How Much Deposit Do You Need for a Mortgage in 2025?
A practical guide to mortgage deposits — minimum requirements, how LTV affects your rate, and strategies to save faster.
Why Your Deposit Size Matters So Much
Your mortgage deposit does two things: it reduces the amount you need to borrow, and — crucially — it determines your Loan-to-Value (LTV) ratio, which is the single biggest factor in the interest rate a lender will offer you. A larger deposit means lower LTV, lower risk to the lender, and a significantly cheaper mortgage rate.
Understanding LTV Ratios
LTV is simply the mortgage as a percentage of the property's value. A 10% deposit gives you a 90% LTV. A 25% deposit gives you a 75% LTV. Lenders use LTV bands — the rates improve meaningfully at each threshold.
| Deposit | LTV | Typical 5-yr Fixed Rate (2025) | Monthly Payment (£250k mortgage) |
|---|---|---|---|
| 5% | 95% LTV | ~5.2% | ~£1,487 |
| 10% | 90% LTV | ~4.7% | ~£1,422 |
| 15% | 85% LTV | ~4.4% | ~£1,382 |
| 20% | 80% LTV | ~4.1% | ~£1,339 |
| 25%+ | 75% LTV | ~3.9% | ~£1,311 |
The difference between a 5% and 25% deposit on a £250,000 mortgage is around £176 per month — that is £2,112 per year over a 25-year term.
The Minimum: 5% Deposit
Most lenders accept a minimum 5% deposit (95% LTV). The Mortgage Guarantee Scheme — which ran until 2025 — supported 95% LTV lending, and several lenders continue to offer 5% deposit mortgages on properties up to £600,000 without it. 5% LTV mortgages come with higher rates, stricter income requirements, and fewer lenders to choose from.
First-Time Buyer Schemes
Lifetime ISA (LISA)
Open a LISA between ages 18 and 39, contribute up to £4,000 per year, and the government adds a 25% bonus — up to £1,000 per year. After 12 months your LISA can be used towards a property worth up to £450,000. Over five years of maximum contributions you could accumulate £25,000 in LISA savings (£20,000 of your own money plus £5,000 in government bonuses).
Shared Ownership
Buy between 10% and 75% of a property and pay rent on the remainder. You only need a deposit on the share you buy — making the deposit significantly smaller. You can increase your ownership share over time through "staircasing." Shared Ownership properties are always leasehold, and service charges apply.
Gifted Deposits: What You Need to Know
Most lenders accept gifted deposits — typically from parents or close family members. The gift must be genuine (not a loan), and the donor usually needs to sign a gifted deposit letter confirming they have no stake in the property and will not require repayment. Lenders apply the same affordability and LTV rules regardless of whether the deposit was saved or gifted.
Calculating How Much Deposit You Need
Work out your target property price, then apply the LTV percentage you are aiming for. If you want to buy a £300,000 property with a 10% deposit, you need £30,000 plus additional cash for stamp duty, solicitor fees (£1,500–£3,000), survey (£500–£1,500), and mortgage arrangement fees (typically £999–£1,999). Budget an additional £4,000–£6,000 in buying costs on top of your deposit.
How to Save Your Deposit Faster
- Open a Cash ISA or LISA immediately — tax-free growth compounds over time, and the LISA bonus is effectively a 25% instant return on savings up to £4,000/year.
- Automate transfers on payday — pay yourself first before spending, so saving becomes the default rather than the afterthought.
- Invest in a Stocks and Shares ISA for longer timescales — if your target is 5+ years away, equity growth can significantly outpace cash savings rates.
- Review rent vs saving trade-off — moving to a cheaper rental or house-sharing for 12–24 months can accelerate deposit-building substantially.
- Bonus and windfall discipline — commit bonuses, tax refunds, and inheritances directly to your deposit pot before they are absorbed into spending.
Use our Mortgage Calculator to model your repayments at different deposit sizes →