Most people who call us assume they need a 10% or 15% deposit before a mortgage lender will look at them. It is the single biggest myth in first time buying. A 5% deposit mortgage, sometimes called a 95% mortgage or a 95% loan to value mortgage, is a standard product now, and many lenders offer them to first time buyers and home movers alike.
The catch is that a small deposit narrows your options and nudges up the interest rate, so the lender you choose matters more than it does at 25% deposit. Some mortgage providers only offer 95% deals through the government's mortgage guarantee scheme. Others run their own low deposit mortgage products with different rules on new builds, flats and credit history. Put the same application in front of two lenders and you can get two very different answers.
That is where we earn our keep. We look at your income, your deposit amount, your credit history and the property you want, then compare mortgages across the market to find the right mortgage for you, not just the first one that says yes. And we do not charge you a penny for it. The lender pays us when your mortgage completes.
"We will never charge you a penny for our service. We're 100% fee free mortgage brokers."
The mechanics are simple. You put down 5% of the property's purchase price and borrow the other 95% as a mortgage loan secured on the home. Where it gets interesting is what sits behind that 95%, and how lenders decide whether to offer it to you.
You pay 5%, the mortgage lender lends 95%
On a £200,000 property, your mortgage deposit is £10,000 and the mortgage is £190,000. That is a 95% loan to value, or LTV. The lender owns a bigger share of the risk than it would at 90% or 75%, which is why 95% mortgage deals carry a slightly higher rate.
The government's mortgage guarantee scheme
To encourage lenders to keep offering 95% mortgages, the government guarantees part of the loan above 80% LTV. If the lender loses money on repossession, the government covers a share of it. You never see this, and it does not change your payments, but it is why big lenders such as Halifax, NatWest, Santander and Virgin Money keep 95% products on the shelf.
Loan to value sets your interest rate
Lenders price mortgage products in LTV bands: 95%, 90%, 85%, 80% and 75%. Each step down is a lower LTV and usually a cheaper mortgage deal. A 5% deposit sits in the top band, so expect the mortgage interest rate to be around half a percent to one percent higher than the very best mortgage deals at 75%.
It is a repayment mortgage, not interest only
Every 95% mortgage we arrange is a repayment mortgage. Each of your monthly mortgage payments covers the interest plus a slice of the outstanding mortgage, so your balance falls every month and your equity grows. An interest only mortgage is not available at this loan to value.
Fixed rate for certainty
Nearly all 5% deposit borrowers choose a fixed rate for two or five years so the monthly repayments cannot change while the balance is at its highest. When the fixed rate ends, your LTV will have dropped through repayments and any growth in the property's value, and you can remortgage onto a lower band.
Credit history and the affordability assessment
Lenders are stricter at 95% than at 75%. Expect a full credit check, a close look at your bank statements and an affordability assessment that stress tests your monthly payments at a higher interest rate. A clean recent credit history matters more here than almost anywhere else in mortgages.
A larger deposit always helps, but waiting to save one is not free either. Every year you pay rent is a year of mortgage repayments you are not making on your own home, and property prices rarely stand still. Here is what each deposit level buys you so you can make the call with your eyes open.
The minimum most lenders accept, and the quickest way onto the property ladder. On a £250,000 home that is £12,500. Fewer lenders, a higher interest rate and stricter checks, but a real route to home ownership years sooner than saving for 10%.
This is where the market opens up. Far more lenders, noticeably cheaper mortgage deals, and more flexibility on new build flats and applicants with a thin credit history. If you are close to 10%, it can be worth a few more months of saving.
Each 5% you add tends to unlock a slightly lower rate band. At 25% deposit you are looking at close to the best mortgage rates on the market and the widest choice of lenders. For most first time buyers this is a later remortgage goal rather than a starting point.
A gifted deposit from a parent, grandparent or other family member is accepted by almost every lender and can turn a 5% deposit into 10% overnight. The gift must be a gift, not a loan, and the giver signs a short letter confirming it. We will tell you exactly what the lender wants to see.
Saving for a deposit? A Lifetime ISA lets you save up to £4,000 each tax year with a 25% government bonus, up to £1,000 a year, towards a first home costing up to £450,000. Combined with a 5% deposit mortgage, it is one of the fastest ways to get the deposit amount together.
Use our calculator to see what a 5% deposit looks like on the property price you have in mind: the deposit in pounds, the mortgage needed, roughly what lenders will let you borrow, and the monthly mortgage payments. Change the deposit to 10% and watch the numbers move. It is free, there is no sign up and nothing is saved.When you are ready for real figures, an agreement in principle from us is free and usually back the same day, and our stamp duty calculator covers the tax side.
