First-time buyer saving tips: how to save for a house deposit

How Much Deposit Do You Actually Need?

• 5% deposit: The minimum most lenders accept. On a £250,000 property, that's £12,500. You'll pay higher interest rates, but it gets you on the ladder
• 10% deposit: The sweet spot for most first-time buyers. Better mortgage rates and more lender options. On a £250,000 property: £25,000
• 15-20% deposit: Significantly better rates and lower monthly payments. Worth aiming for if your timeline allows, but don't let perfect be the enemy of good
• Don't forget additional costs: Solicitor fees (£1,000–£2,000), surveys (£300–£600), moving costs, and furniture. Budget an extra £3,000–£5,000 on top of your deposit
• In England and Northern Ireland, first-time buyers pay no stamp duty on the first £300,000 and 5% on the portion between £300,000 and £500,000 (no relief above £500,000), a significant saving compared to other buyers
• Use a zero-based budget to maximise how much you can save each month towards your target

The Lifetime ISA: Your Secret Weapon

• How it works: Open a LISA, save up to £4,000 per tax year, and the government adds a 25% bonus (up to £1,000/year) automatically
• Maximum bonus: Save £4,000/year for 5 years = £20,000 saved + £5,000 bonus = £25,000. That's a 10% deposit on a £250,000 property, funded partly by the government
• Eligibility: You must be 18–39 to open one. The property must cost £450,000 or less. You must be a genuine first-time buyer (never owned property anywhere in the world)
• The 12-month rule: Your LISA must be open for at least 12 months before you can use it for a property purchase. Open one TODAY even if you're not ready to buy — start the clock
• Providers: Moneybox, AJ Bell, and Hargreaves Lansdown all offer stocks and shares LISAs. Cash LISAs are available from Skipton and Nottingham Building Societies
• Read our full Lifetime ISA guide for provider comparisons and detailed rules
• Penalty warning: Withdrawing for anything other than a first home or retirement incurs a 25% penalty — you'll get back less than you put in. Only put in money you're committed to using for a property. The government has consulted on replacing the LISA with a new First Time Buyer ISA, but no launch date is confirmed and you can still open and pay into a LISA

Government Schemes for First-Time Buyers

• Shared Ownership: Buy a 25–75% share of a property and pay rent on the rest. Lower deposit needed (5–10% of your share, not the full property price). Available through housing associations
• First Homes scheme: Selected new-build properties sold at 30–50% discount to first-time buyers. The discount stays with the property permanently. Check your local council for available properties
• Mortgage Guarantee Scheme: The government guarantees part of the mortgage, allowing lenders to offer 95% mortgages with better rates. You still only need a 5% deposit
• Right to Buy: If you're a council or housing association tenant, you may be able to buy your home at a discount; in England the maximum has been £16,000 to £38,000 depending on area since November 2024
• Forces Help to Buy: If you're in the armed forces, you can borrow up to 50% of your salary (max £25,000) interest-free for a deposit
• Important: Some schemes can't be combined — you can use a LISA with most, but check the specific rules for each scheme before committing

Creating Your Savings Timeline

• Step 1: Decide your target property price. Research sold prices in your area on Rightmove or Zoopla, not listing prices
• Step 2: Choose your deposit percentage (5%, 10%, or 15%) and add £5,000 for additional costs. This is your total savings target
• Step 3: Subtract what you've already saved (including any LISA balance plus bonus)
• Step 4: Divide the remaining amount by the number of months until your target date. This is your required monthly saving
• Example: £250,000 property, 10% deposit (£25,000) + £5,000 costs = £30,000 target. Already saved £5,000. Need £25,000 over 3 years = £694/month
• If the monthly amount feels impossible, either extend your timeline, reduce your target property price, or increase your income with a side hustle
• Set up your target in SYM with a deadline — visual progress tracking is a powerful motivator

Boosting Your Savings Rate

• Pay yourself first: Set up a standing order to your savings account on payday. Treat it like a bill — non-negotiable. If you save what's left after spending, there won't be anything left
• Reduce rent: This is typically the biggest expense. Consider house-sharing, moving to a cheaper area, or negotiating with your landlord. Even £100/month less in rent is £1,200/year
• Cut subscriptions ruthlessly: The average UK household spends £60–£80/month on subscriptions. Audit them all and cancel anything you don't use weekly. Check our subscription audit guide
• Switch and save: Use comparison sites for energy, broadband, insurance, and mobile. Most people overpay by £200–£500/year on these alone
• Meal plan: Food is the second-biggest variable expense. Meal planning can save £100–£200/month — see our meal planning guide
• Bank your pay rises: When your salary increases, don't increase your lifestyle. Redirect the entire raise to your deposit savings
• Use savings challenges like the 52-week challenge to build momentum

Getting Mortgage-Ready

• Check your credit score: Use ClearScore, Credit Karma, or Experian. Fix any errors, and don't apply for new credit in the 6 months before your mortgage application
• Get on the electoral roll: Being registered to vote at your current address significantly improves your credit score — it's a quick win
• Reduce existing debt: Pay off credit cards, overdrafts, and loans where possible. Lenders look at your debt-to-income ratio when deciding how much to lend
• Stabilise your income: Lenders want to see at least 3–6 months of consistent income. Avoid changing jobs right before applying if possible
• Get a mortgage in principle (MIP): This is a provisional offer showing how much a lender would lend you. It strengthens your position when making offers and is usually free
• Consider a mortgage broker: They have access to deals not available directly and can save you thousands over the mortgage term. Many charge no upfront fee
• Save bank statements: Lenders will want 3–6 months of statements. Avoid unexplained large transactions, gambling activity, or regular overdraft use during this period

Frequently Asked Questions