Explore deposit options for first home buyers, including savings, gifts and family support, so you can choose a mortgage that suits your budget and plans.
For many first-time buyers, the deposit is the point where buying a home starts to feel real – and, sometimes, daunting. The good news is that deposit options for first home buyers are broader than simply saving every penny alone. Your own savings remain central, but a gifted deposit, government support and certain family arrangements may also help you take the next step.
What matters is not only how much deposit you have, but where it has come from, how it affects your mortgage choices and whether the monthly repayments remain comfortable. A clear plan at the outset can make the journey from offer to completion far less stressful.
How much deposit do you need for a first home?
A deposit is the amount you contribute towards the purchase price, with the mortgage covering the rest. It is usually expressed as a percentage. For example, a £250,000 home bought with a £25,000 deposit would need a £225,000 mortgage, giving a loan-to-value ratio of 90%.
Some lenders offer mortgages with a 5% deposit, although availability and criteria vary. A larger deposit can reduce the loan-to-value and may give you access to more mortgage products or lower interest rates. It does not automatically mean the cheapest overall mortgage, however. Product fees, the term of the loan and your wider financial circumstances all need consideration.
A 10% deposit is often a useful benchmark, but it is not a rule. The right target depends on the property price, your income, your credit profile and the repayments you can comfortably afford. It is also wise not to put every available pound into the deposit if this leaves no money for legal fees, survey costs, moving expenses or an emergency fund.
Deposit options for first home buyers
Saving your own deposit
Building a deposit from income and existing savings gives you the greatest flexibility. Lenders will usually want to see evidence of where the money came from, so keeping funds in a bank or savings account and avoiding unexplained large transfers can help when the time comes to apply.
If you are buying with a partner, combining savings may increase your deposit and borrowing power. At the same time, joint ownership and joint borrowing create shared legal and financial responsibilities. It is sensible to discuss how each person is contributing and, where contributions are unequal, take legal advice about how the property should be owned.
A Lifetime ISA can be particularly valuable for eligible first-time buyers. You can save up to the permitted annual amount and receive a government bonus, subject to the scheme rules. There are restrictions around the property value, account age and how the money is used, so timing matters. Withdrawing funds for another purpose can result in a charge, which is why it is worth checking the detail before relying on it for a purchase.
A gifted deposit from family
A gifted deposit is one of the most common ways parents or other close family members help a buyer purchase their first property. The person giving the money will normally need to confirm in writing that it is an unconditional gift, that they will not own part of the property and that they do not expect repayment.
Your solicitor and mortgage lender will carry out checks on the source of the funds. This is a standard part of anti-money laundering requirements, not a reflection on your family. The donor may need to provide identification, bank statements and evidence showing how they built up the money.
Not every lender has identical rules. Some will accept gifts only from close relatives, while others may take a broader view. If the person giving the money will live in the property, retain an interest in it or expects to be repaid, the arrangement may need a different approach. Raising this early avoids a last-minute problem once an offer has been accepted.
A family loan or family-backed mortgage
Some families prefer to lend money rather than give it away. This can work in certain circumstances, but it is more complicated than a gift. A lender may treat the repayments as an ongoing commitment, which could reduce the amount you can borrow. Others may not accept a repayable family loan as part of the deposit at all.
There are also mortgage arrangements where a family member uses savings or, in some cases, property as additional support. These products can help buyers with a smaller deposit, but the family member needs to understand the commitment fully. Their funds may be tied up for a fixed period, or their property could be at risk if mortgage payments are not maintained.
This route should be based on open conversations, clear expectations and advice for everyone involved. It can be a generous solution, but it should never leave a family member financially exposed.
Shared Ownership
Shared Ownership allows eligible buyers to purchase a share of a home and pay rent on the remaining share. Because the mortgage is based on the share you are buying, the required deposit may be lower in cash terms than buying the whole property outright.
You will still need to meet affordability checks and budget for the mortgage payment, rent, service charge and other household costs. The lease, staircasing options and future sale process all deserve careful attention. Shared Ownership can be a practical route onto the property ladder, but it is not simply a cheaper version of full ownership.
Right to Buy and other specialist routes
Eligible council tenants may be able to use a Right to Buy discount towards their purchase, subject to the scheme rules and local circumstances. The discount can reduce the amount of cash needed upfront, but buyers must still pass lender affordability and credit checks.
There are also specialist mortgage products for buyers with smaller deposits, non-standard income or a limited credit history. These can be useful where high street criteria do not quite fit, but the product must be assessed in the context of its rate, fees and longer-term suitability.
What lenders look for beyond the deposit
A strong deposit helps, but it is only one part of a mortgage application. Lenders will assess your income, employment, regular commitments, credit history and likely ability to maintain payments if interest rates rise. They will also consider the property itself, particularly if it has unusual construction, a short lease or restrictions that affect resale.
The source of your deposit matters just as much as the amount. A personal loan, credit card advance or other undisclosed borrowing is unlikely to be acceptable as a deposit and can affect affordability. Being transparent is always the better approach. A mortgage adviser can establish which lenders are likely to accept your circumstances before an application is submitted.
It is equally important to separate your deposit from the other costs of moving. Depending on the purchase price and circumstances, you may need to allow for solicitor fees, searches, a survey, mortgage arrangement fees, removals and insurance. First-time buyers may benefit from Stamp Duty Land Tax relief on qualifying purchases, but the rules and thresholds should be checked for your situation.
Choosing the route that protects your budget
It can be tempting to focus entirely on reaching the biggest possible deposit. Yet a slightly smaller deposit may be sensible if it means keeping a financial cushion after completion. Homeownership brings costs that tenants do not always face, from boiler repairs to service charges and buildings insurance.
Equally, a low-deposit mortgage is not automatically the right answer just because it gets you moving sooner. A larger loan may mean higher monthly payments and less flexibility if your circumstances change. The right balance is the one that supports your plans without putting unnecessary pressure on your everyday budget.
Illingworth Mortgages can help you compare the practical implications of different deposit levels, lender criteria and mortgage options. That includes looking beyond the initial rate to the full cost and suitability of the arrangement.
Buying your first home is a major commitment, but you do not need to solve every part of it alone. Start by understanding the funds available to you, keep the evidence of their source organised and seek advice before making decisions that could affect your mortgage options.
