5% deposit mortgages

Saving a bigger deposit can take time, especially when rent, bills and moving costs are all competing for your money.

A 5% deposit mortgage can reduce the amount you need upfront, but it also means borrowing a larger share of the property value. That can affect lender choice, rates, affordability checks and monthly payments.

This guide explains how 5% deposit mortgages work, who they may suit and how to compare buying now with saving for a larger deposit.

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What to know about 5% deposit mortgages

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How a 5% deposit mortgage works

A 5% deposit mortgage usually means you put down 5% of the property price and borrow the remaining 95% through a mortgage.

This is also called a 95% loan-to-value mortgage, or 95% LTV, because the mortgage covers 95% of the property value.

For example, if you bought a £250,000 home with a 5% deposit, you would put down £12,500 and borrow £237,500, before any fees, costs or product terms are considered.

What a 5% deposit could look like

These examples show how a 5% deposit changes at different property prices. Check your own figures with our loan-to-value calculator →

What could the monthly repayments look like?

A smaller deposit can help reduce the amount you need upfront, but it also means you borrow more of the property value.

That can affect the monthly payment, especially when the mortgage rate, term and loan amount are taken into account.

Indicative monthly repayment example

This example is based on buying a £250,000 property with a 5% deposit of £12,500 and a mortgage of £237,500.

The table above is a simplified example for illustration only. Estimate your own figures with our repayment calculator →

Who may qualify for a 5% deposit mortgage?

5% deposit mortgages are often used by first-time buyers, but some lenders may also consider home movers and other buyers, depending on their circumstances.

You may be able to apply if you have a 5% deposit, can show the mortgage is affordable and are buying a property the lender accepts at 95% loan-to-value.

Having a 5% deposit is only one part of the application. They may assess:

• your income and employment type
• regular spending and monthly commitments
• credit history
• deposit source
• existing debts
• property type and valuation
• whether the mortgage remains affordable if costs change

At 95% loan-to-value, checking your options early can help you see which lenders may fit.

Property type can affect 5% deposit options

Not every property will be accepted with a 5% deposit.

Some lenders may take a closer look at flats, new builds, high-rise buildings, unusual construction types or certain lease terms. They may also have different rules for houses and flats.

For example, a lender may accept 95% loan-to-value on a standard house but ask for a larger deposit on a flat or new-build property.

This means the property can matter as much as the buyer when applying with a smaller deposit.

Buying a new-build with a 5% deposit

Low-deposit routes to compare

A 5% deposit mortgage is one low-deposit route, but it is not the only way to buy with less upfront. Some buyers may also use savings products, family support, shared ownership or first-time buyer schemes.

Each route can change how much deposit you need, how much you borrow and what your monthly costs look like.

Ways to strengthen your application

With a smaller deposit, lenders may look more closely at the overall application, not just the deposit amount.

Before applying, it can help to:

• check your credit report for errors or recent issues
• keep your deposit source clear and easy to evidence
• avoid taking on new borrowing before applying
• reduce regular commitments where possible
• check whether a gifted deposit could improve your position
• compare whether saving slightly more could move you into a stronger loan-to-value band

If you have bad credit or recent credit issues, lender choice may be more limited with a smaller deposit. Some lenders may still take a different view depending on the type, age and severity of the issue.

Still building your deposit? Read our guide on how to save for a house deposit to help set a clearer savings target.

5% deposit or 10% deposit: should you buy now or save more?

A 5% deposit may help you buy sooner, while a 10% deposit may give you more lender choice and potentially different rates. The right route depends on your savings, affordability, property plans and timing.

The main trade-off is timing. A 5% deposit may help you move sooner, while saving to 10% could improve your mortgage options. Compare the monthly payment, lender choice and how long it would take to save more before deciding.

Is a 5% deposit mortgage right for you?

Buying with a 5% deposit can make homeownership feel closer, but the right choice depends on the numbers, your timing and how comfortable the repayments feel.

A 5% deposit mortgage may be worth exploring if suitable options are available, the monthly payments feel manageable and buying sooner matters to your plans.

How Muttuo Mortgages can help

A 5% deposit mortgage can help some buyers move sooner, but the lender, property and affordability checks still need to line up.

Muttuo Mortgages can help you:

Whether you are buying your first home, moving home or comparing low-deposit routes, getting advice early can help you understand which options are realistic before you apply.

5% deposit mortgages FAQs

These FAQs answer common questions about 5% deposit mortgages, including eligibility, first-time buyer options, new-build purchases and whether saving a larger deposit could help.

What is a 5% deposit mortgage?

A 5% deposit mortgage lets you buy with a deposit worth 5% of the property price.

You usually put down 5% of the purchase price and borrow the remaining 95% through a mortgage. This is often called a 95% loan-to-value mortgage.

Can I get a mortgage with a 5% deposit?

You may be able to, if you meet lender criteria.

Lenders will assess your income, spending, debts, credit profile, deposit source and the property. Some property types or circumstances may need a larger deposit.

Is a 5% deposit enough for first-time buyers?

It can be, but affordability still matters.

Many first-time buyers use low-deposit mortgages to buy sooner. However, you still need to pass affordability checks and budget for mortgage payments and other buying costs.

Are 5% deposit mortgages more expensive?

They can be more expensive than lower loan-to-value mortgages.

Because you are borrowing a higher proportion of the property value, rates may be higher and lender choice may be more limited than with a larger deposit.

Is it better to save a 10% deposit?

It depends on your budget, timing and mortgage options.

A 10% deposit may give you more lender choice and potentially lower rates. However, waiting longer is not always the right decision if suitable 5% deposit options are available and the monthly payments are affordable.

Can I use a 5% deposit on a new build?

Sometimes, but rules vary by lender and property.

Some lenders or schemes may support 5% deposit new-build purchases. However, lenders may apply different criteria for new-build houses, flats, incentives and completion deadlines.

Can I get a 5% deposit mortgage with bad credit?

It may be harder, but it depends on the type, age and severity of the credit issue.

Lender choice may be more limited with a smaller deposit. Some lenders may want a larger deposit if there are recent or serious credit issues, so it is worth checking your options before applying.

Can I use a gifted deposit with a 5% deposit mortgage?

Yes, some lenders may accept a gifted deposit.

The lender will usually want confirmation that the money is a gift and not a loan that needs to be repaid. They may also check the source of funds.

What is the difference between a 5% deposit and 95% loan-to-value?

They describe the same mortgage structure from different angles.

A 5% deposit is the amount you contribute. A 95% loan-to-value mortgage is the amount you borrow compared with the property value.