The Mortgage Guarantee Scheme helps lenders offer mortgages to buyers with a small deposit. The government does not pay towards your purchase. Instead, it provides a guarantee to participating lenders, helping them offer mortgages at a high loan-to-value ratio.
The current permanent scheme began in July 2025. Knowing how the scheme works and what lenders still check can help you prepare your application.
What the Mortgage Guarantee Scheme does
GOVERNMENT
Provides a lender guarantee
Covers part of a participating lender’s eligible losses if a borrower defaults, subject to the scheme rules.
LENDER
Assesses the mortgage application
Decides whether to lend after checking your finances, credit history and the property you intend to buy.
DEPOSIT
Buyer provides the deposit
You fund your deposit from an acceptable source and budget separately for legal fees and other purchase costs.
REPAYMENT
Buyer repays the mortgage
You remain responsible for the mortgage payments. Government backing does not reduce the amount you owe.
How the government guarantee supports lenders
A smaller deposit means the lender funds more of the purchase. If the borrower stops paying and the home sells for less than the debt, the lender may face a loss. The government mortgage guarantee scheme covers part of eligible lender losses, reducing some of that risk.
The arrangement supports mortgage availability rather than topping up your savings. This illustrative example shows who funds a purchase with a 5% deposit.
Purchase component
Amount
Property price
£200,000
Buyer’s 5% deposit
£10,000
Mortgage borrowing
£190,000
Government contribution towards the purchase
£0
You borrow the full £190,000 from the lender and repay it with interest under your mortgage terms. The guarantee does not give the government a share of your home.
WORTH KNOWING
The guarantee protects the lender, not your mortgage payments. It does not provide payment protection or remove your responsibility for any outstanding debt.
Who can qualify for the scheme?
Eligible first-time buyers and home movers can use the scheme for a UK home they intend to live in. The main purchase conditions are:
Requirement
What it means
Loan-to-value
More than 90%, up to and including 95%. LTV measures your borrowing against the property’s value.
Repayment mortgage
Your payments cover interest and reduce the loan balance. Interest-only mortgages are excluded.
Ownership and use
Residential purchases qualify; buy-to-let, shared ownership and shared equity arrangements do not.
Mortgage structure
Offset and guarantor mortgages are excluded under the scheme rules.
The current scheme rules contain no £600,000 property cap or blanket new-build exclusion. Lenders can set their own property, loan and deposit limits. A home that qualifies under the scheme must also meet the lender’s requirements.
A mortgage at exactly 90% LTV falls outside the scheme. That does not prevent you from applying for a standard 90% mortgage if you have a suitable deposit.
What buyers still need to provide
Deposit and purchase costs
Show where your deposit comes from and allow for legal fees, a survey, moving costs and any property tax due. Government backing does not cover these expenses.
Evidence of affordable borrowing
Lenders assess income, regular spending and existing commitments. Expect to supply documents such as payslips, bank statements or self-employed income evidence.
Credit and property checks
The scheme has credit-history restrictions, alongside each lender’s assessment. The lender also values the property to decide whether it provides suitable security.
What could you afford to borrow?
Explore your potential borrowing and monthly repayments.
Credit restrictions include certain recent serious arrears, county court judgments and insolvency arrangements. The type of credit issue, when it happened and the amount involved can affect the outcome. Discuss these details with an adviser, as the rules include specific limits and exceptions.
How to apply for a mortgage
To apply for a mortgage supported by the scheme, approach a lender or mortgage broker. You do not submit a separate government application; the lender manages its participation in the guarantee arrangement.
Prepare your budget and mortgage application
Start with your available deposit and likely borrowing needs, then compare suitable mortgages and lender requirements. Check that the monthly payments leave room for your other spending and changes in circumstances.
An Agreement in Principle (AIP) can indicate what a lender might offer, but it is not a mortgage offer. Once you have chosen a property, submit the full application and supporting evidence. The lender then completes its checks before deciding whether to issue an offer.
Remember that a small deposit leaves less of a buffer if property values fall. You could owe more than your home is worth, known as negative equity, which may restrict your options when selling or changing your mortgage.
How it relates to 5% mortgages
A 5% deposit mortgage is not automatically part of the scheme. Lenders can offer high-LTV mortgages without government backing, so scheme participation alone should not determine your choice.
Compare the rate, fees, repayment term and conditions against your circumstances. A lower headline rate may not mean a lower overall cost once fees are included. Explore the wider borrowing options in our 5% deposit mortgages guide. For other types of support, see the overview of first-time buyer schemes.
How Muttuo can help
Muttuo compares options from more than 100 lenders across the market. We assess mortgage choices against your deposit and circumstances; not all lenders participate in the scheme.
Understand lender requirements for your circumstances
Compare rates, fees and mortgage conditions
Prepare your application and supporting documents
Find a mortgage that fits your plans
Discuss your budget and the mortgage options that could suit your purchase.
Your home may be repossessed if you do not keep up repayments on your mortgage.
Common Mortgage Guarantee Schemes answered
Is the Mortgage Guarantee Scheme permanent?
The July 2025 scheme is ongoing, with no scheduled closing date. Government policy and lender participation can still change.
Which lenders offer scheme-backed mortgages?
Participating lenders offer eligible mortgages. Ask your lender or broker about current availability; historical participant lists may be out of date.
Is this the same as Help to Buy?
No. The former Help to Buy equity loan lent buyers money towards their purchase. This scheme instead covers part of a lender’s eligible losses if a borrower stops paying.
