Buying your first home is one of the most exciting — and nerve-wracking — things you will ever do. Between browsing listings and imagining where the sofa will go, there is one number that shapes almost everything else: your deposit. It affects how much you can borrow, the interest rate you are offered, and how comfortable your monthly payments feel once the keys are in your hand. This guide walks through what you actually need, why a bigger deposit pays off, and the costs that quietly catch first-time buyers out.

How much deposit do you actually need?

In the UK, most lenders want a minimum deposit of 5% of the property price. On a £250,000 home, that is £12,500 — a serious sum, but not the whole story. The size of your deposit determines your loan-to-value ratio (LTV), and that ratio drives the deals you are offered.

• 5% deposit (95% LTV): the widest range of options for buyers with limited savings, but typically the highest interest rates and the strictest affordability checks.
• 10% deposit (90% LTV): rates start to improve noticeably, and monthly repayments become more manageable.
• 15–20% deposit (85–80% LTV): where genuinely competitive deals usually begin.
• 25% or more (75% LTV and below): often the best rates available, plus more choice of lenders.

A simple rule of thumb: the more you put down, the less you borrow, so you pay less interest over the life of the mortgage. Aim for 10% if you can, even if it means waiting a few extra months.

Why a bigger deposit can save you money

The difference between deposit tiers is not just cosmetic. Because interest is charged on the amount you borrow, a lower LTV reduces both your outstanding balance and your rate.

Suppose you are buying a £250,000 home. With a 5% deposit you borrow £237,500; with a 10% deposit you borrow £225,000. That is £12,500 less debt from day one. Add a slightly lower interest rate on top, and the saving over a two-year fixed deal can easily run into four figures — money that could instead go towards furniture, decorating, or an emergency fund.

It also gives you breathing room. Lower repayments mean you are less exposed if your circumstances change, and you may qualify for a longer fixed term, which makes budgeting far easier.

Help with building your deposit

You do not have to do this entirely on your own. Several routes can give your savings a boost:

• Lifetime ISA: if you are aged 18–39, you can save up to £4,000 a year and the government adds a 25% bonus, up to £1,000 annually. The property must cost £450,000 or less, and there are penalties for withdrawing for anything other than a first home or retirement.
• Help to Buy ISA: closed to new applicants, but if you already hold one you can generally keep saving and claim the bonus on completion until the scheme deadline.
• Shared ownership: buying a share of a property — often between 25% and 75% — and paying rent on the rest. The deposit is calculated on the share you buy, which can dramatically reduce the upfront figure.
• Family support: some lenders accept gifted deposits, and guarantor or family-assisted mortgages can help if your income alone is stretched. Always ask how the lender wants gifts documented.

The costs that catch first-time buyers out

Your deposit is only part of the money you need on completion day. Budget for these from the start, or you may find yourself short at the worst possible moment:

• Stamp duty: in England and Northern Ireland, first-time buyers generally pay nothing on the first £300,000 and get relief up to £500,000. Rules differ in Scotland and Wales, and thresholds change, so check the current position before you commit.
• Legal and conveyancing fees: commonly £800–£2,000, plus searches and bank transfer fees.
• Survey: around £300–£700 depending on the property and level of inspection. A homebuyer survey is usually worth every penny.
• Mortgage fees: arrangement fees can range from nothing to over £1,000, and some brokers charge a fee too.
• Removals and setup: £300–£1,000 for a removal firm, plus furniture, appliances, and possibly a deposit for utilities.
• Ongoing costs: buildings insurance is compulsory, and leasehold properties come with service charges and ground rent.

As a rough guide, set aside 2–4% of the purchase price to cover these extras.

Practical steps to grow your pot and get mortgage-ready

Small, consistent habits beat sporadic bursts of saving. Set up a standing order into a dedicated savings account on payday, so the money leaves before you can spend it. If you have a Lifetime ISA, use it first — the bonus is hard to beat. Review your three biggest outgoings: rent, energy, and transport, where a phone call or a switch can free up £50 or more a month.

While you save, protect your future application. Lenders look at at least three months of bank statements, so avoid unauthorised overdrafts or missed payments. Try not to change jobs or open new credit in the months before applying, and check your credit report for errors. When your deposit is close to target, get a mortgage in principle — it shows estate agents you are serious and clarifies how much you can borrow.

Finally, keep your deposit money separate from your emergency fund. Wiping out your savings to buy a home leaves you vulnerable if the boiler fails in your first winter. A small buffer behind you makes the whole experience far less stressful — and lets you enjoy that first cup of tea in your own kitchen.