Low-deposit mortgages: 5% and 10% deposits

A low-deposit mortgage is a home loan where the buyer puts down a small part of the price and borrows the rest. Lenders describe these loans by loan-to-value, the loan as a share of the price or valuation, whichever is lower. The smaller the deposit, the higher the loan-to-value and the more the lender is lending.

Low-deposit mortgages are usually regulated mortgages (FCA Handbook MCOB, accessed 20 Oct 2026), with the same affordability checks as other home loans. Many first-time buyers use them, though they are open to other buyers too. Lenders set their own limits, and the maximum loan-to-value can differ between new-build flats, houses and other property types.

Lenders price mortgages in loan-to-value bands, and each larger deposit moves the loan into a lower band. A worked example, using example figures, not market data: on a £250,000 home, a 5% deposit is £12,500 and the loan is £237,500, while a 10% deposit is £25,000 and the loan is £225,000.

The lower band usually brings more lenders and lower pricing, because the lender's risk falls as the deposit grows. Moving from one band to the next, even by a small amount, can change the monthly payment more than a small change in the price of the home, so it can be worth checking how close a deposit is to the next band.

With a small deposit, lenders look closely at income, outgoings, credit history and the source of the deposit. They test whether the payment would still be affordable if rates rose, and they check the property itself, because some lenders limit high loan-to-value lending on new-build flats or homes with short leases.

Gifted deposits from family are accepted by many lenders, usually with a signed letter confirming the money is a gift, not a loan, and that the giver will have no share in the home. Savings built up in a Lifetime ISA can form part of the deposit too, and lenders want to see clear records of where all the money has come from.

Lenders also look at how much of the price is being borrowed against income. How lenders work out borrowing for first-time buyers, and how deposits and income combine, is covered in the first-time buyer mortgage guide, which walks through each stage.

The deposit changes the cost of a mortgage in two ways: the amount borrowed and the rate charged. A larger deposit means a smaller loan and usually a lower rate, so the monthly payment falls on both counts. Fees, the length of any fixed period and the term also change the total cost over time, along with any cashback.

Comparing deals on the total cost over the fixed period, including arrangement fees, gives a fairer view than the headline rate, especially on smaller loans and shorter fixed periods. Current pricing across loan-to-value bands, and what moves it, is set out on the first-time buyer mortgage rates page.

Buyers build a deposit through savings, a Lifetime ISA, gifts from family or a mix of these. Some use family help without a gift, such as a guarantor or joint borrower mortgage, or a family member's savings held as security. Shared ownership reduces the deposit needed, because it is based on the share bought.

Each route has its own rules and risks for the buyer and any family member involved, so the choice depends on the buyer's income, savings and plans for the home. Family-assisted options are explained in the guarantor and family-assisted mortgages guide in this section.