What Is a Mortgage Deposit?
A mortgage deposit is the upfront cash payment you put towards a property when you take out a mortgage. When buying a home, most people cannot afford the full purchase price in cash, so a bank or building society lends them the balance through a mortgage that is repaid with interest over a long period of time, typically 25 years.
The deposit, also called a down payment, covers a percentage of the property's value, and the lender covers the rest. The bigger your deposit, the smaller the loan you need and the better the deals you can usually access.
Why Do I Need a Mortgage Deposit?
Mortgage lenders ask for a deposit in order to reduce the risk of the loan. By requiring the borrower to put up some of their own money, the lender knows you are committed and has a cushion if property prices fall. A higher deposit also benefits you: you borrow less, so the mortgage works out cheaper and you are offered lower interest rates.
How Much Deposit Do I Need for a Mortgage?
The minimum deposit most mainstream UK lenders accept is 5% of the property price, which gives you a 95% mortgage. On a £250,000 home that is a £12,500 deposit. In practice, however, the lowest deposits come with the highest interest rates, so many buyers aim for 10% or more if they can.
Mortgages come in all shapes and sizes and there is no single set figure, but the deposit bands below reflect how UK lenders typically price their deals in 2026. As a rule of thumb, every extra 5% of deposit moves you into a cheaper rate band.
| Deposit | Loan-to-value (LTV) | Deposit on a £250,000 home | What it means for you |
|---|---|---|---|
| 5% | 95% LTV | £12,500 | The mainstream minimum. Highest rates and fewest deals. |
| 10% | 90% LTV | £25,000 | A meaningful drop in rate versus 95%. A common target for movers. |
| 15% | 85% LTV | £37,500 | Opens up most high-street fixed-rate deals. |
| 20% | 80% LTV | £50,000 | Access to the best of the mainstream rate cards. |
| 25% or more | 75% LTV or lower | £62,500+ | The sharpest rates available, and the floor for most buy-to-let. |
For a full breakdown of how each band behaves with current 2026 numbers, see our UK mortgages hub and the guide on how much you can borrow.
What does loan-to-value mean? Loan-to-value, or LTV, is simply the size of your mortgage compared to your property's value, shown as a percentage.
For example, if the house price is £250,000 and your deposit is £25,000 (10%), your lender will lend you £225,000 (90%). That makes the loan-to-value 90%. The lower your LTV, the lower the risk for the lender, and the lower the interest rate you are usually offered.
Can I Get a Mortgage with No Deposit?
True 100% loan-to-value mortgages that require no deposit at all are very rare today, and the few that exist tend to rely on a guarantor or family savings being used as security. Almost all mainstream lenders will ask for at least a 5% deposit. A handful of guarantor and family-springboard products can help if a relative is willing to back the loan with their own savings or property.
How Does Deposit Size Affect Your Mortgage Rate?
The size of your deposit directly affects how much you pay and which deals you can access. As a general rule, the smaller the deposit, the higher the interest rate, because the lender is taking on more risk and charges more to compensate for it.
Is It Better to Have a Higher Deposit?
If you can, it is generally better to save for a higher deposit. Paying more upfront makes your repayments cheaper and can shorten your mortgage. Here are the main ways a higher deposit benefits you:
- Lower risk: a higher deposit reduces the chance of your home falling into negative equity if prices dip;
- Cheaper repayments: you borrow less, so the amount you pay back and your monthly payments are lower, leaving more household budget for other things;
- Better interest rates: a lower LTV makes the loan less risky for the lender, so you are offered sharper rates that reduce the cost of the mortgage over time.
What About My Credit Score?
Another way of improving your mortgage terms is by boosting your credit score. Showing that you pay bills on time and keep up with repayments gives lenders more confidence that you can manage the debt.
One simple way to improve your credit score is to use a credit card for small purchases each month, but always pay the balance in full rather than partially. Registering on the electoral roll and avoiding multiple credit applications in a short period also help.
