Last reviewed: May 2026 · 8 min read Written by: Zimmie — property content writer specialising in first-time buyer schemes in England
The short answer — how much deposit do you need?
The minimum deposit for a First Homes Scheme property is 5% of the discounted purchase price — not 5% of the full market value.
Because the scheme gives you a minimum 30% discount, your deposit is significantly lower than on an equivalent open-market purchase.
On a £280,000 property with a 30% First Homes discount, your purchase price is £196,000.
The minimum deposit is £9,800 — not the £14,000 you would need buying the same home at full market value.
| Full market value | Discount | Your purchase price | Minimum deposit (5%) | Deposit saved vs open market |
| £200,000 | 30% | £140,000 | £7,000 | £3,000 less |
| £250,000 | 30% | £175,000 | £8,750 | £3,750 less |
| £280,000 | 30% | £196,000 | £9,800 | £4,200 less |
| £300,000 | 30% | £210,000 | £10,500 | £4,500 less |
| £350,000 | 30% | £245,000 | £12,250 | £5,250 less |
| £400,000 | 30% | £280,000 | £14,000 | £6,000 less |
| £400,000 | 40% | £240,000 | £12,000 | £8,000 less |
| £500,000 | 40% | £300,000 | £15,000 | £10,000 less |
→ Read our complete guide: First Homes Scheme UK — complete 2026 guide https://firsthomesscheme.com/
Source: GOV.UK — First Homes Scheme https://www.gov.uk/first-homes-scheme
Source: Bury Council — First Homes Scheme mortgage and deposit requirements https://www.bury.gov.uk/housing/buying-a-home/affordable-housing-types/first-homes-scheme
Table of Contents
Why the First Homes Scheme deposit is calculated differently
Most first-time buyers assume their deposit is based on the full market value of the property they are buying.
With the First Homes Scheme, this is not the case.
Your mortgage lender calculates the deposit as a percentage of the discounted purchase price — the amount shown on your purchase contract after the First Homes discount has been applied by the developer and approved by the local council.
This distinction matters enormously for buyers who have been saving based on full market prices.
A buyer who has saved £10,000 expecting they can only afford a £200,000 property at full market value can actually purchase a £285,714 property through the First Homes Scheme with a 30% discount — because the discounted price comes down to £200,000 and the 5% deposit is £10,000.
Source: GOV.UK — First Homes Scheme https://www.gov.uk/first-homes-scheme
Source: Share to Buy — First Homes Scheme guide https://www.sharetobuy.com/schemes/first-homes/
The mortgage minimum rule — what it means for your deposit
Alongside the 5% deposit minimum, the First Homes Scheme has a second financial requirement that directly affects your deposit decision.
Your mortgage must cover a minimum of 50% of the discounted purchase price. This rule exists to ensure the scheme genuinely supports buyers who need financial help — not buyers who could purchase without a mortgage.
In practice, this means your maximum deposit is 50% of the discounted price. If you have savings above this threshold, you still must take a mortgage for at least the remaining 50%.
| Discounted purchase price | Minimum deposit (5%) | Maximum deposit (50%) | Mortgage minimum (50%) |
| £140,000 | £7,000 | £70,000 | £70,000 |
| £175,000 | £8,750 | £87,500 | £87,500 |
| £210,000 | £10,500 | £105,000 | £105,000 |
| £245,000 | £12,250 | £122,500 | £122,500 |
| £280,000 | £14,000 | £140,000 | £140,000 |
| £300,000 | £15,000 | £150,000 | £150,000 |
For the vast majority of first-time buyers the 50% maximum deposit rule is irrelevant — most buyers are working with the minimum 5%. It only applies to buyers with unusually large savings relative to the property price.
Source: Bury Council — First Homes Scheme https://www.bury.gov.uk/housing/buying-a-home/affordable-housing-types/first-homes-scheme
Source: Malvern Hills District Council — First Homes eligibility criteria https://www.malvernhills.gov.uk/housing/housing-advice/affordable-housing/first-homes-scheme
How your deposit size affects your mortgage rate
The 5% minimum deposit is the lowest entry point — but it is not necessarily the most financially efficient choice if you have more savings available.
