MORTGAGES
5% Deposit Mortgage Guarantee
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Your home may be repossessed if you do not keep up repayments on your mortgage.
Buying with a small deposit? The short version
Quick answer
There are two routes to a smaller deposit. Your First Home is a new government scheme, announced on 26 September 2026, that is expected to let eligible first-time buyers buy a new-build home in England with a 2.5% deposit, using a government equity loan of 20% of the price plus a mortgage for the rest. Full details are expected at the Budget on 28 October 2026, and eligibility will be subject to the final scheme rules.
Separately, 5% deposit mortgages (up to 95% loan to value) are offered by lenders taking part in the Mortgage Guarantee Scheme, subject to each lender’s checks.
A whole-of-market broker can talk through which route may suit your situation. Get in touch and we will talk it through.
Your First Home: the new 2.5% deposit scheme
The government has announced a new scheme called Your First Home, aimed at first-time buyers who find the deposit the hardest part of getting started. This is what has been announced so far:
- A deposit of 2.5% of the purchase price.
- A government equity loan of 20% of the price, with an initial interest-free period.
- A mortgage for the rest, which would be around 77.5% of the price.
- For new-build homes bought from a developer that has signed up to the scheme, in England.
- A household income cap and local property price caps, to target the help.
What we do not know yet. The income and price caps, how long the interest-free period lasts, how the equity loan is repaid, which lenders will take part and when the scheme opens have not been confirmed. Full details are expected at the Budget on 28 October 2026. Whether you can use the scheme will be subject to the final scheme rules, and lenders will still carry out their usual affordability and credit checks.
We will update this page as soon as the details are confirmed. If a new-build is on your list, it is worth talking it through now so you know where you stand. Speak to us any time.
Source: GOV.UK, Ministry of Housing, Communities and Local Government, 26 September 2026.
5% deposit mortgages: the Mortgage Guarantee Scheme
A 5% deposit is still possible if you are buying a home to live in. Under the government’s Mortgage Guarantee Scheme, lenders that take part can offer mortgages of up to 95% of the property’s value, which means a deposit of 5%. It is open to eligible first-time buyers and home movers buying a home they will live in, not a buy-to-let or second home.
Affordability and credit checks still apply, and criteria vary from lender to lender. A smaller deposit usually means a higher rate and a larger monthly payment, so it is worth comparing against putting down more, if that is an option for you.
Which route may suit you? Your First Home is expected to be for new-build homes only, while a 5% deposit mortgage can be used on a wider range of homes you will live in. The right choice depends on the home you want, the monthly cost and your circumstances. Get in touch and a broker can talk through the options.
5% deposit mortgages: how the scheme works
The Mortgage Guarantee Scheme is a government scheme that helps lenders keep mortgages of 91% to 95% of a property’s value available. It has been permanently available since July 2025. Mortgages offered through it let eligible first-time buyers and home movers buy a home with a deposit as small as 5%, anywhere in the UK.
Lenders choose whether to take part, and each one sets its own criteria. A scheme mortgage goes through the same checks as any other. An earlier version of the scheme, which began in 2021, has closed to new applications.
Source: GOV.UK, HM Treasury, 2025 Mortgage Guarantee Scheme.
How does the scheme work?
For the person borrowing, a mortgage under the scheme works like any other mortgage. The guarantee is for the lender’s benefit. It means a lender taking part can offer mortgages of more than 90% and up to 95% of the property’s value, which is a deposit of 5% up to just under 10%.
If a borrower falls behind with repayments, the property is sold and the sale does not cover what is owed, the government can cover part of the lender’s loss. Under the scheme rules, the guarantee covers 95% of a qualifying loss on the part of the loan above 80% of the property’s value. As an example, on a £100,000 property with a 95% mortgage, the loan is £95,000 and the guarantee relates to the £15,000 above the £80,000 mark.
A guarantee under the scheme applies for up to seven years after the mortgage completes.
Sources: GOV.UK, 2025 Mortgage Guarantee Scheme and the 2025 Mortgage Guarantee Scheme Rules (PDF).
