How much deposit do I need to buy a house?

Here’s what different deposits look like on a £250,000 home:

A 95% mortgage gets you on the ladder soonest, but you’ll pay a higher rate, have fewer lenders to choose from, and pass a tougher affordability check. Each 5% you add typically unlocks a better “band” of deals — more on that next.

Lenders price mortgages by loan-to-value (LTV) — the mortgage as a percentage of the property’s value. The lower the LTV, the less risk the lender carries if prices fall, so the better the rate you’re offered.

Pricing typically steps down at these thresholds:

• 95% LTV — the most expensive band, smallest choice of lenders;
• 90% → 85% → 80% — each step usually brings a noticeably better rate;
• 75% — a big step: most lenders’ “standard” competitive band;
• 60% and below — the very best headline rates on the market.

Crucially, the steps are cliff-edges, not a smooth slope: moving from a 9% to a 10% deposit can cut your rate; moving from 10% to 11% usually won’t. If you’re close to a band, it can be worth waiting a few months to cross it. Check which band you’re in with the Loan-to-Value Calculator.

Even before any rate improvement, a bigger deposit means borrowing less. On a £250,000 home over 25 years at 4.5%:

That’s a £278-a-month gap between 5% and 25% at the same rate — and in reality the 25% buyer would also be offered a cheaper rate, widening the gap further. Run your own price and rate through the Mortgage Calculator to see both effects.

If you’re a first-time buyer, three things can stretch your deposit further:

• Lifetime ISA (LISA) — save up to £4,000 a year and the government adds a 25% bonus (up to £1,000 a year). You must be 18–39 to open one, the home must cost £450,000 or less, and withdrawing for anything other than a first home or retirement triggers a 25% charge. Over five years, £4,000 a year becomes £25,000 including bonuses — before any interest.
• Stamp duty relief — in England & Northern Ireland, first-time buyers pay no SDLT up to £300,000 (then 5% to £500,000). On a £250,000 home that saves the full £2,500 a non-first-time buyer would pay. Check your figure with the Stamp Duty Calculator — Scotland and Wales have their own rules.
• Gifted deposits — most lenders accept a deposit gifted by close family, with a signed letter confirming it’s a gift, not a loan. The giver may need ID and proof of funds for anti-money-laundering checks.

At a 4% savings rate (interest compounding monthly), here’s roughly how long common targets take:

Two ways to shorten the wait: put the first £4,000 a year into a LISA for the 25% bonus, and keep the rest in the best easy-access or notice account you can find so compounding works for you — the Compound Interest Calculator shows the difference the rate makes.

Budget for the other upfront costs so the deposit doesn’t swallow everything:

• Stamp duty (unless exempt) — £2,500 on a £250,000 home for a non-first-time buyer in England/NI;
• Legal fees (conveyancing) — typically £1,000–£2,000 including searches;
• Survey — roughly £400–£1,500 depending on level;
• Mortgage fees — arrangement fees are often £999–£1,500, plus possible valuation and broker fees;
• Moving costs — van hire or removals, and a buffer for immediate repairs.

The True Cost of Buying a House Calculator adds all of this up for your actual numbers in one go.

Mostly — but not at any cost. Prioritise in this order:

1. Keep an emergency fund. Don’t hand every pound to the seller; three months of essential outgoings is a common target — homeownership comes with surprise bills.
2. Clear expensive debt first. Card debt at 20%+ costs far more than a slightly better mortgage band saves.
3. Then push for the next LTV band. Going from 95% to 90%, or 80% to 75%, has the biggest payoff per pound saved.

A bigger deposit also protects you from negative equity — owing more than the home is worth if prices fall — which can trap you on your lender’s expensive standard variable rate because you can’t remortgage. Buying with 5% down leaves very little buffer; 10–15% gives you real breathing room.