How much deposit do I need as a first-time buyer?

The minimum deposit is typically 5% of the purchase price. On a £250,000 property, that is £12,500. However, a 10% deposit (£25,000) gives you access to significantly better mortgage rates, and 15-20% opens up the most competitive deals. You also need to budget for legal fees, survey costs, stamp duty (if applicable) and moving costs - typically an additional £3,000-£10,000.

What is a Lifetime ISA and how does it help first-time buyers?

A Lifetime ISA lets you save up to £4,000 per year towards your first home, with the government adding a 25% bonus - up to £1,000 per year. You must be aged 18-39 to open one, and the property must cost £450,000 or less. The bonus is paid monthly, so your money grows throughout the year. If you withdraw for any purpose other than buying your first home or retirement, you face a 25% penalty on the withdrawal, which means you get back less than you put in.

Can I use gifted deposit from my parents?

Yes, most lenders accept gifted deposits from immediate family members. The person gifting the money typically needs to provide a signed letter confirming the gift is not a loan and they have no interest in the property. The lender may also require proof of the source of funds. Some lenders require at least a portion of the deposit to come from your own savings, but this varies.

Is shared ownership worth it?

Shared ownership can be a good route onto the property ladder if you cannot afford to buy outright, as you need a smaller deposit and mortgage. However, you pay rent on the share you do not own, and the combined mortgage payment plus rent can sometimes approach the cost of buying outright. You also face restrictions on modifications, may have difficulty selling your share, and staircasing to full ownership involves additional legal and valuation costs each time.

What happened to Help to Buy?

The Help to Buy equity loan scheme closed to new applications on 31 October 2022, with all completions required by 31 March 2023. The Help to Buy ISA also closed to new accounts in November 2019, though existing account holders could continue saving until November 2029. The Lifetime ISA is now the main government savings vehicle for first-time buyers. The First Homes scheme remains available for eligible buyers of new-build properties.

First-Time Buyer Guide UK 2026: Schemes, Deposits & Stamp Duty Relief

Who counts as a first-time buyer?

For HMRC and stamp duty purposes, a first-time buyer is someone who has never owned a freehold or leasehold interest in a residential property, anywhere in the world. This applies to each individual buyer - if you are buying with someone who has previously owned a property, you do not qualify for first-time buyer relief even if you personally have never owned.

Some people assume that if they inherited a property but never lived in it, they still count as first-time buyers. This is not the case - any previous ownership of a residential property, including an inherited interest, disqualifies you from first-time buyer status.

For government schemes like the Lifetime ISA, the definition is similar but may have additional criteria. For shared ownership, you typically need to be a first-time buyer or a previous homeowner who cannot afford to buy now. Always check the specific eligibility criteria for each scheme.

Deposit requirements

The minimum deposit for most mortgage lenders is 5% of the purchase price. Some lenders have offered 0% deposit mortgages with parental guarantees, but these are rare and typically more expensive. The relationship between deposit size and mortgage rate is significant:

Deposit	LTV	Typical rate premium	On £250k property
5%	95%	+0.8-1.2% vs 60% LTV	£12,500
10%	90%	+0.5-0.8%	£25,000
15%	85%	+0.2-0.4%	£37,500
20%	80%	+0.1-0.2%	£50,000
40%	60%	Baseline	£100,000

The biggest improvement in rate comes between 95% and 85% LTV. If you can stretch from a 5% to a 15% deposit, you could save hundreds of pounds per month and tens of thousands over the mortgage term. Even an extra 5% can make a material difference.

First-time buyer stamp duty relief

In England and Northern Ireland, first-time buyers pay no SDLT on the first £300,000 of a property purchase, and 5% on the portion between £300,001 and £500,000. If the purchase price exceeds £500,000, standard rates apply and no first-time buyer relief is available.

This means a first-time buyer purchasing at £300,000 pays zero stamp duty. At £400,000, they pay £5,000 (5% on £100,000). At £500,000, they pay £10,000 (5% on £200,000). A standard buyer at £500,000 would pay £12,500 - so the relief saves up to £2,500 at the threshold.

In Scotland, first-time buyers benefit from an increased nil-rate threshold of £175,000 (compared to £145,000 for other buyers) under LBTT. Wales does not offer specific first-time buyer LTT relief, though the nil-rate band of £225,000 benefits all buyers. See our full stamp duty guide for detailed rate tables.

Lifetime ISA (LISA)

The Lifetime ISA is the most valuable savings tool available to first-time buyers. You can save up to £4,000 per year and the government adds a 25% bonus - up to £1,000 free money per year. The bonus is paid monthly, so it starts earning interest or returns straight away.

Eligibility: You must be aged 18-39 to open a LISA. You can continue contributing until age 50. The property you buy must cost £450,000 or less, and you must use a mortgage (not buy outright with cash). You must have held the LISA for at least 12 months before using it.

The penalty trap: If you withdraw from a LISA for any purpose other than buying your first home or after age 60, a 25% penalty applies to the withdrawal. Because the penalty is calculated on the total amount (including bonus), you actually get back less than you put in. For example, if you save £4,000 and receive a £1,000 bonus (total £5,000), a non-qualifying withdrawal would deduct £1,250 (25% of £5,000), leaving you with £3,750 - a loss of £250 on your own money.

