How Much Of A Deposit Do First-Time Buyers Really Need in 2026?

Buying your first home starts with one big question: how much of a deposit do you actually need?

If you're researching the first-time buyer deposit in 2026, you've probably seen figures like 5%, 10% or even 20%. The truth is, there isn’t a one-size-fits-all answer. While some buyers can purchase with a smaller deposit, the right amount depends on your financial situation, the property you’re buying and what lenders are willing to offer.

This guide breaks it all down in plain English so you can understand what matters, what doesn’t, and how to plan realistically, based on what we see every day helping first-time buyers secure their first mortgage.

Flexibility on benefit amount and wait time until received
Flexibility on benefit amount and wait time until received

The Short Answer First-Time Buyers Are Looking For

In 2026, many first-time buyers in the UK can still purchase a home with a minimum deposit of 5%.

However, most buyers benefit from having between 10% and 15%, as this often gives access to better mortgage deals and lower monthly payments. For many people, the right deposit is not the biggest one possible, but the one that allows you to buy comfortably and sustainably.

More importantly:

Your deposit is only part of the decision
Lenders focus heavily on affordability and income
You also need to budget for additional buying costs

Why The 5% Deposit Isn’t The Full Story

It’s easy to assume that if 5% is the minimum, that’s all you need.

But lenders don’t just look at your deposit. They assess your income and employment, monthly outgoings, credit history, financial commitments and overall affordability.

That’s why getting personalised first-time buyer mortgage advice early on can save time and prevent disappointment later, especially when you’re unsure how lenders will assess your situation.

Understanding Loan To Value (LTV) Simply

One of the most important terms you’ll come across is Loan to Value, often shortened to LTV. It sounds technical, but it’s straightforward.

It represents the percentage of the property price you are buying against the proportion of that value tht is made up of mortgage vs deposit, eg: £200k purchase, borrowing £150k for the mortgage = 75% Loan to Value as £150k is 75% of £200k.

Why LTV Matters

Lower LTV usually means a number of things including better interest rates, more lender choice, lower monthly payments and greater flexibility.

This is why many buyers aim for at least 10% if possible, even though 5% is technically enough.

This is something we regularly explain to first-time buyers, as even a small increase in deposit can open up noticeably better mortgage options.

How Much Deposit Do You Need In Real Terms?

The actual amount depends on the property price.

Typical Examples

£180,000 property → 5% deposit = £9,000
£250,000 property → 5% deposit = £12,500
£300,000 property → 10% deposit = £30,000

These are just examples, but they help put percentages into real context.

A mortgage adviser can help you understand what’s realistic based on your income and the type of property you’re considering.

The Biggest Mistake First-Time Buyers Make

Many buyers believe they need to save the biggest deposit possible before they can buy.

In reality, this can sometimes work against you.

Waiting longer to save a larger deposit can mean house prices increasing, spending more on rent and missing out on building equity sooner

For some buyers, purchasing with a 5% or 10% deposit earlier may be more beneficial than waiting years to reach 15% or 20%.

There’s no universal answer, which is why tailored advice is so important, especially when deciding whether to buy now or wait and save longer.

What About Mortgage Affordability?

Your deposit is only one part of the equation.

Lenders will also assess how much you can borrow based on affordability.

This includes your income, your monthly spending, any loans, credit cards or car finance as well as future interest rate stress testing

Even with a larger deposit, affordability can still limit how much you can borrow.

This is where speaking to an adviser through a service like mortgage advice becomes valuable.

Don’t Forget The Extra Costs

One of the most common issues first-time buyers face is underestimating how much money they need beyond the deposit.

You may also need to budget for:

Solicitor and legal fees, Property surveys, Mortgage valuation fees, Moving costs, Furniture and initial setup and Emergency savings.

According to MoneyHelper, these additional costs can be significant and should be planned for alongside your deposit.

We often speak to buyers who focus purely on the deposit, only to realise later that the additional costs catch them off guard.

Using A Gifted Deposit

Many first-time buyers receive help from family.

This is known as a gifted deposit.

Lenders usually accept this, but there are requirements including a signed declaration confirming it’s a gift, proof of where the funds came from and Identification checks for the person gifting

If you're considering this route, it’s worth understanding the process early to avoid delays. This is something we guide clients through regularly, helping ensure everything is in place before the application is submitted.

How A Lifetime ISA Can Help

The Lifetime ISA is one of the most effective ways to boost your deposit.

You can save up to £4,000 per year, receive a 25% government bonus and use it towards your first home

What About Buying With No Deposit?

Some lenders have introduced higher loan-to-value products in recent years.

However they are not available to everyone, criteria can be stricter and interest rates may be higher

These options are best discussed with a mortgage adviser to determine suitability.

Why Local Advice Can Make A Difference

Property markets vary depending on location.

For example, buyers in Northallerton and across North Yorkshire may find very different price points compared to larger cities.

Working with a local adviser who understands the area can make a real difference, especially when you're trying to balance budget, deposit and property expectations. We can help you et realistic expectations, understand local property values and find lenders suited to your situation

You can explore more about this in why choosing a local mortgage adviser matters.

Frequently Asked Questions

Is 5% enough for a first-time buyer?

Yes, some lenders offer mortgages with a 5% deposit, but affordability and credit profile also play a major role.

Is a 10% deposit better than 5%?

Generally yes. A 10% deposit often gives access to better mortgage rates and more lender options.

Can I use a gifted deposit?

Yes, many lenders accept gifted deposits, but they require documentation and checks.

Do I need savings beyond my deposit?

Yes. You should budget for legal fees, surveys, moving costs and a financial buffer.

Will a bigger deposit reduce my monthly payments?

Usually yes, as you will be borrowing less and may qualify for lower interest rates.

What Should You Do Next?

Understanding how much deposit you need is only the first step.

What really matters is knowing what you can afford, what lenders will offer you and how to structure your purchase properly.

If you're unsure where to start, speaking to a mortgage adviser can give you clarity early in the process and help you avoid costly mistakes, particularly when it comes to understanding what deposit will actually work for you.

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Visit: 80-81 High St, Northallerton DL7 8EG

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