Low deposit mortgage sceme
A low deposit mortgage scheme is an excellent option for homebuyers who may not have a large sum of money saved for a down payment. These schemes allow individuals to secure a mortgage with a smaller deposit, often as low as 5% or 10% of the property’s value, making homeownership more accessible. With a low deposit mortgage, you can take the first step toward buying a home without waiting years to save up a larger deposit. Many lenders now offer these schemes, providing competitive interest rates and flexible terms to suit a variety of financial situations. Whether you’re a first-time buyer or looking to move, a low deposit mortgage scheme can be a great way to get started in the property market.
low deposit mortgage scheme UK
The low deposit mortgage scheme UK is a popular solution for aspiring homeowners looking to get on the property ladder with a smaller upfront cost. In the UK, many lenders now offer mortgages with deposits as low as 5%, making homeownership more attainable for first-time buyers and those with limited savings. These schemes are designed to help buyers secure a mortgage even if they can’t afford the standard 20% deposit typically required. With the low deposit mortgage scheme UK, you can access competitive interest rates and flexible repayment terms, making it easier to invest in your first home. Whether you’re looking for a new home or refinancing, this option provides an affordable path to homeownership in the UK.
Mortgage guarantee scheme
The mortgage guarantee scheme is a government-backed initiative designed to help first-time buyers and those with a smaller deposit secure a mortgage. By offering lenders a guarantee on a portion of the loan, this scheme enables buyers to access mortgages with as little as a 5% deposit, making homeownership more accessible. The mortgage guarantee scheme aims to increase the availability of affordable housing options, particularly for individuals who may struggle to meet the traditional 20% deposit requirement. Whether you’re a first-time buyer or looking to move, this scheme can provide you with the financial support needed to step onto the property ladder with confidence.
How to Buy a House with a 5% Deposit: A Step-by-Step Guide
Dreaming of owning your own home but worried about saving a large deposit? The good news is that it’s possible to buy a house with a 5% deposit in today’s market. While many buyers traditionally needed a 20% deposit to secure a mortgage, a growing number of mortgage schemes are now offering options for buyers to purchase homes with a significantly smaller upfront cost. In this guide, we’ll explore how you can buy a house with a 5% deposit, the benefits of this option, and the key steps to make your homeownership dream a reality.
What Does a 5% Deposit Mortgage Mean?
When you buy a house with a 5% deposit, you’re only required to put down 5% of the property’s value, with the remaining 95% covered by the mortgage. For example, if you’re purchasing a house worth £200,000, a 5% deposit would amount to £10,000, and you would borrow £190,000 from the lender. This significantly lowers the initial financial barrier compared to traditional mortgages that typically require a 20% deposit.
How to Qualify for a 5% Deposit Mortgage
In the past, saving for a 20% deposit was seen as a necessary step in securing a mortgage. However, with the introduction of government-backed schemes and more flexible mortgage products, it’s now possible to buy a house with a 5% deposit. Here are some of the key requirements:
Credit Score: Lenders will usually require a good credit score to ensure that you can manage the mortgage repayments. A strong credit history will improve your chances of being approved.
Stable Income: You’ll need a steady income to demonstrate your ability to repay the mortgage. Lenders typically assess your monthly earnings and debt-to-income ratio when considering your application.
Government Schemes: The UK government offers various schemes, such as the Help to Buy and Mortgage Guarantee Scheme, which make it easier to buy a house with a 5% deposit. These programs help lower the risk for lenders, making it more likely they’ll approve your mortgage.
Affordability Assessment: Lenders will assess your ability to afford monthly mortgage repayments. Be prepared to show proof of your income, savings, and any other relevant financial details.
Benefits of a 5% Deposit Mortgage
Get on the Property Ladder Sooner: A major advantage of a 5% deposit mortgage is that it allows you to purchase a home without needing years of saving for a larger deposit. This is particularly beneficial for first-time buyers who may be struggling to save up a significant amount.
Lower Initial Costs: With a 5% deposit, you can avoid the large upfront costs associated with a 20% deposit, freeing up more funds for other expenses, such as moving costs or home improvements.
