The deposit is the single biggest financial obstacle for most first-time buyers. In 2026, the average UK house price sits around £292,000 — meaning a 10% deposit is approximately £29,200, on top of stamp duty, legal fees, and survey costs. The good news is that with the right accounts and a disciplined approach, reaching that target is more achievable than it often feels. This guide covers exactly how to do it.
How much deposit do you actually need?
The minimum deposit for most residential mortgages is 5% — but the deposit you should aim for, and the rate environment you access as a result, are quite different things.
| Deposit | LTV | Indicative 5yr fix rate (2026) | Monthly payment on £260k loan | Verdict |
|---|---|---|---|---|
| 5% | 95% | ~5.3–5.9% | ~£1,670–£1,800/mo | Possible but costly |
| 10% | 90% | ~4.6–5.0% | ~£1,490–£1,580/mo | Good starting point |
| 15% | 85% | ~4.1–4.5% | ~£1,390–£1,450/mo | Sweet spot for most buyers |
| 20% | 80% | ~3.9–4.2% | ~£1,300–£1,370/mo | Best mainstream rates |
| 25%+ | 75% | ~3.7–4.0% | ~£1,220–£1,280/mo | Optimal — diminishing returns above this |
The jump from 5% to 10% LTV reduces your monthly payment by roughly £150–200/month on a typical purchase — the equivalent of a meaningful salary increase in take-home terms. For most buyers, targeting 10–15% is the right balance between time spent saving and the long-term rate benefit.
Deposit timeline calculator
How long will it take to save your deposit?
Enter your target property price, deposit percentage, and monthly saving capacity to see your timeline.
The Lifetime ISA — the most powerful FTB savings tool
The Lifetime ISA (LISA) provides a 25% government bonus on contributions of up to £4,000 per year — worth up to £1,000 free money annually toward your deposit. It is the single most valuable savings tool available to UK first-time buyers.
Up to £4,000/year. Contributes to your £20,000 annual ISA allowance.
25% on contributions — £1,000 bonus per year on a full £4,000 contribution.
Can only be used toward a property worth up to £450,000. No relief above this.
If withdrawn for any non-qualifying reason, a 25% penalty applies — which effectively claws back the bonus AND reduces your own savings by 6.25%.
Must open a LISA before age 40. Can contribute until age 50.
Must hold the LISA for at least 12 months before using it to buy a home.
The 25% bonus compounds with interest if your LISA is invested (a stocks and shares LISA) rather than held as cash. For buyers with a 5+ year timeline, a stocks and shares LISA typically outperforms a cash LISA significantly — though with higher volatility risk. For buyers targeting a purchase within 2–3 years, a cash LISA offers certainty with a competitive interest rate and the guaranteed 25% bonus.
Where to keep your deposit savings
The 25% government bonus makes the LISA unbeatable for eligible first-time buyers purchasing under £450,000. Open as early as possible — the 12-month waiting period starts from account opening, not from when you start contributing.
Tax-free savings up to £20,000/year (combined ISA allowance). Best used alongside a LISA once you have maxed the £4,000 LISA contribution. Easy access ISAs offer flexibility; fixed-rate ISAs offer slightly better rates if you can lock savings away for 1–2 years.
Some banks offer high rates (6–8%) on regular savers — but with monthly contribution caps (typically £300–£500) and balance limits (often £3,000–£6,000). Excellent for a portion of savings but capacity is too limited to use as a primary vehicle.
For savings beyond your annual ISA/LISA allowance. Easy access accounts at the best rates offer strong returns in the current environment. Interest is taxable above the personal savings allowance (£1,000 for basic-rate taxpayers). Use for the overflow once tax-free allowances are maximised.
How to accelerate your timeline
Maximise the LISA first
Before optimising any other account, maximise your LISA contribution to £4,000 per year — this earns the full £1,000 bonus. If you cannot afford £4,000/year, contribute whatever you can: even £1,000 contributes earns a £250 bonus. No other savings product in the UK adds 25% to your money before you earn a penny of interest.
Reduce your target purchase price
Every £10,000 reduction in purchase price reduces a 10% deposit target by £1,000. A buyer stretching for a £300,000 property versus accepting a £260,000 property needs an extra £4,000 in deposit alone — before accounting for the higher mortgage, higher stamp duty, and higher ongoing costs. Flexibility on location or property type can materially reduce the timeline.
Split contributions between joint buyers
Two buyers each contributing £4,000/year to their own LISA receive £2,000 in combined government bonuses — £2,000/year of free money. A couple saving together can reach a 10% deposit on a £285,000 property roughly 30–40% faster than a solo buyer at the same combined saving rate, purely from the combined LISA bonus effect.
Budget the total cost — not just the deposit
The deposit is not the only upfront cost. Add stamp duty (use the stamp duty calculator to check your figure — first-time buyers pay 0% on the first £300,000), solicitor fees (£1,500–£2,500), a homebuyer survey (£400–£900), mortgage arrangement fee (£0–£2,000 depending on product), and removal costs. Total these before setting your savings target — the actual cash needed is typically 3–5% above the deposit itself.
The buyers who reach their deposit target fastest are not usually those who earn the most. They are the ones who open a LISA early, make it a standing order rather than a monthly decision, and leave the money alone. Consistency and the 25% bonus compound faster than almost any investment return available to the average earner.
Frequently asked questions
Is a 5% deposit enough to buy a house in 2026?
Technically yes — 95% LTV mortgages exist, and the government's Mortgage Guarantee Scheme has supported this tier. But the rates on 5% deposit mortgages in 2026 are significantly higher than at 10% or 15% LTV, typically 5.3–5.9% for a 5-year fix versus 4.1–4.5% at 85% LTV. On a £260,000 mortgage, that difference costs approximately £250–300/month. If you can hold off and save to 10%, the long-term financial benefit is meaningful. If you need to buy now — perhaps because rents are expensive, you have children starting school, or the property market is moving — a 5% deposit is a viable entry point.
How long does it typically take to save a house deposit in 2026?
For a single buyer earning around £35,000 saving approximately £600/month (after LISA contributions), reaching a 10% deposit on a £285,000 property takes roughly 3.5–4 years from scratch — or around 2.5–3 years with £10,000 already saved. Using a LISA from the start reduces this by approximately 4–6 months due to the bonus. Two buyers combining savings can often reach the same target in 18–24 months. The median age for first-time buyers in the UK is now around 33 — most people spend their late twenties accumulating their deposit.
Can I use gifted money as a deposit?
Yes — gifted deposits are accepted by most lenders, subject to conditions. The person gifting the money (typically a parent) must sign a gifted deposit letter confirming the money is a gift — not a loan — and that they have no financial interest in the property. Lenders typically want to verify the source of the gifted funds (bank statements of the donor showing the money has been held for a period) to satisfy anti-money-laundering requirements. Some lenders cap the proportion of the deposit that can be gifted; others have no restriction. Discuss this with your mortgage broker before applying, as the treatment varies between lenders.
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