How much deposit do I need as a first-time buyer?

Typically 5-20% of the property price. A 5% deposit is the minimum most lenders accept, but a 10-15% deposit unlocks better interest rates. For a £250,000 home, that's £12,500-£50,000. Some schemes help with deposits, including the Lifetime ISA bonus and shared ownership.

Do first-time buyers pay stamp duty?

First-time buyers pay no stamp duty on the first £425,000 of a property priced up to £625,000. Above £625,000, normal rates apply to the entire purchase. This relief saves up to £6,250 compared to standard rates.

What salary do I need to buy a house?

Lenders typically offer 4-4.5 times your annual income. For a £250,000 mortgage with a 10% deposit, you'd need income of approximately £50,000-£56,250. Joint incomes are combined for couples. Some professional mortgages offer higher multiples.

What credit score do I need for a mortgage?

There's no fixed minimum, but a score of 700+ (Experian) or 420+ (Equifax) gives access to the best rates. Lower scores may still get mortgage approval but at higher interest rates. Check your score with all three agencies before applying.

How long does buying a house take?

Typically 3-6 months from offer accepted to completion. Factors affecting timescale include chain length, survey issues, legal complications, and lender processing times. Cash buyers and new builds can be faster.

Can I buy a house with bad credit?

Yes, but with limitations. Specialist lenders offer mortgages for those with CCJs, defaults, or low scores, but expect higher interest rates and larger deposit requirements (typically 15-25%). Brokers can help find suitable lenders.

Mortgages & Property

First-Time Buyer Guide UK 2025/26: Everything You Need to Know

Complete guide for first-time buyers in the UK. Learn about deposits, mortgages, stamp duty relief, government schemes, and the step-by-step process of buying your first home.

By PocketWise · 6 June 2025 · 7 min read

Mortgage information is general guidance only. Mortgages are regulated by the FCA. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE. Consult an FCA-regulated mortgage adviser before making decisions.

Buying your first home is one of the biggest financial decisions you’ll make. This comprehensive guide covers everything from saving a deposit to getting the keys, with current information on schemes, costs, and the process for 2025/26.

First-Time Buyer Costs at a Glance

For a £250,000 property with 10% deposit:

Cost	Amount	When Paid
Deposit	£25,000	Exchange of contracts
Mortgage arrangement fee	£0-£2,000	Application or added to loan
Valuation fee	£0-£500	Application
Survey	£400-£1,500	After offer accepted
Conveyancing	£1,000-£2,000	Completion
Stamp duty	£0 (FTB relief)	Completion
Moving costs	£500-£2,000	Completion day
Total cash needed	£27,000-£31,000

How Much Can You Borrow?

Income Multiples

Single Income	Mortgage at 4.5x	Property (10% deposit)
£25,000	£112,500	£125,000
£30,000	£135,000	£150,000
£40,000	£180,000	£200,000
£50,000	£225,000	£250,000
£60,000	£270,000	£300,000
£75,000	£337,500	£375,000

Joint Income

Combined Income	Mortgage at 4.5x	Property (10% deposit)
£50,000	£225,000	£250,000
£60,000	£270,000	£300,000
£70,000	£315,000	£350,000
£80,000	£360,000	£400,000
£100,000	£450,000	£500,000

Affordability Assessment

Lenders also stress-test your ability to pay if rates rise:

Factor	Typical Assessment
Stress test rate	Around 8-9%
Credit commitments	Reduce borrowing capacity
Essential spending	National average or actual
Childcare costs	Deducted from income
Student loans	Monthly payment deducted
Future rate rises	Must afford higher payments

Deposit Requirements

Deposit Size Impact

Deposit	LTV	Rate Impact	Access to Deals
5%	95% LTV	Highest rates	Limited lenders
10%	90% LTV	Better rates	More options
15%	85% LTV	Good rates	Wider choice
20%	80% LTV	Competitive	Best rates available
25%+	75% LTV	Lowest rates	All deals accessible

Deposit Sources

Source	Considerations
Savings	Must show 3+ months in account
Gift from family	Requires gift letter
Lifetime ISA	25% bonus up to £1,000/year
Inheritance	Documentation required
Help to Buy ISA	Bonus at completion only
Savings from sale	If not first-time buyer

Gifted Deposits

If family is helping:

Written gift letter required
Confirms no repayment expected
Lender may contact donor
Donor’s savings may be checked
Usually must be from close family