Mortgage lenders price their interest rates based on your loan-to-value (LTV) ratio. The lower your LTV — meaning the larger your deposit as a percentage of the purchase price — the better the mortgage rate you will be offered.
| Your deposit | LTV ratio | Typical mortgage rate | Monthly saving vs 5% deposit |
| 5% (£9,800 on £196k) | 95% | approx. 5.0–5.5% | Baseline |
| 10% (£19,600 on £196k) | 90% | approx. 4.5–5.0% | approx. £50–£80/month |
| 15% (£29,400 on £196k) | 85% | approx. 4.25–4.75% | approx. £80–£120/month |
| 20% (£39,200 on £196k) | 80% | approx. 4.0–4.5% | approx. £100–£150/month |
| 25% (£49,000 on £196k) | 75% | approx. 3.75–4.25% | approx. £130–£180/month |
⚠️ These are illustrative mortgage rates based on market conditions in May 2026. Your actual rate will vary depending on your lender, credit history, and the specific property. Always get a personalised mortgage illustration from an FCA-regulated whole-of-market mortgage broker.
The practical decision for most First Homes buyers is whether to use the minimum 5% deposit and keep remaining savings as a financial buffer — or to put down 10% to access meaningfully better rates and lower monthly payments.
Source: MoneyHelper — Mortgage deposit — how much do you need? https://www.moneyhelper.org.uk/en/homes/buying-a-home/how-much-deposit-do-you-need-for-a-mortgage
Source: Which? — First-time buyer mortgage rates 2026 https://www.which.co.uk/money/mortgages-and-property/mortgages/mortgage-types/first-time-buyer-mortgages-aXDhk2j4F4sT
Full worked examples — First Homes Scheme deposit at every common price point
Here are complete financial breakdowns for four typical First Homes Scheme purchase scenarios across different regions of England.
Worked example 1 — Liverpool new-build at £180,000 full market value
This represents a typical new-build price point in the North West.
| Item | 30% discount scenario |
| Full market value | £180,000 |
| First Homes discount (30%) | £54,000 |
| Your purchase price | £126,000 |
| Minimum deposit (5%) | £6,300 |
| Mortgage needed (95% LTV) | £119,700 |
| Monthly repayment (4.75% / 25yr) | approx. £680 |
| Stamp Duty payable | £0 |
| Total upfront cash needed | approx. £10,300 (deposit + legal fees) |
Worked example 2 — Midlands new-build at £250,000 full market value
| Item | 30% discount scenario |
| Full market value | £250,000 |
| First Homes discount (30%) | £75,000 |
| Your purchase price | £175,000 |
| Minimum deposit (5%) | £8,750 |
| Mortgage needed (95% LTV) | £166,250 |
| Monthly repayment (4.75% / 25yr) | approx. £944 |
| Stamp Duty payable | £0 |
| Total upfront cash needed | approx. £13,250 (deposit + legal fees) |
Worked example 3 — South East new-build at £350,000 full market value
| Item | 30% discount scenario | 40% discount scenario |
| Full market value | £350,000 | £350,000 |
| Discount applied | £105,000 | £140,000 |
| Your purchase price | £245,000 | £210,000 |
| Minimum deposit (5%) | £12,250 | £10,500 |
| Mortgage needed | £232,750 | £199,500 |
| Monthly repayment (4.75% / 25yr) | approx. £1,322 | approx. £1,133 |
| Stamp Duty payable | £0 | £0 |
| Total upfront cash needed | approx. £16,750 | approx. £15,000 |
Worked example 4 — London new-build at £500,000 full market value
London buyers benefit from a higher income cap (£90,000) and a higher price cap of £420,000 after discount.
