House deposit figures can be pretty scary, especially when you’re spending hundreds of thousands of pounds on a property.
But understanding how deposits work makes the process more manageable. It helps you break down exactly what you need to save and spend, giving you a clear picture of your financial position.
In this guide, you’ll learn how much deposit you might need, how to plan and gather the funds, when and how deposits are paid, and what options exist for first-time buyers.
How much deposit do I need to buy a house?
Most lenders require between 5% and 20% of the property’s value.
To figure out exactly how much you need for a house deposit, you need to think about:
- Property price. Higher-priced homes typically require larger deposits. A higher deposit generally gives you access to lower mortgage rates and smaller monthly repayments.
- Mortgage type and lender requirements. Some lenders accept 5%, others may ask for more.
- Monthly affordability. A larger deposit reduces monthly repayments and can shorten your mortgage term.
Let’s use an example to demonstrate how much deposit you’d need for a £250,000 home:
- 5% deposit → £12,500
- 10% deposit → £25,000
- 20% deposit → £50,000
A 5% deposit gets you on the ladder faster, but a 10–20% deposit can make your mortgage more affordable and secure better rates in the long-run.
Depending on your monthly affordability, you might choose the lower deposit and higher monthly payments or the higher deposit and lower monthly payments.
Side note: The deposit is also separate from other home-buying costs like solicitor fees, stamp duty, or moving expenses. Find out more about these costs in this article: How to save for a house deposit.
What is the minimum deposit for a house?
The minimum deposit depends on the lender and mortgage type. Some lenders accept 5% of the property value as a minimum. So for a £250,000 home, the deposit would be £12,500.
Some specialist schemes may allow even lower deposits, particularly for first-time buyers, but lower deposits often come with higher interest rates and stricter eligibility criteria.
Did you know? Genesis Homes participates in the Deposit Unlock scheme, where buyers can secure a new build home with a 5% deposit and access competitive mortgage options, making it easier to get on the property ladder.
How do house deposits work?
Here’s a simple breakdown of how the house deposit process works when buying a home:
1. Decide on your deposit amount
Consider property price, lender requirements, and what you can realistically save. A higher deposit can lower monthly repayments and give access to better mortgage rates.
2. Save or gather the deposit
Use personal savings, gifts from family, bonuses, or government contribution schemes (like a LISA) to build the amount needed.
3. Get a mortgage agreement in principle (AIP or MIP)
An MIP is a conditional statement from a lender showing how much they might lend you based on your income and credit profile. It’s often required by sellers to demonstrate you’re a serious buyer. To get one, you provide proof of income, existing debts, and consent to a credit check from your chosen lender (or you can use a mortgage broker to handle this for you).
4. Make an offer on a property
Your offer signals intent to the seller. If accepted, you move toward the exchange of contracts.
5. Exchange contracts and pay the deposit
You pay the deposit when you exchange contracts for the property. You send the money to your solicitor or conveyancer, and they hold the funds until the sale is fully completed. This typically happens on the same day.
6. Complete the purchase
On completion day, the remaining balance of the purchase price is transferred to the seller, and you officially take ownership of the property!
A carefully planned deposit helps you secure your home, strengthens your mortgage position, and reduces long-term interest costs. It can also give you negotiating power with sellers.
Why? Because sellers often prefer buyers who can show a larger deposit.
A higher deposit demonstrates financial readiness and reduces the risk of the sale falling through. By offering a slightly higher deposit upfront or committing to a faster exchange, you might negotiate a better price or ask the seller to cover certain fees.
Side note: The above timeline can be slightly different when buying a new build home. For example, you often pay a reservation fee first to secure the property. Exchange of contracts can happen much earlier in the build process, sometimes before the home is finished. Completion then takes place once the property is structurally complete and ready to move into.
House deposit FAQs
What is the average house deposit?
Research from Halifax found that the average deposit for a house in the UK is £61,090. With house prices sitting at £311,034, this means first-time buyers are putting a 20% deposit towards their homes.
Can you buy a house with a 5% deposit?
Yes, some lenders offer 95% mortgages, allowing you to buy with a 5% deposit. These often come with higher interest rates and larger monthly repayments, but they let you get on the property ladder sooner.
Can you buy a house with no deposit?
It’s rare. Some lenders offer 100% mortgages, but these carry higher rates, stricter eligibility, and greater financial risk. Most buyers benefit from saving at least a small deposit.
Affordable ownership schemes also help first-time buyers get on the property ladder with little to no deposit.
When do you pay the deposit when buying a house?
The deposit is usually paid when contracts are exchanged. It’s held securely by your solicitor or conveyancer until completion, when the remaining purchase funds are transferred, and you officially become a homeowner!
What is a deposit contribution from a developer?
A developer deposit contribution is when a housebuilder or developer covers part of your deposit on a new-build home.
For example, they might contribute £5,000 toward your deposit, reducing the amount you need to save yourself. This can make it easier to secure a mortgage and move in sooner.
These contributions are often part of promotional or first-time buyer schemes.
Take the next step towards home ownership with Genesis Homes
A well-planned deposit reduces your mortgage costs, strengthens your position with lenders, and gives you negotiating power with sellers. Start by setting a realistic target, saving consistently, and exploring schemes that boost your deposit, like Lifetime ISAs or developer contributions.
When you’re ready to move forward, take a look at the latest developments from Genesis Homes. We make buying a new-build home accessible, offering options like Deposit Unlock that help first-time buyers secure their ideal property with just a 5% deposit.Contact the team for more information about the scheme. Let’s get you in your dream house sooner rather than later!