Getting on the property ladder nowadays can be a tall order.
House prices have become more expensive compared to incomes across several decades, the cost of living has jumped, and saving up enough for a deposit can take years.
Most people buying their first home put down a 10 to 20 per cent deposit, but there are options that might mean putting down less than this, including an option where no standard deposit is needed if your family can help by providing security.
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Buying with a scheme that helps you buy without a deposit, makes it easier to get on the property ladder sooner, but it also requires borrowing more and having a smaller buffer against house prices falling.
On the flipside, some first-time buyers can find that they pay less on their mortgage and other homeowning costs than they would on rent.
Many lenders offer home loans for those with small deposits, while individual banks have special schemes that can give first-time buyers a hand.
With the help of Lloyds Bank we explain what first-time buyers need to know
First-time buyers can use schemes that help them get on the property ladder
What is a mortgage deposit?
A deposit is the initial amount of money a home buyer puts down, with the rest of a property’s purchase price being covered by a mortgage.
For example, someone buying a £200,000 home with a 20 per cent deposit would put down £40,000 and borrow £160,000, which is the other 80 per cent.
Meanwhile, a first-time buyer who bought the same property with a 10 per cent deposit would put down £20,000 and borrow £180,000, which is the other 90 per cent.
While we regularly talk about 10 per cent or 15 per cent deposits, mortgage lenders often refer to their products the other way round.
They will usually mention loan-to-value, which is a measure of how much someone is borrowing on a mortgage compared to a property’s value. So, a 10 per cent deposit mortgage is the same as a 90 per cent loan-to-value one.
Lenders are also responsible for ensuring that first-time buyers can afford to pay their monthly mortgage bills and will assess them on affordability, which involves looking at incomings and outgoings.
They use this calculation to decide how much you can afford to borrow, so buyers looking for a 10 per cent deposit mortgage will need individual or joint income that meets the requirements for borrowing the other 90 per cent.
Remember that your home could be repossessed if you do not keep up with mortgage payments, so it is important to make sure you can afford them.
> How Lloyds can help first-time buyers
How family can help first-time buyers
There are a variety of mortgage lender schemes that enable first-time buyers to tap into family savings to use as a deposit.
These operate in slightly different ways but offer a way for those unable to tap the Bank of Mum and Dad for a gifted deposit to still get financial help from family.
Lloyds’ Lend a Hand mortgage allows a family member to put 10 per cent of a home’s purchase price into a three-year fixed term savings account as security, alongside a three-year fixed rate mortgage.
Terms and conditions apply, and either the applicant or family member has to have a Club Lloyds current account, for which a £5 monthly fee may apply.
They get their savings back, with interest, when the three-year term ends, as long as repayments are up to date. Only the first-time buyer has their name on the mortgage and they legally own the property.
More help for first-time buyers
Aside from family support mortgages, lenders have plenty of other ways to support first-time buyers.
Some will offer a boost that could allow first-time buyers to borrow more than five times their annual income. This may require them to have a larger deposit though.
For example, with Lloyds First-time Buyer Boost, a new first-time buyer putting down at least a 10 per cent deposit with a household income of £50,000 or more can borrow up to 22 per cent extra.
For example, first-time buyers with £50,000 income could potentially borrow up to £275,000 rather than £224,500. This could help first-time buyers get on the ladder sooner.
As well as mortgage bills, first-time buyers should consider other homeowning costs
What other costs should first-time buyers consider?
Borrowing more money with a small deposit mortgage means higher monthly payments and less protection against house prices falling.
First-time buyers may consider this worthwhile if they can get on the housing ladder and stop renting. The average asking rent has increased 40 per cent in the last five years, according to Rightmove in April 2025.
But first-time buyers must avoid simply comparing rent and mortgage bills. They also need to factor in other longer-term costs when buying a home – and the cost of maintenance, insurance, and other bills that a landlord would pick up.
The main buying costs on top of a deposit are conveyancing and legal fees, a survey, and stamp duty.
The latter recently got more expensive. From 1 April the first-time buyer stamp duty exemption for England and Northern Ireland threshold dropped from £425,000 to £300,000.
This means a first-time buyer purchasing a £350,000 home must now pay £2,500 in stamp duty rather than zero, while buying a £405,000 property will incur a £5,250 bill.
The risks of small deposit mortgages
Buying with a small deposit comes with some risks. House prices do not always rise and if they decline, the smaller the deposit put down the greater the risk of a homeowner seeing their equity drop, or even falling into negative equity.
Negative equity is when the value of a house falls below the amount left to pay on the mortgage. This could leave homeowners unable to remortgage to a different lender or move home.
Buyers should also be careful not to financially overstretch themselves, particuarly given the higher interest rates that tend to come along with 95 per cent loan-to-value mortgages.
While getting on the property ladder is a big milestone, having a mortgage is a major financial responsibility. Falling behind on payments can impact a person’s credit history and could have negative financial consequences for years to come.
Even if someone passes the lender’s affordability checks, it’s important for the borrower to make sure they are comfortable with the monthly payments.
They need to consider their current lifestyle costs, tax, pension contributions, student loan repayments or any other commitments – and whether life is likely to get more expensive in future, perhaps due to having children.
> Help for first-time buyers: Lloyds explains what you need to know
You could lose your home if you don’t keep up with your mortgage repayments . Lending is subject to status.
The information in this article was correct at the date of writing on 18 July 2025.