Stamp Duty for First-Time Buyers

Current First-Time Buyer Relief

Property Price	Stamp Duty	Standard Rate Would Be
Up to £425,000	£0	Up to £2,500
£450,000	£625	£3,750
£500,000	£3,125	£7,500
£550,000	£5,625	£11,250
£600,000	£8,125	£15,000
£625,000	£10,000	£18,750
Above £625,000	Standard rates	No FTB relief

First-Time Buyer Relief Rules

Both buyers must be first-time buyers (for joint purchases)
Property must be your main residence
Price must be £625,000 or less for any relief
Relief is automatic — claimed through solicitor

Government Schemes for First-Time Buyers

First Homes Scheme

Discount of 30-50% on new build homes.

Feature	Detail
Discount	30-50% off market value
Price cap	£250,000 after discount (£420,000 London)
Eligibility	First-time buyers, income under £80k (£90k London)
Local connection	May be required
Mortgage	Still need deposit and mortgage for discounted price
Selling	Must sell to another First Homes buyer at same discount

Shared Ownership

Buy a share (25-75%) and rent the rest from housing association.

Feature	Detail
Minimum share	25% (some allow 10%)
Rent on unowned share	Typically 2.75% per year
Staircasing	Buy more shares over time
Income limit	£80,000 (£90,000 London)
Properties	New builds and resales

Example: £250,000 Property, 25% Share

Cost Type	Amount
Purchase price (25%)	£62,500
10% deposit	£6,250
Mortgage needed	£56,250
Monthly mortgage (~5%)	£330
Monthly rent (2.75% of £187,500)	£430
Total monthly	£760

Lifetime ISA

Save up to £4,000/year with 25% government bonus for first home.

Feature	Detail
Annual limit	£4,000
Government bonus	25% (up to £1,000/year)
Maximum bonus	£1,000 per year
Property limit	£450,000
Age limit	Open between 18-39, use until 60
Penalty for non-home withdrawal	25% withdrawal charge

LISA vs Regular Saving Over 5 Years

Saving	LISA	Regular Account
Your savings	£20,000	£20,000
Government bonus	£5,000	£0
Interest (estimated)	~£1,500	~£1,500
Total	£26,500	£21,500

Help to Build: Equity Loan

For self-build and custom-build homes.

Feature	Detail
Equity loan	5-20% (40% London)
Interest free	First 5 years
Property value limit	£600,000
Deposit needed	5% minimum
Mortgage needed	For remainder

Getting a Mortgage

Types of Mortgage

Type	How It Works	Best For
Fixed rate	Rate locked for 2-10 years	Budget certainty
Variable (tracker)	Follows base rate + margin	Expect rates to fall
Variable (SVR)	Lender’s standard rate	Short-term only
Offset	Savings reduce interest charged	Large savings balance
Guarantor	Family supports application	Low income/deposit

Current Mortgage Rates (2025)

LTV	2-Year Fixed	5-Year Fixed
95%	5.5-6.5%	5.3-6.0%
90%	4.8-5.5%	4.6-5.2%
85%	4.4-5.0%	4.2-4.8%
80%	4.0-4.6%	3.9-4.4%
75%	3.8-4.3%	3.7-4.2%

Rates change frequently — these are indicative only.

Monthly Payment Calculator

Mortgage Amount	25 Years @ 4.5%	25 Years @ 5.5%	30 Years @ 5%
£150,000	£834	£920	£805
£200,000	£1,112	£1,227	£1,074
£250,000	£1,390	£1,534	£1,342
£300,000	£1,668	£1,840	£1,610
£350,000	£1,946	£2,147	£1,879

Mortgage Fees

Fee	Typical Cost	Notes
Arrangement/product fee	£0-£2,000	Can add to loan
Booking fee	£0-£250	Non-refundable
Valuation	£0-£500	Basic often free
Higher lending charge	£0-£300	If high LTV
CHAPS/telegraphic fee	£25-£50	Funds transfer

Using a Mortgage Broker

Pros	Cons
Access to whole market	May charge fee (£0-£500)
Expert advice	Some work with limited lenders
Handle paperwork	Not always necessary for simple cases
Find deals not direct	DIY comparison sites exist
Support through process	Quality varies

Step-by-Step Buying Process

Phase 1: Preparation (1-6 months before)

Step	Action
1	Check credit reports (all three agencies)
2	Fix any credit issues
3	Save for deposit and fees
4	Get Decision in Principle (DIP) from lender
5	Calculate total budget
6	Research areas