This calculator is for illustration only and is not financial advice or a lending decision. Lending depends on your full circumstances, credit history, outgoings and the lender's criteria. The interest rate shown is an example, not a quote. Speak to us for a personalised figure.
Your home may be repossessed if you do not keep up repayments on your mortgage.
You do not have to be a first time buyer, and you do not have to use the government scheme. These are the things lenders check before they offer mortgages at 95% loan to value.
5% deposit mortgages are open to first time buyers and to existing homeowners moving up the housing ladder. If you are buying your only home and will live in it, you qualify in principle. Our first time buyer mortgages page covers the wider picture for first purchases.
Scheme backed 95% deals are for UK residents buying a home to live in, in England, Scotland, Wales or Northern Ireland. Buy to let properties, holiday lets and second homes are excluded, though other low deposit routes exist for landlords.
The mortgage guarantee scheme covers homes up to £600,000 and many lenders' own 95% products go higher. New build houses are usually fine at 95%. New build flats are the awkward one, with several lenders capping them at 85% or 90% LTV.
You do not need a perfect file, but recent missed payments, defaults or a CCJ in the last few years will rule out most 95% lenders. Being on the electoral roll and having a few years of well managed credit makes a real difference to the credit check.
Lenders typically lend around 4.5 times your income, and a few stretch to 5.5 times for higher earners. They also test whether you could comfortably afford the monthly payments if the interest rate rose, so your other commitments and outgoings count.
Savings, a Lifetime ISA, a gifted deposit from family or the sale of your current home are all fine. Borrowed deposits, including personal loans and credit cards, are not, and lenders will ask to see where every pound came from.
Self employed with one year of accounts, a small blip on your credit history, income from overtime or a second job: none of these automatically rule out a 5% deposit mortgage. Lenders differ wildly, and knowing which one suits your financial situation is exactly what a mortgage broker is for. If family income could help, see our joint borrower sole proprietor mortgage page, and if you would rather buy a share of a home first, shared ownership is worth a look.
We would rather you went in knowing this than found out later. None of it is a reason not to buy, but each one shapes the advice we give.
With only 5% equity, a small fall in the property's value can leave you owing more than the home is worth. It only bites if you need to sell or remortgage while prices are down. A repayment mortgage and a five year fixed rate give you time to build a cushion.
95% mortgage rates sit above the rest of the market. On a £237,500 mortgage, half a percent extra is roughly £70 a month. The plan is to remortgage to a lower LTV band when your fixed rate ends and claw that back.
If you fix for two years and rates rise, your monthly repayments could jump at the end of the deal. We show you the payment at a higher rate before you commit, so you choose a deal you can comfortably afford in more than one scenario.
Fewer lenders, tighter credit scoring and more property restrictions mean a 95% application has less room for error. That is exactly why the lender choice, and the order you do things in, matters so much.
You will roll onto the lender's standard variable rate, which is nearly always more expensive. We contact you six months before the end of your deal to line up a new mortgage at a lower LTV. Our remortgage advice page explains how that works.
The mortgage guarantee scheme is the reason 95% mortgages stayed available when lenders pulled back after 2020. It was made a permanent fixture in 2025. Here is what it does and does not do for you.
The government promises to cover part of the lender's loss on the portion of the loan above 80% LTV if the home is repossessed and sold at a loss. It is a guarantee to the lender, not a government loan to you, and you do not pay for it directly.
UK residents buying a home to live in, first time buyers or home movers, with a deposit of 5% to 9%, on a repayment mortgage, for a property up to £600,000. Buy to let properties and second homes are not eligible.
Participating lenders include several of the biggest names on the high street. Many other lenders offer their own 95% mortgages outside the scheme with slightly different rules, which is why we compare both before recommending.
More choice and more stable availability of 95% mortgage deals. Your application is still assessed on your credit history, income and affordability in the normal way, and your rate and monthly payments are set by the lender, not the scheme.
Buying with a small deposit touches every part of the process, so we have linked the five free first time buyer guides that pick up where this page leaves off.
How much deposit do you need, what can you borrow, and what other costs should you budget for beyond the deposit?
Fixed rate, variable, tracker, interest only: how each type works and which suits you as a first time buyer.
Shared Ownership, First Homes and low deposit routes, plus step by step guidance from AIP to completion.
Self-employed? Adverse credit history? How these affect your application and which lenders can still help.
Why you need a conveyancer, which insurances are required and which are recommended, and how to protect your home and family from day one.
Book a free, no obligation chat with a 5% deposit mortgage specialist. We will work out what you can afford, compare 95% mortgage deals across the market and tell you honestly whether to buy now or save a little longer.
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