New to this? Have a read of What is an ISA? first. It covers the basics from scratch in a few minutes.
How big a deposit do you need?
Most lenders want a deposit of at least 5% of the property price, so £12,500 on a £250,000 home. A bigger deposit usually means a lower interest rate, because the lender is taking less risk. The jumps at 10%, 15% and 25% are often where rates improve the most.
How much you can borrow depends on your income and your outgoings. Lenders often offer around four to four and a half times your yearly income, but every lender is different.
Where to keep your deposit
If you're planning to buy in the next few years, cash is usually the safer home for your deposit. Investments can fall in value, and that could happen just before you need the money. Good options include:
- A Lifetime ISA, if you're 18 to 39. The government adds 25% to what you pay in, up to £1,000 a year, and you can choose cash or investments inside it.
- A cash ISA or savings account, for anything above the Lifetime ISA limit. Our guide to cash ISAs vs savings accounts explains the difference.
Buying with a partner? You can each have a Lifetime ISA and use both towards the same home.
Stamp duty for first-time buyers
In England and Northern Ireland, first-time buyers pay no Stamp Duty on the first £300,000, and 5% on the part between £300,001 and £500,000. Above £500,000, the relief doesn't apply and the normal rates are used. Scotland and Wales have their own property taxes with different rules.
The other costs
Your deposit isn't the only money you'll need. Budget for:
- solicitor or conveyancer fees
- a survey of the property
- mortgage arrangement fees, if your deal has them
- moving costs, and furniture if you're starting from scratch.
Making it happen
Work out your target, divide it by the months you've got, and set up a standing order for payday. Our savings calculator shows how regular amounts add up. Keep your safety net separate, so a surprise bill doesn't eat into your deposit.
The government has consulted on replacing the Lifetime ISA with a new First Time Buyer ISA. Until a decision is announced, the current rules apply. Our money changes page will cover it when there's news.
Common questions
How much deposit do I need for a first home?
Usually at least 5% of the price. On a £200,000 home, that's £10,000. A bigger deposit tends to get you a cheaper mortgage.
Should I invest my house deposit?
If you're buying within the next few years, cash is usually safer. Investments can fall in value at the wrong moment.
Do first-time buyers pay stamp duty?
In England and Northern Ireland, not on the first £300,000. The part between £300,001 and £500,000 is taxed at 5%. Homes over £500,000 don't get the relief.
Sources
We checked this guide against these sources on 13 October 2026. Rules and allowances can change, so check the latest position before you act.
This guide is general information, not personal financial advice. Read our full disclaimer.