Buying your first home is exciting, but your deposit is one of the first things a lender will look at closely. It is not enough to show that you have money in your account. A lender will usually want to understand where the money came from, how long you have held it, whether it is genuinely available and whether any part of it needs to be repaid.
This matters because your deposit affects your loan-to-value ratio, your mortgage options and, in many cases, the interest rates available to you. Recent UK House Price Index data shows that the average price paid by first-time buyers in Great Britain was £226,465 in January 2026, while London first-time buyers paid an average of £472,000 in April 2026. That means even a 5% or 10% deposit can be a significant amount of money.
A Mortgage adviser Essex can help you understand how lenders may view your deposit, especially if your income, savings pattern or family support is not straightforward.
Why your deposit matters to lenders
Your deposit shows the lender how much of the property price you can fund yourself. For example, if you buy a property for £250,000 and have a £25,000 deposit, you would need a £225,000 mortgage. That would usually mean a 90% loan-to-value mortgage.
MoneyHelper explains that first-time buyers usually need at least a 5% or 10% deposit, and that a larger deposit may give access to a wider range of mortgage deals or lower interest rates.
From the lender’s point of view, your deposit also helps show financial discipline. If you have built savings gradually, kept your bank account in good order and avoided unexplained large transactions, your application may be easier to assess.
Your first-time buyer deposit checklist
Before you apply for a mortgage, make sure you can evidence the following:
- The total amount of your deposit
- Where the money came from
- How long the money has been in your account
- Whether any part of the deposit is a gift
- Whether any part of the deposit is borrowed
- Your latest bank statements
- Your savings account statements
- Proof of ID and address
- Evidence of any Lifetime ISA funds, if used
- A gifted deposit letter, if relevant
Proof of savings
If your deposit comes from your own savings, lenders usually want to see bank or savings account statements. These should show your name, account number, balance and recent transactions.
Lenders may look for a consistent savings pattern. For example, regular transfers from your salary into a savings account can be easier to explain than sudden large cash deposits. If you have moved money between accounts, keep records of each transfer so the lender can follow the trail.
Avoid making unexplained cash deposits before applying for a mortgage. Even if the money is yours, lenders have anti-money laundering checks to complete. Clear records make the process smoother.
Gifted deposit from family
Many first-time buyers receive help from parents, grandparents or other relatives. If part or all of your deposit is gifted, the lender will usually ask for a gifted deposit letter.
This letter normally confirms:
- Who is giving the money
- The amount being gifted
- The relationship between you and the person giving the gift
- That the money is a gift, not a loan
- That the person giving the gift will not own part of the property
- That they do not expect repayment
The person giving the gift may also need to provide bank statements and ID. This is normal. The lender needs to check the source of funds, not just your own account.
Borrowed deposits
Borrowed deposits can be more complicated. If you are using a personal loan, credit card, employer loan or informal family loan as your deposit, you must tell the lender.
Some lenders may not accept borrowed deposits. Others may consider them, but they will usually include the repayment cost in your affordability assessment. This can reduce how much you are able to borrow.
Do not describe borrowed money as a gift. If repayments are expected, the lender needs to know. Being accurate from the start protects your application and avoids delays later.
Lifetime ISA funds
If you have a Lifetime ISA, you may be able to use it towards your first home purchase, provided the rules are met. The property must usually cost £450,000 or less, and the Lifetime ISA must have been open for at least 12 months before you use it for a qualifying purchase.
You should speak to your conveyancer early so the funds are withdrawn correctly. Do not withdraw the money yourself unless you have checked the rules, as this could trigger a withdrawal charge.
Bank statements and spending habits
Your deposit is only one part of the mortgage assessment. Lenders will also review your bank statements to understand your income, regular bills, debt repayments and spending habits.
Before applying, check your statements for:
- Missed payments
- Returned direct debits
- Overdraft reliance
- Large unexplained transfers
- Gambling transactions
- Short-term borrowing
- Regular payments that are no longer needed
You do not need to stop normal spending, but your account should show that you can manage money responsibly. If you are close to applying, try to keep your finances stable and avoid taking on new credit.
Deposit size and mortgage options
A bigger deposit can improve your position. For example, moving from a 5% deposit to a 10% deposit may open up more mortgage options. Moving from 10% to 15% or 20% may improve your access further, depending on the lender and market conditions.
Halifax reported that the average first-time buyer deposit in 2024 was £61,090, equal to around 20% of the purchase price. This does not mean every buyer needs that amount, but it shows how important deposit planning has become in the UK housing market.
If you are buying in Essex, London or the wider South East, your required deposit may be higher in cash terms because property prices are often above the national average. A 10% deposit on a £300,000 home is £30,000. On a £450,000 home, it is £45,000.
Extra costs to budget for
Your deposit is not the only cost you need to prepare for. Lenders want to know that you can complete the purchase without using every penny you have.
You may also need money for:
- Solicitor or conveyancing fees
- Survey costs
- Mortgage arrangement or product fees
- Valuation fees, if applicable
- Broker fees, if applicable
- Buildings insurance
- Removal costs
- Furniture and appliances
- Service charges or ground rent for leasehold property
- Stamp Duty Land Tax, if payable
First-time buyers in England may benefit from Stamp Duty relief, depending on the purchase price and current rules. However, you should still check the position before making an offer, as tax thresholds and reliefs can change.
Common deposit mistakes to avoid
A mortgage application can be delayed if the deposit is not clearly evidenced. Common mistakes include:
- Moving money between too many accounts without keeping records
- Receiving a family gift without telling the lender
- Using cash savings without proof of where the cash came from
- Taking out new credit shortly before applying
- Assuming a lender will accept borrowed deposit funds
- Forgetting to budget for legal fees and moving costs
- Using Lifetime ISA funds incorrectly
The best approach is to prepare early. Gather your documents before you find a property, not after your offer is accepted. This gives you time to fix gaps and answer questions properly.
How to get your deposit mortgage-ready
Start by checking how much you have saved and where the money is held. Then create a clear document folder with your latest statements, payslips, ID, proof of address and any gifted deposit evidence.
If family members are helping, speak to them early. They may need to provide documents, and some people are surprised by this. It is better to explain the process before you are under pressure to exchange contracts.
You should also review your credit report, reduce unnecessary borrowing where possible and avoid making major financial changes during the application process.
Ready to buy your first home?
Your deposit is more than a number. It is part of the story a lender uses to assess your mortgage application. When your savings are clear, your documents are organised and your source of funds can be explained, you give yourself a stronger start.
Alexandra Hamilton can help you understand your deposit options, prepare for lender checks and find a mortgage route that suits your circumstances. If you are planning to buy your first home, get in touch today for clear, friendly mortgage advice before you apply.
