Your First Home deposit: what 2.5% means in pounds

How much deposit you need for Your First Home: 2.5% in pounds at typical prices, the costs on top, how long saving takes and how a Lifetime ISA helps.

Status: Based on the government announcement of 26 September 2026. Full rules are due at the Budget on 28 October 2026. Every figure is labelled as confirmed, announced, expected or assumed. Some figures on this page are announced or confirmed and some are our working assumptions; the calculator and the methodology page label each one.

Page last updated 27 September 2026. Assumptions are explained on the methodology page.

In short

Your First Home is expected to need a deposit of 2.5% of the price: £5,750 on a £230,000 home, £7,500 on £300,000.
That is half the 5% a normal small-deposit mortgage needs, and a fraction of the 10% or more most first-time buyers actually put down.
Budget another £3,000 to £4,500 for legal fees, mortgage fees, a snagging survey, moving and insurance (our itemised example comes to £4,548), and nothing for stamp duty on homes up to £300,000.
Saving £300 a month reaches £5,750 in about 20 months, or about 16 months inside a Lifetime ISA with its 25% bonus.

How much is a 2.5% deposit?

The Your First Home deposit is expected to be 2.5% of the purchase price, according to the government’s announcement of 26 September 2026 (GOV.UK). The example used in reports of the announcement is a £230,000 home (Rightmove’s average first-time buyer price), where 2.5% is £5,750. At other prices:

Home price	2.5% deposit (Your First Home)	5% deposit (95% mortgage)	10% deposit
£180,000	£4,500	£9,000	£18,000
£230,000	£5,750	£11,500	£23,000
£280,000	£7,000	£14,000	£28,000
£350,000	£8,750	£17,500	£35,000
£450,000	£11,250	£22,500	£45,000

The deposit calculator works this out for any price and shows how long it takes to save.

Why 2.5% is unusual

Outside the scheme, the smallest deposit most first-time buyers can use is 5%, through a 95% mortgage, many of them backed by the government’s permanent mortgage guarantee scheme (GOV.UK). A handful of lenders offer 100% mortgages with conditions such as a rental track record, and most buyers put down far more than 5% because bigger deposits get cheaper rates.

Your First Home halves the entry point because the government’s 20% equity loan does the work a bigger deposit would do: the lender only has to fund 77.5% of the price, which is a lower-risk loan than 95%. That is why the scheme’s mortgage rate is usually cheaper as well as the deposit being smaller. It is also why the scheme is not free money: that 20% is repaid as a share of the home’s value, as the repayment page explains.

What else you need on top of the deposit

The deposit is not the only cash you need on completion day. Typical costs for a first-time buyer in England buying a new build:

Cost	Typical amount	Notes
Solicitor or conveyancer	£1,200 to £2,000 including searches and VAT	The average buying bill was about £1,509 in September 2026 according to the HomeOwners Alliance; leasehold and scheme purchases can cost more
Stamp duty	£0 up to £300,000	First-time buyer relief; 5% on the part from £300,001 to £500,000; none above £500,000 (GOV.UK)
Mortgage fees	£0 to £1,500	Our estimate from the September 2026 rate tables; arrangement fees can be added to the loan, and some first-time buyer deals waive the valuation fee
Snagging survey	£300 to £600	Our estimate; optional but worth it on a new build; see buying a new build
Reservation fee	£500 to £2,000	Our estimate of what developers ask; paid to the developer and deducted from the price; Help to Buy capped it at £500 (GOV.UK)
Removals, furniture, insurance	£500 upwards	Buildings insurance is arranged at exchange to start on completion (or from exchange if the contract says so)

So a £230,000 purchase needs roughly £5,750 plus £3,000 to £4,500 of costs, call it £9,000 to £10,500 in total; our itemised example in the first-time buyer costs guide comes to £4,548 beyond the deposit, so about £10,300 all in.

How long does it take to save?

Saving £300 a month, a £5,750 deposit takes about 20 months. Saving £500 a month, about a year. The fastest legal boost is a Lifetime ISA: the government adds 25% to whatever you pay in, up to £4,000 a year, so £300 a month becomes £375 and the same £5,750 arrives in about 16 months (GOV.UK). The conditions: you must open it before you are 40, the account must have been open 12 months before you buy, the home must cost £450,000 or less, and withdrawing for anything except a first home or retirement costs a 25% charge (GOV.UK). One change to know about: the Treasury has consulted on a new First-Time Buyer ISA that “will be offered in place of the Lifetime ISA” once it exists, with its bonus and limits still to be set; existing Lifetime ISAs carry on (GOV.UK). The Lifetime ISA comparison covers how the schemes fit together and what the change means.

Should you put down more than 2.5%?

