example rates only, picked to show the usual pattern. Real rates move all the time, so check current deals before relying on any figures.
| Deposit | Mortgage | Example rate | Monthly payment | Total interest over 25 years |
|---|---|---|---|---|
| 5% (£12,500) | £237,500 | 5.0% | £1,388.40 | £179,020 |
| 10% (£25,000) | £225,000 | 4.7% | £1,276.30 | £157,891 |
| 15% (£37,500) | £212,500 | 4.5% | £1,181.14 | £141,843 |
| 25% (£62,500) | £187,500 | 4.3% | £1,021.02 | £118,805 |
Two things are going on. You borrow less, and you pay a lower rate on what you do borrow. In this example, going from 5% to 10% deposit cuts the monthly payment by about £112. In practice you'd remortgage every few years rather than stay on one rate for 25 years, but the pattern holds.
How much can you borrow?
Your deposit sets the LTV, but your income sets the ceiling. Many lenders cap borrowing at around 4 to 4.5 times your annual income (joint income if you're buying together), and some go higher for certain professions or bigger earners. They also run an affordability check on your outgoings, debts and childcare costs, and stress-test whether you could still pay if rates rose.
So on a joint income of £60,000, a 4.5 times multiple gives about £270,000 of borrowing. Put that against the deposit you have and you get a rough price range. The mortgage affordability calculator does this for you.
Don't forget the other costs
The deposit isn't the only money you need up front. Budget for:
- Stamp duty. In England and Northern Ireland, first-time buyers pay nothing on the first £300,000 and 5% on the part between £300,001 and £500,000, as long as the price is £500,000 or less. Home movers pay more. Use the stamp duty calculator for your figure.
- Solicitor or conveyancer fees, plus searches.
- A survey, which is optional but worth having on older homes.
- Mortgage fees, which some lenders charge for their lowest rates.
- Moving costs, and a buffer for things that need fixing once you're in.
Help for first-time buyers
Lifetime ISA. If you're 18 to 39 you can open one and pay in up to £4,000 a tax year. The government adds a 25% bonus, so up to £1,000 a year. You can use it towards a first home costing £450,000 or less. Take the money out for anything else (other than retirement from 60 or terminal illness) and you pay a 25% charge, which leaves you with less than you put in. The government has consulted on replacing it with a new first-time buyer ISA, but at the time of writing that isn't in place, and existing Lifetime ISAs carry on as normal.
Shared ownership. You buy a share of a home and pay rent on the rest, which means a smaller mortgage and deposit. It comes with its own rules and costs, so read the lease carefully.
Family help. A gifted deposit is common. Lenders will want a letter confirming it's a gift and not a loan.
This is general information, not financial advice.
Last reviewed October 2026.