Take Advantage of Lower Interest Rates: Many lenders now offer competitive interest rates for 5% deposit mortgages, meaning you can secure an affordable loan without paying excessive interest over time.
Government Schemes That Help You Buy a House with a 5% Deposit
The UK government has launched several initiatives to make homeownership more accessible. Two key schemes are:
Mortgage Guarantee Scheme: This scheme, which has been permanently available since July 2025, allows buyers to buy a house with a 5% deposit by providing lenders with a government-backed guarantee. It increases lenders’ confidence in offering low-deposit mortgages, making it easier for buyers to access affordable housing options.
Help to Buy Scheme: Although the Help to Buy equity loan scheme is ending in 2023, it has helped many buyers purchase a home with a smaller deposit. Under this scheme, you could borrow up to 20% (or 40% in London) of the property’s value from the government, requiring just a 5% deposit from you.
Things to Consider When Buying a House with a 5% Deposit
While a 5% deposit mortgage makes homeownership more accessible, there are a few factors to keep in mind:
Higher Monthly Payments: With a smaller deposit, you’ll be borrowing a larger sum, which means your monthly repayments will be higher. Make sure your budget can comfortably accommodate these costs.
Private Mortgage Insurance (PMI): In some cases, if your deposit is less than 10%, lenders may require you to pay for PMI, which protects the lender if you default on the mortgage. This can add to the overall cost of your loan.
Less Equity: A smaller deposit means you’ll have less equity in your home, which could make it harder to move if property prices fall.
Loan-to-Value Ratio: Lenders will look at your loan-to-value (LTV) ratio, which compares the amount you’re borrowing to the value of the property. A higher LTV can sometimes mean a higher interest rate, so it’s essential to shop around for the best mortgage deal.
Which buyers can take part in the scheme?
The scheme is open to eligible first-time buyers and home movers. The scheme rules set out what a loan must meet to qualify. In brief:
- The mortgage is to buy a home in the UK that you intend to live in, as sole owner or as the only co-owners. It cannot be a buy-to-let mortgage, and it cannot be used for shared ownership or shared equity.
- The loan is more than 90% and no more than 95% of the property’s value, so the deposit is 5% up to just under 10%.
- It is a capital repayment mortgage, not interest only, and it is a first charge on the property.
- The lender must be satisfied that you are not credit-impaired, as the scheme rules define it, and that the loan is affordable. That includes verifying your income and stress testing against future interest rate rises.
- The earlier 2021 scheme had a property price limit of £600,000. The 2025 rules do not set a maximum property price, but each lender sets its own limits.
Source: 2025 Mortgage Guarantee Scheme Rules (PDF), GOV.UK.
What kind of mortgage rate can I get?
Rates are set by each lender and change often, so this page does not quote them. In general, a mortgage with a smaller deposit tends to carry a higher rate than one with a larger deposit, because the lender is lending a bigger share of the property’s value.
Does the scheme change anything for the borrower?
A mortgage under the scheme is one option for someone with a small deposit. It is not a special type of mortgage for the person borrowing, because the guarantee protects the lender. Whether a 95% mortgage suits you depends on your circumstances, including the monthly payment and how much you could put down.
It can help to compare a few deposit levels, because mortgage pricing tends to change as the loan to value falls.
If you are aged 18 to 39, a Lifetime ISA could help you save towards a larger deposit. It lets you save up to £4,000 a year towards a first home or retirement, and the government adds a 25% bonus, up to £1,000 a year.
Which lenders offer these mortgages?
Lenders choose whether to join the scheme and which mortgages to offer under it, so what is available changes over time. GOV.UK publishes the scheme rules, while the mortgages themselves come from the lenders.
A broker can check which lenders currently offer mortgages of up to 95% of a property’s value and whether your circumstances fit their criteria. Get in touch if you would like to talk it through.
Your home/property may be repossessed if you do not keep up repayments on your mortgage.
Some Buy-To-Let Mortgages are not regulated by the Financial Conduct Authority.
What fees are involved with buying a home?
Arrangement Fees
Most mortgage lenders charge an administrative fee for the arrangement of the mortgage. This will vary from lender to lender. You may even find that some specialist lenders offer no arrangement fees for those in certain jobs.
