Quick answers
- How much deposit do you need? 5% is the realistic minimum through 95% mortgages, but a bigger deposit usually means a better rate. Work out YOUR number: target house price × deposit % + £3,000–£5,000 extra costs.
- What is the fastest legal boost? A Lifetime ISA: save up to £4,000 a year and the government adds 25%, up to £1,000 a year free.
- How long does it take? On a £250,000 home, a 10% deposit (£25,000) takes about 4 years at £500 a month, or just over 2 years at £1,000 a month.
- What is the biggest trap? Taking money out of a Lifetime ISA for anything except a qualifying first home costs you a 25% charge — you lose the bonus AND some of your own money.
Why the deposit figures you see disagree
Search for the average first-time buyer deposit and you will find £25,000, £41,000 and £70,000 all quoted in 2026. They are not all wrong — they measure different things. £25,000 is roughly 10% of a £250,000 home. £41,403 is a Skipton survey average across buyers. Around £70,000 is L&C Mortgages’ 2026 average, which reflects buyers purchasing homes costing over £305,000 on average, at 20.7% of the price. London deposits are far higher than the North East. Ignore the national average and work out your own number instead.
Step 1: Work out YOUR number
Pick a realistic target price for where you actually want to buy, then multiply:
- 5% deposit on £250,000 = £12,500
- 10% deposit on £250,000 = £25,000
- 15% deposit on £250,000 = £37,500
- 20% deposit on £250,000 = £50,000
Then add £3,000–£5,000 for the extra upfront costs: solicitor fees (£1,500–£2,000), survey (£400–£700), mortgage fees (£0–£1,000) and moving costs (£500–£1,500). Your deposit is not your only upfront cost — forgetting this is the most common budgeting mistake.
Step 2: Turn it into a monthly plan
Saving £500 a month toward a £250,000 home:
- 5% (£12,500): about 2 years and 1 month
- 10% (£25,000): about 4 years and 2 months
- 15% (£37,500): about 6 years and 3 months
- 20% (£50,000): about 8 years and 4 months
Saving £1,000 a month (realistic for a couple both saving) roughly halves every timeline. The single most effective habit is automation: move the money on payday into a separate account before you can spend it. A third of renters report saving £100 or less a month — at that pace, even a modest deposit takes decades, which is why the monthly amount matters more than the account you pick.
Step 3: Use the Lifetime ISA properly
If you are 18 to 39, open a Lifetime ISA (LISA) and use it first, up to £4,000 a year:
- You save up to £4,000 per tax year; the government adds 25%, up to £1,000 a year.
- You can keep paying in until you turn 50.
- The account must have been open for at least 12 months before you use it to buy.
- The home must cost £450,000 or less, you must be a genuine first-time buyer, and you must buy with a mortgage.
- You can hold cash, stocks and shares, or both.
The penalty trap, stated plainly: withdraw for any reason other than a qualifying first home, turning 60, or terminal illness, and a 25% charge applies to the whole amount withdrawn. Save £4,000, get the £1,000 bonus (£5,000 total), withdraw early, lose £1,250, and walk away with £3,750 — £250 less than you put in. Only put money in a LISA that you are confident will go toward a home within the £450,000 cap. In London and much of the South East, that cap is the real problem, because it has not moved since 2017.
Step 4: Where to keep the rest
- LISA first, up to the £4,000 annual limit, for the bonus.
- Cash ISA for savings above that limit — rates around 4–5% were available in 2026, tax-free, but rates move, so check current ones.
- Regular saver accounts from banks can pay more on small monthly amounts (some 5–6% on £200–£500 a month in 2026) — worth stacking alongside ISAs.
- Keep deposit money out of investments you might need to sell at a bad moment. A deposit fund is for certainty, not growth bets.
Step 5: Watch for schemes — but do not bank on announcements
A “Your First Home” scheme was announced in September 2026, pairing a 2.5% deposit with an interest-free government equity loan of up to 20% on new builds in England. Full details were expected around the late-October Budget. Tembo’s modelling suggested it could cut average deposit-saving time from 34 months (5% deposit) to 18 months — but also warned that lower earners would still need to borrow beyond 4.5 times income in most cities analysed. Treat announcements as possibilities, not plans, until the rules are published.
Mistakes that cost first-time savers years
- Saving without a target number — pick a price, a percentage and a monthly amount.
- Forgetting the £3,000–£5,000 extra costs.
- Raiding a LISA early and paying the 25% charge.
- Aiming at a home over the £450,000 LISA cap while counting on the bonus.
- Keeping everything in a current account earning nothing while inflation eats it.
- Waiting for the “perfect” time instead of starting with whatever monthly amount is possible now.
Read next
- First-Time Buyer Mortgage UK: Everything You Need to Know
- Credit Scores Decoded: How They Really Work in the UK
- The Financial Level-Up Checklist: 20 Moves Before 25
- Ten Money Mistakes Almost Every 20-Something Makes
This article is general information, not financial advice. Rules, rates and scheme details change — check GOV.UK and current lender terms before acting.