| Item | 30% discount scenario | 40% discount scenario |
| Full market value | £500,000 | £500,000 |
| Discount applied | £150,000 | £200,000 |
| Your purchase price | £350,000 | £300,000 |
| Minimum deposit (5%) | £17,500 | £15,000 |
| Mortgage needed | £332,500 | £285,000 |
| Monthly repayment (4.75% / 25yr) | approx. £1,888 | approx. £1,619 |
| Stamp Duty payable | £2,500 | £0 |
| Total upfront cash needed | approx. £23,000 | approx. £19,500 |
Source: GOV.UK — First Homes Scheme: price caps https://www.gov.uk/first-homes-scheme
Source: GOV.UK — SDLT residential property rates https://www.gov.uk/stamp-duty-land-tax/residential-property-rates
Using a Lifetime ISA alongside your First Homes Scheme deposit
The Lifetime ISA is the most powerful savings tool available to First Homes Scheme buyers in England — and combining both schemes simultaneously gives you two government bonuses working together on the same purchase.
The government adds a 25% bonus on Lifetime ISA savings of up to £4,000 per year — meaning up to £1,000 in free money added to your savings every year. This bonus is paid directly into your LISA account on top of your own contributions.
| LISA savings per year | Government bonus | Total in LISA | Years to save | Total accumulated |
| £1,000/year | £250/year | £1,250/year | 3 years | £3,750 |
| £2,000/year | £500/year | £2,500/year | 3 years | £7,500 |
| £4,000/year | £1,000/year | £5,000/year | 3 years | £15,000 |
| £4,000/year | £1,000/year | £5,000/year | 4 years | £20,000 |
Critical rules for using a LISA with the First Homes Scheme:
The discounted purchase price must be £450,000 or below to use a Lifetime ISA.
Given the First Homes Scheme price cap of £250,000 outside London (£420,000 in London), the vast majority of First Homes purchases fall within this limit — making the LISA an almost universal fit for First Homes buyers.
You must have held the LISA open for a minimum of 12 months before you can use it towards a property purchase.
Opening one today — even with a small initial contribution — starts that 12-month clock immediately.
The LISA funds are released by your LISA provider directly to your conveyancing solicitor close to completion.
They are not available as cash beforehand. Your solicitor must be aware you are using a LISA from the very start of the purchase process.
If you withdraw LISA funds for any purpose other than a qualifying property purchase or retirement after age 60, a 25% withdrawal penalty applies.
This penalty claws back the government bonus plus a portion of your own savings — meaning you receive less back than you put in.
Source: MoneyHelper — Lifetime ISA https://www.moneyhelper.org.uk/en/savings/types-of-savings/lifetime-isas
Source: GOV.UK — Lifetime ISA https://www.gov.uk/lifetime-isa
LISA plus First Homes Scheme — the most powerful combination available
When you combine the First Homes Scheme discount with a Lifetime ISA, two separate government financial benefits work simultaneously on a single purchase.
No other combination of schemes available to first-time buyers in England delivers more total government financial support on one property.
Here is how the combination works on a real purchase:
Example — £280,000 property, 30% First Homes discount, LISA used for deposit:
| Financial element | Amount |
| Full market value | £280,000 |
| First Homes discount (30%) | £84,000 |
| Your purchase price | £196,000 |
| Government discount saving | £84,000 |
| LISA savings (4 years at £4,000) | £16,000 |
| Government LISA bonus (4 years) | £4,000 |
| Total deposit available | £20,000 (10.2% of discounted price) |
| LTV ratio | 89.8% — accesses better rate tier |
| Stamp Duty payable | £0 |
| Total government support received | £88,000 |
The combination of the First Homes 30% discount and four years of maximum LISA contributions gives this buyer £88,000 in combined government financial support — on top of their own savings — without any application process beyond confirming First Homes eligibility.