Valuation Fees
You will need to have your chosen property independently valued, again, these fees will vary depending on the lender chosen.
Legal Fees
The mortgage application process requires the appointment of a solicitor, who will arrange conveyancing and local authority searches, usually payable directly to the solicitor.
Stamp Duty
Under normal circumstances, Stamp duty is due on the purchase of all properties and is based upon the value of your home, amongst other things. First Time Buyers currently benefit from an exemption on Stamp Duty on purchases up to £300,000.
How can Mortgage Matchmakers help First Time Buyers?
Buying your first home can be intimidating.
From trying to establish which type of mortgage is best suited to you, through to finding a lender offering competitive mortgage rates to First Time Buyers. Qualified and experienced Mortgage Brokers can be comforting and reassuring throughout the process of making life-altering decisions.
Even the most confident buyer, however, can benefit hugely from Mortgage Brokers’ advice. We have a wide market view, which gives us access to mortgage deals that you won’t find on the high street. This means that we can not only find you the most suitable mortgage deals available but are able to divert your efforts towards those lenders most likely to accept your application.
Your home/property may be repossessed if you do not keep up repayments on your mortgage.
Some Buy-To-Let Mortgages are not regulated by the Financial Conduct Authority.
Happy Clients
Jazz Bhangu2026-07-31I found Mohit when doing a local search for mortgage advisors that were local to me. Mortgage Matchmakers popped up with nothing but 5 star reviews. When I reached out to Mohit for an initial discussion, I felt very confident that the 5 star reviews were a true reflection of his service. Mohit was always available to talk through the process, what my options were and unfortunately when my sale and purchase fell through he was very supportive and provided some great advice during what was a challenging period. I always felt like Mohit gave me numerous options and approaches I could take with my new mortgage, I never felt any pressure from him in any shape just excellent advice and guidance throughout what was a stressful period. Mohit has now become my go to guy and will be reaching out to him when my current fixed is due. I would recommend Mohit to family and friends without any doubts, 5 star service from a 5 star guy!!
Nitin Katyal2026-06-03Best in business. From the moment I contacted Bhavna Grover, I was well informed about the options available. I will highly recommend Mortgage Matchmakers.
Loredana Gheorghe2026-05-18Excellent service from start to finish.As a first time buyer, Mohit was professional, responsive, and made the whole mortgage process smooth and stress-free. He took the time to explain everything clearly and worked hard to secure the best deal for me. Highly recommended.⭐️⭐️⭐️⭐️⭐️
Mina T2026-05-15Mohit was really helpful and got me a mortgage offer within a few days! Thank you so much :)
Basavaraj SH2026-04-29I was referred to Bhavna (Mortgage advisor) by a friend, and I’m so glad I was. She has been amazing in helping me with my residential remortgage and finding the best deal suited to my circumstances. Bhavna is incredibly hardworking, responsive, and communicates everything clearly and efficiently, making the whole process stress-free. She truly goes the extra mile for her clients and supports you at every step right through to completion. She also keeps an eye on the market to make sure you secure the best possible deal before everything is finalised. I would highly recommend Bhavna to anyone looking for a reliable and dedicated mortgage advisor.
Jyoti Bains2026-04-02I’ve known Mohit for past so many years, and in that time I’ve seen firsthand just how dedicated, honest, and knowledgeable he is, both professionally and personally. As a mortgage advisor, Mohit goes above and beyond. He takes the time to really understand your situation, explains everything clearly (no jargon or pressure), and make what can feel like a stressful process so much smoother and more manageable. What really stands out is his integrity, you genuinely feel he has your best interests at heart. It’s rare to find someone who combines expertise with such a personal touch. Whether you’re a first-time buyer or remortgaging, you’re in very safe hands. Highly recommend to anyone looking for trustworthy, reliable mortgage advice!
