First-Time Buyer Mortgages In The UK: Deposits, Affordability And The Process

Buying your first home is rarely about chasing one headline rate. It is usually about finding a purchase price, deposit and monthly payment that still leave you with breathing room once the legal costs, moving costs and day-to-day bills are taken into account.

Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.

Figures as of 6 April 2026 London.

What Counts As A First-Time Buyer

In broad terms, a first-time buyer is someone who has never owned a residential property before. In practice, though, the definition can vary depending on whether you are looking at lender criteria, a government scheme or tax treatment. That is why it is worth checking the exact rules before you assume you qualify.

For Stamp Duty Land Tax relief in England and Northern Ireland, you and anyone you buy with must both be first-time buyers. If the property costs more than £500,000, the relief does not apply. Scotland and Wales use different property tax systems, so if you are buying there, ask your solicitor to confirm the likely tax position before you finalise your budget.

The first-time buyer market is still active. UK Finance said 391,000 first-time buyer loans were granted in 2025, up from 332,000 in 2024. That does not make the process easy, but it does show that buyers are still getting transactions through where the deposit, affordability and paperwork are well prepared.

If you are buying jointly, one of the most common mistakes is assuming the cleaner case will carry the application. In reality, the lender will usually assess the whole picture - both incomes, both credit profiles, both commitments and the source of the deposit. Where one buyer has owned before, that can also affect scheme eligibility and tax treatment. For legal and tax questions, speak to a qualified solicitor or accountant.

How Much Deposit Do You Need

Many first-time buyers start by asking whether 5% is enough. Sometimes it is. A 5% deposit can be workable, but it does not automatically mean the same choice of lenders, rates or property types you might see at 10% or 15%. In general, the lower the loan-to-value, the broader the product choice may become and the easier it can be to absorb valuation issues or pricing changes.

Official UK House Price Index data for January 2026 showed an average first-time buyer purchase price of £243,000 in England and £181,000 in Wales. A 5% deposit on those figures would be roughly £12,150 and £9,050 respectively. That is only a broad illustration, but it helps show why many buyers focus first on the deposit and then on whether the monthly payment still feels comfortable.

There is still government support aimed at low-deposit borrowing. HM Treasury’s permanent Mortgage Guarantee Scheme, introduced from July 2025, is designed to help sustain the availability of 91% to 95% loan-to-value mortgages through participating lenders. That can be useful for buyers with a smaller deposit, but participation, criteria and product availability vary by lender and can change.

A Lifetime ISA can also make a real difference if you are still building your deposit. You can contribute up to £4,000 each tax year and receive a 25% government bonus, up to £1,000 per year. The account has specific eligibility and withdrawal rules, so it is worth checking those early rather than assuming every savings route works the same way.

If your deposit is tight, it helps to review the small deposit guide, the Loan-to-Value calculator[Link 2] and the mortgage deposit guide before you start making offers. That gives you a clearer sense of where your savings sit in relation to the price range you are targeting.

It is also worth remembering that not every 5% case is treated the same way. Flats, new builds, gifted deposits, probationary employment, commission-heavy income and credit blips can all narrow the field. Sometimes waiting a little longer to move from 5% to 10% changes the options materially. Sometimes it does not. The key is understanding the trade-off between buying sooner and borrowing at a higher loan-to-value.

How Lenders Assess Affordability

Affordability is more than an income multiple. Lenders will usually look at your basic income, regular overtime or commission where acceptable, existing credit commitments, childcare costs, travel costs, household spending, loan term, credit profile and the type of property you are buying. They also apply their own stress testing, so two lenders can look at the same applicant and reach different conclusions.

This is why online tools are best used as a starting point, not a final answer. The borrowing calculator can help you sense-check the numbers, while the credit report page can help you identify issues before a lender does. That is especially useful if you have old addresses, financial links, missed payments or balances that are higher than expected.

As of the Monetary Policy Committee meeting ending 18 March 2026, Bank Rate was 3.75%. That matters for the wider mortgage market, but fixed-rate pricing can still move independently as lenders reprice funding costs and market expectations. For a first-time buyer, that usually means it is more useful to compare realistic monthly payments and total product cost than to wait for one headline rate decision and assume every lender will react the same way.

A decision in principle can be a helpful early step because it gives you a rough framework for the price range you may be able to target. It is not a guarantee of a mortgage offer. The lender can still change its view once it sees your documents, checks your credit in more detail and values the property.

For many first-time buyers, the strongest applications are the simplest to understand. That means income evidenced clearly, the deposit source explained properly, bank statements showing sensible conduct, and no surprises around undisclosed borrowing. Where the case is more complex - for example self-employed income, a gifted deposit from overseas, or a new-build with developer incentives - the presentation of the case matters even more.

Costs To Budget For Beyond The Deposit

The deposit is only one part of the upfront cost. You may also need to budget for conveyancing, searches, a survey if appropriate, lender fees, moving costs and buildings insurance. If you are buying a leasehold property, you also need to understand the likely service charges and any ground rent position. Those costs can affect affordability in practice even when they do not directly change the mortgage payment.

Tax needs to be checked early, not after your offer is accepted. In England and Northern Ireland, some first-time buyers will pay no Stamp Duty Land Tax, while others will still have a bill depending on the purchase price. The Stamp Duty calculator is useful for an early estimate, but your solicitor should confirm the final position because the legal and tax treatment depends on the exact transaction.