→ Read our full LISA guide: Can you use a Lifetime ISA for the First Homes Scheme? — 2026 guide https://firsthomesscheme.com/lifetime-isa-first-homes-scheme/
Source: GOV.UK — Lifetime ISA https://www.gov.uk/lifetime-isa
Source: MoneyHelper — Government schemes for first-time home buyers https://www.moneyhelper.org.uk/en/homes/buying-a-home/government-schemes-for-first-time-home-buyers-and-existing-homeowners
How to save your First Homes Scheme deposit — realistic plan by savings level
Not all buyers are at the same stage. Here is a practical deposit-saving roadmap depending on how much you currently have saved.
If you have £0 saved — starting from scratch:
Open a Lifetime ISA immediately — even if you can only contribute £50 per month to start. The 12-month waiting period begins from the day you open it, not from when you reach your savings target.
Set up a direct debit on the day the LISA opens so contributions happen automatically.
Research First Homes Scheme properties in your target area to establish a realistic purchase price target. Use the worked examples above to calculate the exact deposit you need.
Work backwards to a monthly savings target.
If you have £3,000 to £8,000 saved:
You are within reach of a 5% deposit on lower-priced First Homes properties in the North and Midlands.
If you do not already have a Lifetime ISA open, open one today.
A three-year LISA savings plan at £200 per month — plus the 25% government bonus — adds approximately £7,500 to your deposit.
Combined with existing savings this could be sufficient for a property under £200,000 with a 30% First Homes discount.
If you have £8,000 to £15,000 saved:
You are within reach of a 5% deposit on most First Homes Scheme properties across England outside London.
Consider whether delaying six to twelve months to reach a 10% deposit unlocks a meaningfully better mortgage rate — use the LTV table above to quantify the monthly saving against the delay cost.
If you have £15,000 or more saved:
You can likely access a 10% deposit on most First Homes properties and the more competitive mortgage rates that come with it.
Use a whole-of-market mortgage broker to compare the rate difference between a 10% and a 15% deposit — sometimes an additional six months of saving provides a disproportionate rate improvement.
Source: MoneyHelper — How to save for a house deposit https://www.moneyhelper.org.uk/en/homes/buying-a-home/saving-for-a-mortgage-deposit
Other costs to budget for alongside your deposit
The deposit is the largest upfront cost — but it is not the only one. Every First Homes Scheme buyer must budget for these additional costs before reserving a property.
| Cost | Typical amount | When paid |
| Reservation fee | £500 – £2,000 | On reserving the property |
| Conveyancing solicitor fees | £1,200 – £2,500 | Throughout — final on completion |
| HomeBuyer survey (RICS Level 2) | £400 – £700 | After reservation |
| Mortgage arrangement fee | £0 – £1,500 | At mortgage offer |
| Buildings insurance (from exchange) | £150 – £400/year | From exchange of contracts |
| Stamp Duty Land Tax | £0 for most FHS purchases | Within 14 days of completion |
| Removal costs | £300 – £1,500 | On moving day |
| Total additional costs | £2,550 – £8,600 | Various stages |
The most important financial rule for First Homes buyers: your deposit and your additional costs are completely separate budgets. Never plan to use your deposit money to cover legal fees or survey costs.
Source: MoneySavingExpert — First Homes Scheme guide https://www.moneysavingexpert.com/mortgages/first-home-scheme-guide/
Source: GOV.UK — First Homes Scheme https://www.gov.uk/first-homes-scheme
Can your parents contribute to your First Homes Scheme deposit?
Yes — a gifted deposit from parents or family members is accepted by most mortgage lenders on First Homes Scheme properties, subject to the same rules as any other purchase.
The lender will require a gifted deposit letter from the person contributing the funds. This letter confirms the money is a gift — not a loan — and that the gifter has no financial interest in the property and no expectation of repayment.
Most lenders require the gifter to confirm the gift in writing and may ask for evidence of the source of the funds — particularly for larger contributions. Your conveyancing solicitor will guide you through this process.
From an inheritance tax perspective, cash gifts from parents are potentially exempt from inheritance tax if the parent survives for seven years after making the gift.