How to Save a Mortgage Deposit
Saving a deposit is the hardest part for most first-time buyers. A few practical habits make a real difference:
- Clear high-interest debts first, then redirect those payments into savings;
- Set up a standing order so a fixed amount moves into a savings account on payday;
- Review your spending and switch recurring bills, including energy, to cheaper deals;
- Use a dedicated savings account or government-backed scheme to make your money work harder.
The Lifetime ISA
The Lifetime ISA (LISA) is designed specifically to help first-time buyers save a deposit. You can pay in up to a set annual limit, and the government adds a 25% bonus on top of what you save. The funds can be used towards a first home up to a qualifying property value, provided the account has been open for at least 12 months. Always check the current limits and rules on GOV.UK before relying on a LISA, as conditions and penalties for non-qualifying withdrawals apply.
Regular Savings Accounts
Outside a LISA, a regular savings account with a competitive rate is a straightforward way to build a deposit. Many banks offer higher rates if you pay in every month and do not withdraw, which suits the steady saving a deposit requires. Comparing accounts and reviewing the rate each year keeps your money growing.
What Are Acceptable Deposit Sources?
Lenders accept several forms of deposit, and the exact rules vary between them. The source of your deposit can affect how easily your application is approved, mainly because lenders must check the money is legitimate. Here is a list of commonly accepted deposit sources:
- Personal savings: money you have built up in a bank account or investment is the most readily accepted form, though lenders may ask for evidence of how it accumulated;
- Inheritance: inherited money is acceptable as long as it has already been paid or is about to be, with proof of where it came from;
- Sale of property or assets: proceeds from selling a property or other assets are generally fine, provided the funds are legitimate and cleared into your account;
- Gifted deposit: money given to you, usually by a close family member, can be used as a deposit, but most lenders require a signed letter confirming it is a gift and not a loan.
Is There Help Available for My Deposit?
With house prices high, many first-time buyers worry that getting a mortgage is out of reach. In fact there is a lot of help available, particularly when it comes to the deposit.
Help for First-Time Buyers
First-time buyers can use different schemes that increase the affordability of a mortgage, including government-backed programmes that reduce the deposit burden. There is also support for tenants wanting to buy their council house. Commonly used options include:
- Mortgage Guarantee Scheme (supports 95% mortgages);
- First Homes Scheme (discounted homes for local first-time buyers);
- Right to Buy for eligible council tenants;
- Lifetime ISA bonus towards a first home;
- Stamp Duty relief for first-time buyers.
See our full guide to first-time buyer schemes for the eligibility rules and how they stack with a mortgage.
What If I Have Bad Credit?
If you have a poor or limited credit history, it can be harder to get favourable terms. You may need a specialist lender or the help of a mortgage broker, who can match you to lenders that consider your circumstances and advise on improving your application before you apply.
Mortgage deposit FAQ
The Selectra expert answers your questions
The minimum deposit most UK lenders accept is 5% of the property price, which gives a 95% mortgage. On a £250,000 home that is £12,500. The lowest deposits carry the highest rates, so many buyers aim for 10% to 20% to unlock cheaper deals. See our mortgages hub for the full picture.
You typically need at least 5% of the purchase price, but a 10% to 20% deposit gives you access to lower interest rates and more deals. A deposit of 25% or more reaches the sharpest rates available, because your loan-to-value falls to 75% or lower.
LTV is the size of your mortgage compared with the property's value, shown as a percentage. If you buy a £250,000 home with a £25,000 (10%) deposit, you borrow £225,000, so your LTV is 90%. A lower LTV means lower risk for the lender and usually a lower interest rate for you.
True 100% LTV mortgages with no deposit are very rare today. Almost all mainstream lenders require at least a 5% deposit. A few guarantor or family-springboard products can help if a relative backs the loan with their own savings or property.
Yes. A gifted deposit, usually from a close family member, is widely accepted, but most lenders require a signed gift letter confirming the money is a gift rather than a loan and that the giver has no stake in the property.
Clear high-interest debt, set up a standing order into a savings account on payday, and cut recurring bills such as energy. First-time buyers can also use a Lifetime ISA, which adds a 25% government bonus on what you save towards a first home, subject to the current limits and rules on GOV.UK.