Maximising the LISA: Open one as early as possible to start the 12-month clock. If you are saving as a couple and both qualify, you can each open a LISA and receive up to £2,000 per year in combined bonuses. A stocks and shares LISA may offer better long-term growth than a cash LISA if you are planning to buy in 3+ years, but carries the risk of investment losses.

Help to Buy ISA (now closed)

The Help to Buy ISA closed to new accounts in November 2019. Existing account holders can continue saving until November 2029 and claim their bonus by November 2030. The bonus is 25% on savings up to £12,000, giving a maximum bonus of £3,000.

Unlike the LISA, the Help to Buy ISA bonus is paid at the point of property purchase, not as you save. This means you cannot use the bonus as part of your exchange deposit - only at completion. The property price cap is £250,000 (or £450,000 in London).

You cannot hold both a Help to Buy ISA and a LISA for the same property purchase. If you have both, you can use the savings from both accounts but only claim the government bonus on one. In most cases, the LISA bonus is more generous.

Shared ownership

Shared ownership allows you to buy a share of a property (between 25% and 75%) and pay rent on the remaining share. You need a mortgage and deposit only for the share you are buying, making it more accessible than buying outright. Shared ownership properties are typically offered through housing associations.

Staircasing: You can buy additional shares over time, a process called staircasing, until you own 100% of the property. Each staircase requires a valuation (at your cost) and legal fees. The valuation is based on the property's current market value, so if prices have risen you pay more for additional shares.

New model (from 2021): Shared ownership properties sold from April 2021 onwards include a 10-year period where the housing association covers the cost of essential repairs and maintenance, a minimum initial share of 10% (reduced from 25%), and the ability to staircase in 1% increments up to 15%.

Considerations: You pay rent plus mortgage payments plus service charges, which can add up. The rent on the unsold share typically starts at 2.75% of the share value per year. Selling a shared ownership property can be more complex - the housing association usually has a right of first refusal and a nomination period.

First Homes scheme

The First Homes scheme offers new-build properties to eligible first-time buyers at a discount of at least 30% compared to market value. The discount is locked to the property in perpetuity - when you sell, the same percentage discount applies to the next buyer.

Eligibility: You must be a first-time buyer, aged 18 or over, and able to secure a mortgage for at least 50% of the discounted price. Your household income must not exceed £80,000 (or £90,000 in London). The price after discount must not exceed £250,000 (or £420,000 in London). Local authorities may set additional eligibility criteria such as local connection requirements, income caps or key-worker priority.

The scheme is still in its early phases and availability varies significantly by area. Not all new-build developments include First Homes, and where they are available, demand typically exceeds supply.

Right to Buy

If you are a council tenant in England, Right to Buy allows you to purchase your council home at a discount. The maximum discount in 2025-26 is £102,400 outside London and £136,400 in London, depending on how long you have been a tenant. You need at least 3 years as a public sector tenant to qualify.

The discount for houses starts at 35% after 3 years and rises by 1% per year to a maximum of 70%. For flats, it starts at 50% and rises by 2% per year to a maximum of 70%. If you sell within 5 years, you must repay some or all of the discount. Right to Buy does not apply in Scotland (where a separate scheme existed but was abolished in 2016) or Wales (where it was abolished in January 2019).

Mortgage guarantee scheme

The UK government's mortgage guarantee scheme encourages lenders to offer 95% LTV mortgages by providing a partial government guarantee on the loan. The scheme has been extended and is available on properties up to £600,000. Most major lenders participate, offering 95% LTV products with competitive rates.

The scheme is transparent to borrowers - you apply for a 95% mortgage through a participating lender as normal, and the government guarantee operates in the background. The scheme has helped normalise 5% deposit lending, which became very scarce during the pandemic.

How to save for a deposit

Saving for a deposit is the biggest barrier for most first-time buyers. With average UK house prices around £285,000, even a 10% deposit means saving £28,500. Here are practical strategies:

Open a Lifetime ISA immediately - the 12-month qualifying period means every month you delay is a month further from using it. Max out contributions if possible.
Automate your savings - set up a standing order on payday so saving happens before spending. Treat your deposit savings like a non-negotiable bill.
Track your spending - use a budgeting app to identify where your money goes. Most people find at least £100-£200 per month in spending they can redirect.
Consider living arrangements - living with family, sharing with more housemates, or moving to a cheaper area temporarily can dramatically increase your saving rate.
Boost income - overtime, a side job, selling unused items, and salary negotiation can all accelerate your timeline.
Bank of Mum and Dad - gifted deposits are accepted by most lenders. If family can help, this can significantly shorten your saving timeline.

Common first-time buyer mistakes

Only considering the purchase price: Stamp duty, legal fees, survey costs, mortgage fees and moving costs can add £5,000-£15,000+ to the upfront bill. Budget for these from the start.

Not getting a survey: The lender's valuation is not a survey. It confirms the property is adequate security for the loan but does not identify structural problems. A £500 survey can save you from a £50,000 problem.

Going direct to one lender: Your bank may not offer the best rate. A whole-of-market mortgage broker compares products from dozens of lenders and can find deals you would not see otherwise.

Ignoring the LISA penalty: If your plans change and you withdraw LISA funds for a non-qualifying purpose, you will lose money. Only commit funds to a LISA if you are confident you will use them for a first property purchase.

Not checking your credit file: Errors on your credit file can cause mortgage rejections or higher rates. Check your file with all three agencies (Experian, Equifax, TransUnion) at least three months before applying. Register on the electoral roll if you have not already - this is a basic eligibility check most lenders perform.