New Build Mortgages: Deposits, LTV Limits and Buyer Schemes

Buying a new build works differently from buying an existing home, and most of the difference sits with the lender. Maximum loan-to-value is often lower, valuations are scrutinised more closely, builder incentives have to be declared, and the gap between reservation and completion can stretch past a standard mortgage offer. This guide explains the deposit lenders look for, how incentives and deposit contributions are treated, which schemes are still open in 2026, and how the offer timeline works for off-plan and under-construction homes.

For a free initial consultation about new build mortgage options, call 01202 155992 or contact Mortgage One.

What counts as a new build and how lenders assess one

Most lenders class a property as a new build if it was built or substantially converted within the last two years and has never been lived in. Off-plan and under-construction homes count too. Lenders treat them more cautiously than resale homes, mainly because of the new build premium, which can erode once the property is no longer new.

The new build premium is the tendency for a brand new property to sell for more than a comparable second-hand home, reflecting modern specification, energy efficiency and the appeal of being first owner. Much of that premium can disappear the moment you complete, so a lender pricing for the risk of the first few years will often cap the maximum loan-to-value below the level it would offer on an equivalent existing home. New build flats attract the most caution, because resale values, service charges, ground rent terms and the number of identical units on the same development all feed into how quickly the property could be sold.

Mortgage One's mortgage application guide covers the documentation and steps that apply to any purchase, including a new build.

What deposit do you need for a new build mortgage?

Deposit requirements depend on the property and the lender. A 5% deposit (95% loan-to-value) is available on selected new builds through the permanent Mortgage Guarantee Scheme, but many lenders set lower maximum loan-to-values on new builds, and lower again on new build flats. In practice that often means a larger deposit than you would need on an equivalent existing home.

The Mortgage Guarantee Scheme became a permanent feature of the market in July 2025. It gives participating lenders a government-backed guarantee on the slice of a high loan-to-value loan above 80%, supporting the availability of 91% to 95% mortgages for first-time buyers and home movers buying a main residence priced up to £600,000. It is not a loan to you and makes no difference to how your mortgage works day to day. Whether a 95% product is actually offered on a particular new build still comes down to each lender's own new build policy, which is where lender choice matters.

Beyond any scheme, the deposit you need is shaped by the property type. Traditional brick and block houses tend to attract the widest lender choice, while new build flats, high-rise blocks and non-standard construction narrow the field and usually call for a larger deposit. Mortgage One's guide on how much deposit you need explains how deposit size affects the rates and lenders open to you.

How do builder incentives affect your new build mortgage?

Builder incentives such as cashback, paid stamp duty, upgrades or a deposit contribution must be declared to the lender on the UK Finance Disclosure of Incentives Form. Where the builder is paying the stamp duty, our SDLT estimate tool shows what that incentive is actually worth against the purchase price before you weigh it in. Most lenders accept total incentives up to 5% of the purchase price or valuation. Above that, the lender may reduce the valuation or decline, which lowers how much you can borrow.

This is the single most common reason a new build mortgage runs into trouble late in the process. A developer might offer cashback, a part-exchange deal or a contribution towards your deposit, and each of those carries a cash value. The valuer works off the lower of the purchase price or the mortgage valuation once the incentives are taken into account, so declaring everything up front, ideally at reservation, lets the lender and valuer assess the property on the correct basis and avoids a revised offer further down the line.

A builder deposit contribution is treated differently from your own savings. Most lenders do not add the contribution to your deposit. Instead they deduct its value from the purchase price, so a 10% cash deposit plus a 5% builder contribution is typically assessed as a 90% loan, not an 85% one. The contribution still reduces the cash you need at completion, but it does not automatically buy you a lower loan-to-value band. Knowing in advance how a target lender treats a contribution is the difference between a clean application and a surprise at valuation.

Mortgage offer timing for off-plan and under-construction homes

A mortgage offer is typically valid for around six months, but an off-plan or under-construction home can complete well beyond that. The build contract usually sets a long-stop date, the latest date for completion. If that falls after your offer expires, the offer has to be extended or re-issued, so timing the application matters.

Some lenders specialise in new build and will hold an offer for longer, or re-issue it without a fresh application, where the build runs late. Others will not, which can leave a buyer needing to re-apply at whatever rates are available when the home is finally ready. This is why the usual advice is to start the mortgage conversation three to six months before you expect to reserve, and to match the lender to your likely completion date rather than to the headline rate alone. As a whole of market mortgage broker, Mortgage One can identify which lenders are active on new build panels and which offer extended or re-issued offers for delayed completions.

If your completion date could fall months after you reserve and you are not sure which lenders will hold an offer that long, call 01202 155992 or contact Mortgage One.

Government and developer schemes for new build buyers

Several routes can still help you into a new build in 2026. The permanent Mortgage Guarantee Scheme supports low-deposit lending, First Homes offers eligible first-time buyers in England a discounted purchase price, and the developer-funded Own New Rate Reducer cuts the initial mortgage rate. Two former mainstays, Help to Buy equity loans and Deposit Unlock, have now closed to new buyers.

The Mortgage Guarantee Scheme has been permanently available across the UK since July 2025. It underwrites part of a high loan-to-value loan so participating lenders can offer 91% to 95% mortgages to first-time buyers and home movers buying a main residence priced up to £600,000, with a deposit as small as 5%.