This is the standard inheritance tax seven-year rule — the gifted deposit does not trigger any immediate tax for you as the recipient.
→ Read our full gifted deposit guide: Can my parents gift me a house deposit? — gifted deposit rules UK 2026 https://firsthomesscheme.com/
Source: Nationwide — Gifted deposit requirements https://www.nationwide.co.uk/mortgages/first-time-buyers/
Source: MoneyHelper — Mortgage deposit — how much do you need? https://www.moneyhelper.org.uk/en/homes/buying-a-home/how-much-deposit-do-you-need-for-a-mortgage
First Homes Scheme deposit — key facts summary
| Question | Answer |
| Minimum deposit percentage | 5% of discounted purchase price |
| Maximum deposit percentage | 50% of discounted purchase price |
| Is deposit based on full market value? | No — based on discounted price only |
| Can I use a Lifetime ISA? | Yes — if discounted price is below £450,000 |
| Can parents gift the deposit? | Yes — gifted deposit letter required |
| Does a larger deposit get a better rate? | Yes — 10% deposit accesses significantly better rates |
| Is deposit separate from legal fees? | Yes — completely separate budgets |
| Can I use Help to Buy ISA funds? | Yes — claim bonus by November 2030 |
| Is cash purchase allowed? | No — must use a mortgage minimum 50% |
Source: GOV.UK — First Homes Scheme https://www.gov.uk/first-homes-scheme
Frequently asked questions
Can I use my Help to Buy ISA funds as part of my First Homes Scheme deposit?
Yes — if you still have a Help to Buy ISA open from before November 2019, you can claim the government bonus (up to £3,000) as part of your deposit. The bonus is paid by HMRC to your solicitor on completion — not in advance. You can hold both a Help to Buy ISA and a Lifetime ISA simultaneously, but you can only use the government bonus from one of them towards a property purchase.
Source: GOV.UK — Help to Buy: ISA https://www.gov.uk/help-to-buy-isa
What happens to my deposit if the purchase falls through before completion?
If the purchase falls through before exchange of contracts, your deposit savings are not at risk — no deposit is paid until exchange. If the purchase falls through after exchange, you may lose your exchange deposit (typically 10% of the discounted price) depending on the circumstances and who withdrew. Your conveyancing solicitor will advise you on your legal position in this scenario.
Is the 5% deposit calculated before or after the Stamp Duty is deducted?
The 5% deposit is calculated purely on the discounted purchase price — Stamp Duty is a completely separate cost paid to HMRC within 14 days of completion. For most First Homes Scheme purchases outside London, Stamp Duty is zero because the discounted price falls below the £300,000 nil-rate threshold.
Source: GOV.UK — SDLT rates https://www.gov.uk/stamp-duty-land-tax/residential-property-rates
Do I need my full deposit saved before I start looking at properties?
No — but you should have the majority of your deposit saved before paying a reservation fee to a developer. Most lenders will require evidence of your deposit funds at the full mortgage application stage. If you are using a Lifetime ISA, the funds are not released until completion — your solicitor manages this timing. If there is a gap between your current savings and your target deposit, be honest with your mortgage broker from the outset about your expected savings timeline.
Can I use equity from another property as a First Homes Scheme deposit?
No. To qualify for the First Homes Scheme you must be a first-time buyer who has never owned a residential property. If you own or have previously owned a property, you are not eligible for the scheme regardless of your equity position.
