How much deposit do I need to buy a house?

The minimum is typically 5% of the purchase price, giving a 95% LTV mortgage. However, you will get significantly better rates with 10% (90% LTV) or more. Many first-time buyers aim for 10–15%, while 20% or above opens up the most competitive deals. The right amount depends on your savings, the property price, and how much you can comfortably afford in monthly payments.

Can a family member gift me a deposit?

Yes, most lenders accept gifted deposits from immediate family members (parents, grandparents, siblings). The person gifting the money will need to sign a declaration confirming it is a gift, not a loan, and that they have no claim to the property. Lenders may also ask for proof of the gift’s source as part of anti-money-laundering checks.

Does my deposit need to be in cash savings?

For a purchase, your deposit typically needs to be available as cleared funds at the point of completion. This can come from savings accounts, a Lifetime ISA, gifted funds, or the proceeds of selling another property. You cannot usually borrow your deposit (taking out a personal loan for a deposit is frowned upon by lenders), though some family-assisted schemes work differently.

What is a Mortgage Deposit? Meaning Explained

Your deposit is the portion of the property’s purchase price that you pay from your own funds, with the rest covered by a mortgage. In the UK, you typically need a minimum deposit of 5% of the purchase price (95% LTV), although a larger deposit will give you access to better mortgage rates and a wider choice of lenders.

The size of your deposit has a significant impact on your mortgage costs. Lenders price their products in LTV bands, and each step down in LTV unlocks better rates. Moving from a 90% to an 85% LTV, or from 80% to 75%, can noticeably reduce your monthly payments and the total interest you pay over the life of the loan.

Deposits can come from savings, gifts from family (most lenders accept gifted deposits from immediate family with a signed letter), the sale of an existing property, or in some cases inheritance. Some government schemes, such as the Lifetime ISA, help first-time buyers save for a deposit with bonus contributions.

Example

You are buying a property for £300,000. A 5% deposit is £15,000, giving you a 95% LTV mortgage. A 10% deposit is £30,000 (90% LTV), and a 20% deposit is £60,000 (80% LTV). At 90% LTV you might pay 5.0%, costing £1,462 per month on a 25-year term. At 80% LTV, you could get 4.2%, reducing the payment to £1,282 — saving £180 per month.

Key Points

The minimum deposit in the UK is typically 5% of the purchase price
A larger deposit means a lower LTV, which unlocks better mortgage rates
Deposits can come from savings, family gifts, inheritance, or the sale of another property
Gifted deposits are accepted by most lenders with a signed declaration from the donor
Government schemes like the Lifetime ISA can boost first-time buyer deposits