Dripesh Chauhan2026-03-26I would like to thank you Mortgage Matchmakers in helping out the mortgage for our second home. Specially I would like to thank you Bhavna for her dedication and professionalism during the process. I will highly recommend Bhavna of Mortgage Matchmakers Limited for anyone looking for a mortgage. Dripesh & Reena
Jaya Bhardwaj2026-03-17Our experience with Bhavna from mortgage matchmakers has been absolutely fantastic. We have been using her for a while now to get mortgages on several of our properties, including buy to let properties purchased through our limited company and she has always managed to find fantastic deals for us. What particularly stands out is her communication, prompt responses to any queries and her efficiency. Even after the mortgage is approved, she constantly keeps looking to see if any better deals arrive on the market and lets you know if this is the case. She manages everything for you and we have never had any issues with any of the mortgage deals she has sorted for us. Doing business with her is a great pleasure and I would highly recommend Bhavna at Mortgage matchmakers for all of your mortgage needs.
Avanish Tantry2026-03-17I have used Mortgage Matchmakers for several mortgages now and am very happy with their service. Bhavna Grover, who has been our mortgage advisor, is excellent and I can’t recommend her enough. She is professional, very hard working, extremely prompt with her responses and gets things done in super quick time. She has always managed to find really competitive deals for me, including limited company but to let mortgages, and keeps looking out for better deals right till the end. I couldn’t ask for anything more and she completely takes the stress and hassle out of obtaining mortgages. If you are looking for a mortgage advisor and company, look no further than Bhavna and Mortgage Matchmakers.
Richard Smith2026-03-11Mohit was very professional and clearly has a good knowledge of the mortgage market. He was able to secure us a rate ahead of the increase that came in 8 hours later! Would highly recommend for all mortgage related enquiries.
Frequently asked questions
What is the Your First Home scheme?
Your First Home is a government scheme announced on 26 September 2026 to help first-time buyers with the deposit. It is expected to let eligible buyers purchase a new-build home with a 2.5% deposit, supported by a government equity loan of 20% of the price, with a mortgage for the rest. Full details are expected at the Budget on 28 October 2026.
Can I buy a home with a 2.5% deposit?
Possibly. The announced scheme is for first-time buyers purchasing a new-build home in England from a developer that has signed up to the scheme. The full rules have not yet been published, so eligibility will be subject to the final scheme rules, and lenders will still carry out their usual affordability and credit checks.
Who will be able to use the 2.5% deposit scheme?
The announcement points to first-time buyers buying new-build homes in England, with a household income cap and local property price caps. The exact limits are expected at the Budget on 28 October 2026, so it is too early to say who will qualify.
When will Your First Home open?
The government has said full details will be set out at the Budget on 28 October 2026. A confirmed opening date has not been announced yet. We will update this page when more is known.
What is the difference between a 2.5% deposit and a 5% deposit mortgage?
With Your First Home, a government equity loan of 20% of the price would sit alongside your 2.5% deposit, leaving a mortgage of around 77.5% of the price on an eligible new-build. A 5% deposit mortgage under the Mortgage Guarantee Scheme means borrowing up to 95% of the property value from a lender, and can be used on a wider range of homes you will live in. Which suits you depends on the home, the monthly cost and your circumstances.
Can I buy a home with a 5% deposit as a first-time buyer?
Yes. Under the Mortgage Guarantee Scheme, eligible first-time buyers and home movers can borrow up to 95% of the property value, meaning a deposit of just 5%. It applies to a home you will live in yourself, not a buy-to-let or second home. Individual eligibility depends on affordability and credit checks, which vary by lender. A broker can check your eligibility and talk you through the options that fit your circumstances.
Is a 5% deposit mortgage a good option for first-time buyers?
This depends on your circumstances. For many first-time buyers, a 5% deposit can mean being able to buy sooner rather than saving for a larger deposit, but a smaller deposit usually means a higher rate and a larger monthly payment. It is worth comparing this against putting down more, if that is an option for you, before deciding. A broker can talk through what fits your situation.
Do I need a strong credit history for a 5% deposit mortgage?
Not necessarily. This depends on the lender and your individual circumstances. Lenders assess affordability and credit as part of any application, and criteria vary. If you have had credit issues in the past, it is still worth speaking to a broker to understand your options.
Have a question about your own situation? Get in touch and we will talk it through.