Phase 2: Finding a Property

Step	Action
7	Search Rightmove, Zoopla, OnTheMarket
8	View properties (minimum 2-3 viewings for serious ones)
9	Check local area in person
10	Research recent sold prices
11	Make offer (usually below asking)
12	Negotiate and agree price

Phase 3: After Offer Accepted

Week	Action
Week 1	Instruct solicitor, apply for mortgage
Week 2-3	Lender valuation, choose survey
Week 3-4	Survey conducted
Week 4-8	Searches completed, legal enquiries
Week 6-10	Mortgage offer issued
Week 8-12	Review contract, raise queries
Week 10-14	Exchange contracts (pay deposit)
Week 12-16	Completion (get keys)

Phase 4: Completion Day

Task	Details
Funds transferred	Solicitor sends mortgage + deposit to seller
Completion confirmed	Usually by 1pm
Keys released	Collect from estate agent
Move in	Your new home!
Post-completion	Register ownership, set up utilities

Surveys Explained

Survey Types

Survey	Cost	Best For
Valuation only	£0-£300	Lender requirement only
HomeBuyer Report	£400-£700	Standard properties, good condition
Building Survey	£600-£1,500	Older/unusual properties, concerns

What Surveys Cover

Issue	Valuation	HomeBuyer	Building Survey
Market value	✓	✓	Optional
Urgent defects	Limited	✓	✓
Roof condition	×	✓	Detailed
Damp issues	×	✓	Detailed
Structural problems	×	Summary	Detailed
Cost estimates	×	Some	Detailed

Additional Costs to Budget

One-Off Costs

Cost	Range	When Due
Survey	£400-£1,500	After offer accepted
Conveyancing	£800-£2,000	Completion
Searches	£250-£450	Included in conveyancing
Mortgage fees	£0-£2,000	Application/completion
Moving costs	£300-£2,000	Completion day
Initial furnishing	£1,000-£10,000+	After moving

Ongoing Costs

Cost	Typical Monthly
Council tax	£100-£300
Utilities	£150-£300
Buildings insurance	£15-£50
Contents insurance	£10-£30
Maintenance fund	£100-£200 (suggested saving)
Ground rent (leasehold)	£0-£100
Service charge (leasehold)	£50-£500

Common First-Time Buyer Mistakes

Mistake	How to Avoid
Only viewing once	View at different times of day
Ignoring leasehold terms	Check ground rent, service charge, lease length
Underestimating costs	Budget 5% of purchase price for fees
Not getting survey	Always get at least HomeBuyer Report
Forgetting ongoing costs	Calculate true monthly cost including bills
Stretching too far	Keep mortgage affordable if rates rise
Skipping legal review	Read all documents, ask questions
Rushing	Take time, it’s a major decision

Leasehold vs Freehold

Key Differences

Factor	Freehold	Leasehold
Own land?	Yes	No — lease from freeholder
Duration	Forever	Fixed term (check length)
Ground rent	No	Yes — annual payment
Service charge	Only if shared areas	Usually applies
Permission needed	Generally no	For major changes
Lease extension	N/A	May need to extend (costly)

Leasehold Warnings

Lease Length	Status	Action
90+ years	Acceptable	Should be fine for mortgage
80-90 years	Caution	Consider extending
Under 80 years	Problematic	Extension expensive, may affect mortgage
Under 70 years	Difficult	Hard to sell/mortgage

Checklist Summary

Before You Start

Check all three credit reports
Calculate realistic budget
Save deposit plus 3-5% for fees
Open and use Lifetime ISA
Get Decision in Principle

When Viewing

Check local area
Note property condition
Ask about running costs
Check mobile signal
View at different times

After Offer Accepted

Instruct solicitor
Apply for mortgage
Book survey
Review all searches
Arrange buildings insurance

Before Completion

Review mortgage terms
Read all legal documents
Arrange funds transfer
Set up utilities
Plan moving day

Summary

Buying your first home requires:

Deposit: 5-20% of property price (larger = better rates)
Good credit: Check and fix any issues first
Mortgage: Up to 4.5x income, stress-tested for rate rises
Government help: First Homes, Shared Ownership, or Lifetime ISA
Budget for fees: £3,000-£5,000+ on top of deposit
Patience: Process takes 3-6 months typically

Start preparing 6-12 months ahead by saving, checking your credit, and researching your options. Get a Decision in Principle before serious house hunting, and use a survey to identify any property problems before committing.