First Homes is an England-only scheme that lets eligible first-time buyers buy a new build at a discount of at least 30%, and up to 50%, below market value, with the discount fixed to the property for future sales. Buyers must have a household income under £80,000, or £90,000 in London, the home must be their only residence, and the mortgage must cover at least half of the discounted price.

Own New Rate Reducer is a developer-funded route rather than a government one. The builder contributes between 3% and 5% of the purchase price to the lender, which uses it to reduce your mortgage interest rate during the initial fixed period, typically two or five years. You own 100% of the home from day one, and the scheme is only accessible through an approved broker.

Shared ownership remains an option on many new build developments, letting you buy an initial share of the property and pay rent on the remainder, with the option to buy further shares over time. The mortgage is taken on your share only, so the deposit and the loan are smaller than buying outright.

Two schemes that previously helped new build buyers have closed. Help to Buy equity loans in England ended in 2023 and are not available to new applicants.

Deposit Unlock, the builder-funded scheme that allowed a 5% deposit on participating developments, closed to new completions in April 2026, although existing mortgage offers are being honoured.

Mortgage One's first-time buyer mortgage guide explains the full buying process, and the guide to government mortgage schemes covers these and other options in more detail.

Do new build flats and buy-to-let purchases have different rules?

Yes. New build flats are treated more cautiously than houses, and several lenders cap the maximum loan-to-value lower, partly because of building safety and resale concerns. A new build bought to let usually needs a larger deposit than a residential purchase and faces the same tighter limits on flats. In every case the lender requires an approved 10-year structural warranty before releasing the advance.

Lenders will not release the mortgage advance on a new build until a recognised warranty or structural insurance policy is in place. The most common is the NHBC Buildmark warranty, which runs for ten years, covering the builder's obligations in the first two years and major structural defects for the remaining eight. Premier Guarantee, LABC Warranty and a handful of others are also accepted. A snagging survey, which records finishing defects for the developer to put right, is not a mortgage requirement but is worth arranging before completion.

A new build bought as an investment is assessed as a buy-to-let, so the rental income has to cover the mortgage under the lender's stress test, and a larger deposit is normally required. New build flats can be harder to place because of the volume of similar units on a development. Mortgage One's buy-to-let mortgage guide explains how lenders assess rental income and what deposit levels typically apply.

How a broker helps you secure a new build mortgage

A broker's value on a new build is knowing which lenders to approach: those active on new build panels, those that accept the incentive package on offer, those that lend at the loan-to-value you need on a house or flat, and those that will hold an offer long enough for a delayed completion. Some routes, such as Own New, are broker-only.

Going direct to a single lender means accepting that lender's new build policy, whatever it is. If they cap new build flats at a lower loan-to-value, or will not extend an offer for a build that slips, you only find out late. Searching the whole of market means matching the case to a lender that fits the property, the deposit, the incentives and the completion timeline from the outset. Mortgage One handles the application, liaises with the developer's sales team and the lender's valuer over the incentive disclosure, and coordinates with your solicitor through to completion.

To find out which lenders will lend at the loan-to-value you need on your chosen plot, call 01202 155992 or contact Mortgage One.

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.

FAQs

1. What deposit do I need for a new build mortgage? A 5% deposit can be enough on selected new builds through the Mortgage Guarantee Scheme, but many lenders ask for more on new builds, and more again on flats. The exact figure depends on the property type, the lender and your wider circumstances.

2. Can I buy a new build with a 5% deposit? Sometimes. The permanent Mortgage Guarantee Scheme supports 95% mortgages on homes up to £600,000 for first-time buyers and home movers, but each lender sets its own new build policy, so a 95% product is not available on every plot, particularly flats.

3. How do builder incentives affect my mortgage? All incentives must be declared on the UK Finance Disclosure of Incentives Form. Most lenders accept incentives up to 5% of the purchase price or valuation. Above that, the lender may cut the valuation, reducing how much you can borrow. A deposit contribution usually lowers the effective loan-to-value rather than topping up your deposit.

4. How long is a new build mortgage offer valid? Offers are typically valid for around six months. Because off-plan and under-construction homes can complete later, the offer may need extending or re-issuing. Some lenders hold or re-issue offers for new builds more readily than others, which is worth checking before you apply.

5. Do I need a building warranty for a new build mortgage? Yes. Lenders require an approved warranty such as NHBC Buildmark, Premier Guarantee or LABC Warranty to be in place before releasing the mortgage advance. The warranty runs for ten years and protects against defined structural defects.

6. Are mortgage rates different for new builds? Rates are not automatically higher, but the available products can differ because lenders price for new build risk and not every lender is active on new build. Developer-funded routes like Own New Rate Reducer can lower the initial rate on participating developments.

7. Can I get a buy-to-let mortgage on a new build? Yes. A new build bought to let is assessed as a buy-to-let, with rental income tested against the mortgage and a larger deposit usually required. New build flats can be harder to place because of the number of similar units on a development.

8. Do I need a mortgage broker to buy a new build? You are not required to use one, but new build adds variables that direct applicants often miss: incentive disclosure, lower loan-to-values on flats, offer extensions for delayed builds and broker-only schemes such as Own New. A whole of market broker matches the case to a lender that fits from the start.