If you have it, usually yes, within reason. Every extra £1,000 of deposit is £1,000 less mortgage, which at 5% over 25 years saves about £5.85 a month and about £750 of interest over the term. A bigger deposit can also move you into a cheaper rate band; lenders price in steps at 75%, 80%, 85% and 90% loan-to-value. Under the scheme the standard mortgage is already 77.5%, so another 2.5% of the price (which doubles the deposit) would take you under 75% and into the cheapest band. The calculator lets you test any deposit size.

Two reasons not to empty your savings: you need a cash buffer for the costs above and for the first months in a new home, and lenders like to see money left over after completion.

What we do not know yet

Whether the scheme will set a maximum deposit (Help to Buy did not), whether gifted deposits are allowed (Help to Buy allowed them), and whether the deposit must come from savings rather than a loan (lenders rarely accept borrowed deposits, and we expect the scheme to follow suit). All of this should be settled at the Budget on 28 October 2026.

What to do now

Put your target price into the deposit calculator and note the 2.5% figure plus about £4,500 for costs.
If you are under 40 and more than a year from buying, a Lifetime ISA still pays its 25% bonus and starts the 12-month clock; read the Lifetime ISA page first, because a replacement account is on the way.
Keep the deposit in an account you can show statements for; lenders and the scheme will ask where it came from.
Read the eligibility page before you get attached to a development.

Figures are illustrations, not quotes or advice. A mortgage is a loan secured on your home. Your home may be repossessed if you do not keep up repayments on your mortgage.

Frequently asked questions

How much deposit do I need for Your First Home?

2.5% of the price, according to the government's announcement, with the detail due at the Budget on 28 October 2026. On a £230,000 home that is £5,750. You can put down more.

Can the deposit be a gift from family?

Not announced. Help to Buy accepted gifted deposits with a signed letter confirming the money was a gift, not a loan, and lenders usually accept them too. The scheme is aimed at people without family help, but nothing suggests gifts will be banned.

Is 2.5% enough to protect me if prices fall?

No. With a 2.5% deposit, a price fall of just over 3% leaves the mortgage larger than your share of the home's value until you have paid some of it off (the government's 20% shrinks with the price too, which is why the threshold is 3.125% rather than 2.5%). The equity loan does not protect you from that; it is a separate debt to the government.

Do I need a bigger deposit for a new build?

Many lenders cap new-build flats at 85% loan-to-value, which is why a 5% deposit on a flat can be hard to find. Under Your First Home the mortgage is only 77.5% of the price, which sits comfortably inside most lenders' new-build limits.

Do I pay stamp duty on top of the deposit?

Not on homes up to £300,000 if everyone buying is a first-time buyer. Between £300,001 and £500,000 you pay 5% on the part above £300,000; above £500,000 the relief disappears.

Sources

GOV.UK: New first-time buyer scheme to be confirmed at Budget (the 2.5% deposit) (accessed 26 September 2026)
GOV.UK: Lifetime ISA (the 25% bonus, £4,000 a year limit) (accessed 26 September 2026)
GOV.UK: Lifetime ISA, withdrawing money (home up to £450,000, 12 months, 25% charge) (accessed 26 September 2026)
GOV.UK: Stamp Duty Land Tax rates (first-time buyer relief) (accessed 26 September 2026)
GOV.UK: 2025 mortgage guarantee scheme (5% deposits without the equity loan) (accessed 26 September 2026)
HomeOwners Alliance: Conveyancing fees explained (typical legal costs, updated 2 September 2026) (accessed 27 September 2026)
GOV.UK: Homebuyers' guide to the Help to Buy equity loan 2021 to 2023 (deposit rules under the previous scheme) (accessed 27 September 2026)

Your First Home pre-registration: is it open yet?
Your First Home pre-registration is expected by the end of 2026; nothing is open yet. What the government said, how Help to Buy worked, what to prepare.
House deposit calculator: how long to save 2.5% or 5%
House deposit calculator: type a price and your monthly saving to see a 2.5% or 5% deposit in pounds and how long it takes, with or without a Lifetime ISA.
Lifetime ISA first-time buyer rules and Your First Home
How the Lifetime ISA works for a first time buyer (£4,000 a year, 25% bonus, £450,000 limit), the ISA replacing it, and how it fits with Your First Home.
First-time buyer costs 2026: every fee beyond the deposit
Every first time buyer cost beyond the deposit, with 2026 figures: solicitor fees, searches, surveys, mortgage fees, stamp duty, removals and insurance.
Your First Home eligibility: am I a first-time buyer?
Who qualifies for Your First Home: the first-time buyer definition, what counts as owning before, the income and price caps, and what is still unconfirmed.