A common mistake is putting every available pound into the deposit and leaving no contingency for the first few months after completion. A safer approach is usually to understand the full purchase cost first, then decide how much deposit you can commit without making the rest of the move unnecessarily tight.

If family support is involved, make sure it is documented properly. Some lenders accept gifted deposits readily, but they will usually want confirmation that the funds are a genuine gift rather than a repayable loan. Others may apply additional checks depending on the donor, the property and the applicant profile.

The Mortgage Process Step By Step

The first step is usually working out what you can afford and how much deposit you want to commit. From there, you can obtain a decision in principle, start viewing properties and make an offer with a clearer idea of your likely budget.

Once your offer is accepted, the focus shifts to the full mortgage application. That is where cleaner cases tend to move more smoothly. Most lenders will want to understand not only your income, but also how stable it is, how the deposit has been built up and whether the property itself fits their criteria.

The likely documents often include:

• proof of identity and address

• recent payslips or SA302s and tax year overviews if self-employed

• bank statements

• proof of deposit

• gifted deposit paperwork where relevant

• details of loans, credit cards and other commitments

• property particulars and solicitor details

After the application is submitted, the lender will assess the case and arrange a valuation. If the underwriting outcome is positive and the property fits, a mortgage offer can be issued. Your solicitor then handles the legal work through to exchange and completion.

The mortgage approval guide is useful if you want a fuller breakdown of what underwriters tend to review. When you are ready to discuss your own case, contact Mortgage One and explain what stage you are at, how much deposit you have and whether there are any complications you already know about. That makes it easier to narrow the discussion to the lenders and routes that may be more relevant.

Schemes And Mortgage Routes Worth Knowing

Shared Ownership can help where buying on the open market is out of reach. Under the government scheme, you buy a share of the home and pay rent on the remainder. GOV.UK says buyers can purchase between 10% and 75% of the home’s full market value, and the deposit is usually 5% to 10% of the share being bought. That can reduce the cash needed upfront, although rent, service charges and leasehold terms still need careful review.

The First Homes scheme is another option in England for eligible buyers. GOV.UK says qualifying first-time buyers may be able to buy a home for 30% to 50% less than market value, subject to the scheme rules, local eligibility and income limits. You must also be able to get a mortgage for at least half the price of the home.

These routes can be useful, but they are not interchangeable. Shared Ownership changes how you buy and what ongoing costs you may pay. First Homes is a discounted purchase model. Standard low-deposit lending is different again. The government mortgage schemes guide and the Shared Ownership guide are good places to compare the basics before you go deeper into lender criteria.

You may also come across family-assisted routes such as gifted deposits or Joint Borrower Sole Proprietor structures. These can help in the right circumstances, but they need to be assessed carefully because the legal ownership, affordability and future exit position all matter. They are best considered as part of the wider strategy rather than as a quick fix.

Choosing The Right First-Time Buyer Mortgage

For many first-time buyers, a capital repayment mortgage on a fixed rate is the most straightforward place to start because it gives clearer monthly budgeting and reduces the balance over time. That does not make it automatically right for everyone. Some borrowers prefer the flexibility of a tracker, while others may be more focused on reducing upfront fees. The point is to compare the structure, the payment and the overall cost together.

A lower headline rate does not always mean the lower-cost option. Product fees, incentives, cashback, valuation arrangements, overpayment flexibility and early repayment charges can all change the real value of a deal. Product availability can also move quickly, especially at higher loan-to-value levels.

Mortgage One can help you understand how lenders may assess your case, which documents are likely to matter most and whether your deposit, income and target property look aligned before you commit too far down one route. If you are ready to move, contact Mortgage One for a clearer view of the next steps based on your circumstances.

The information provided in this article is for general guidance only and does not constitute personal or regulated financial advice. If you’d like to understand what these moves could mean for you, speak to Mortgage One. We can explain your options and timings based on your specific circumstances.

Some Buy to Let mortgages are not regulated by the Financial Conduct Authority.

FAQs

1. Can I get a mortgage with a 5% deposit?
Sometimes, yes. A 5% deposit can be enough, but eligibility, property type, lender participation and affordability all matter.

2. How much can I borrow as a first-time buyer?
It depends on income, outgoings, credit profile, loan term and lender criteria. A quick calculator can help, but the final figure is lender-specific.

3. Does a decision in principle guarantee a mortgage offer?
No. It is an early indication only. The lender can still change its decision after full underwriting and valuation.

4. Do gifted deposits cause problems?
Not necessarily, but they do need to be evidenced properly. Lenders usually want to confirm the money is a genuine gift and not a loan that must be repaid.

5. Are new-build properties harder to finance?
They can be, especially at higher loan-to-value levels. Some lenders apply tighter criteria to certain flats, incentives or developer arrangements.

6. Is Shared Ownership the same as buying normally with a small deposit?
No. With Shared Ownership, you buy a share of the property and usually pay rent on the remainder, so the structure and ongoing costs are different.

7. Should I choose the mortgage with the lowest rate?
Not automatically. Fees, incentives, flexibility and the total cost over the period you expect to keep the deal can all matter.