Low-deposit mortgages for first-time buyers

01

How a 95% loan-to-value mortgage works

Loan-to-value compares the mortgage with the lender's accepted property value. On a £250,000 property, a 5% deposit is £12,500 and a 95% mortgage would be £237,500. This is only an illustration: the purchase price, lender valuation, affordability decision and product rules all have to support the case.

The Mortgage Guarantee Scheme has been permanent since July 2025. It is designed to encourage participating lenders to offer more high loan-to-value mortgages to eligible first-time buyers and home movers. The guarantee protects part of the lender's risk; the borrower remains responsible for the full mortgage and must meet the lender's normal checks.¹

02

What lenders check beyond the deposit

A small deposit does not automatically make a mortgage unaffordable, and a large deposit does not automatically make one affordable. Regulated mortgage lenders assess whether payments are likely to remain affordable using verified income, committed expenditure, essential household spending and other relevant circumstances.³

Criteria vary between lenders. Employment type, variable income, credit history, age, term and property construction can all change the available route. An agreement in principle is useful preparation, but it is not a formal mortgage offer and is still subject to the full application and property assessment.

• Income and how consistently it can be evidenced
• Loans, credit cards, childcare and regular household commitments
• Credit history and conduct of existing accounts
• Mortgage term, age and expected changes to income
• Property type, condition, tenure and the lender's valuation

03

Build the cash budget before viewing homes

MoneyHelper recommends thinking beyond the deposit and budgeting for costs such as legal work, a survey, moving and mortgage-related charges. Property tax rules differ across England, Northern Ireland, Scotland and Wales, so the figure should be checked with the relevant official service and your conveyancer.²

A practical budget starts with total accessible savings, removes buying costs and the emergency cash you want to keep, then treats the remainder as the maximum deposit. That sequence reduces the risk of completing with no room for repairs, furnishing or an unexpected bill.

• Deposit and evidence of where it came from
• Conveyancing, searches and property tax where applicable
• A survey appropriate to the property
• Mortgage, valuation or advice fees where applicable
• Moving, initial repairs and a post-completion reserve

04

Compare the complete mortgage, not only the initial rate

The lowest advertised rate is not always the lowest-cost option for a particular loan. Product fees, incentives, the fixed or variable period, early repayment charges and what happens after the initial deal all affect the result. Compare options over a period that matches your likely plans.

If a 95% mortgage leaves the monthly budget too tight, the sensible answer may be a lower purchase price, a larger deposit or more time to strengthen the application. The maximum available loan is not a target.

05

A sensible order for your next steps

Start with a full household budget and a credit-file check. Organise income and deposit evidence, establish a realistic property range, then explore an agreement in principle before making an offer. Once a property is agreed, arrange the full mortgage application, legal work and an appropriate survey together.

If you want help comparing deposit levels, likely lender requirements and the monthly cost, a mortgage adviser can assess the complete position before you commit to a property.