Source: GOV.UK — First Homes Scheme eligibility https://www.gov.uk/first-homes-scheme
Related guides on this site
→ First Homes Scheme UK — complete 2026 guide (start here) https://firsthomesscheme.com/
→ Who qualifies for the First Homes Scheme? — full eligibility checklist 2026 https://firsthomesscheme.com/first-homes-scheme-eligibility/
→ First Homes Scheme guide — 25 questions answered on eligibility, resale and costs https://firsthomesscheme.com/first-homes-scheme-guide/
→ How to apply for the First Homes Scheme 2026 — step by step guide https://firsthomesscheme.com/how-to-apply-first-homes-scheme/
→ First time buyer stamp duty UK 2026 — exact amounts and what changed https://firsthomesscheme.com/first-time-buyer-stamp-duty/
→ Shared Ownership vs First Homes Scheme — which is better for you? https://firsthomesscheme.com/shared-ownership-vs-first-homes-scheme/
Sources and references
All deposit figures, mortgage rate examples, LISA rules, and scheme requirements in this article are verified against official government sources and established UK financial consumer organisations. All links confirmed May 2026.
[1] GOV.UK — First Homes Scheme: first-time buyer’s guide Publisher: HM Government · Last updated: October 2024 https://www.gov.uk/first-homes-scheme Used for: deposit based on discounted price · mortgage minimum 50% of discounted price · price caps £250,000 and £420,000 · income caps · England only
[2] Bury Council — First Homes Scheme Publisher: Bury Council · Verified May 2026 https://www.bury.gov.uk/housing/buying-a-home/affordable-housing-types/first-homes-scheme Used for: mortgage minimum 50% of discounted price confirmed · maximum deposit 50% rule · cash purchase not allowed · gifted deposit accepted
[3] Malvern Hills District Council — First Homes eligibility criteria Publisher: Malvern Hills District Council · Verified May 2026 https://www.malvernhills.gov.uk/housing/housing-advice/affordable-housing/first-homes-scheme Used for: deposit calculated on discounted price · 5% minimum deposit confirmed · mortgage lender valuation on discounted price
[4] GOV.UK — Lifetime ISA Publisher: HM Government · Last updated: April 2026 https://www.gov.uk/lifetime-isa Used for: 25% government bonus · £4,000 annual maximum · £450,000 property price cap · 12-month minimum holding period · 25% withdrawal penalty · funds released to solicitor at completion
[5] MoneyHelper — Lifetime ISA Publisher: MoneyHelper — Money and Pensions Service · Last updated: March 2026 https://www.moneyhelper.org.uk/en/savings/types-of-savings/lifetime-isas Used for: LISA annual bonus calculation · property cap £450,000 confirmed · LISA and First Homes Scheme compatible · LISA withdrawal penalty detail
[6] MoneyHelper — Mortgage deposit — how much do you need? Publisher: MoneyHelper — Money and Pensions Service · Last updated: February 2026 https://www.moneyhelper.org.uk/en/homes/buying-a-home/how-much-deposit-do-you-need-for-a-mortgage Used for: LTV ratio explanation · deposit size affects mortgage rate · 95% LTV mortgage rates · 90% and 85% LTV rate tiers · gifted deposit rules
[7] MoneyHelper — Government schemes for first-time home buyers Publisher: MoneyHelper — Money and Pensions Service · Last updated: February 2026 https://www.moneyhelper.org.uk/en/homes/buying-a-home/government-schemes-for-first-time-home-buyers-and-existing-homeowners Used for: LISA and First Homes Scheme combination · LISA bonus paid to solicitor not buyer · Help to Buy ISA bonus claim deadline November 2030
[8] MoneyHelper — How to save for a house deposit Publisher: MoneyHelper — Money and Pensions Service · Last updated: March 2026 https://www.moneyhelper.org.uk/en/homes/buying-a-home/saving-for-a-mortgage-deposit Used for: deposit savings timeline guidance · starting from scratch advice · automatic direct debit savings method
[9] Share to Buy — First Homes Scheme guide Publisher: Share to Buy · Last updated: September 2025 https://www.sharetobuy.com/schemes/first-homes/ Used for: deposit calculated on discounted price not market value · 30% to 50% discount range · lender valuation on discounted price
[10] MoneySavingExpert — First Homes Scheme guide Publisher: MoneySavingExpert · Last updated: July 2025 https://www.moneysavingexpert.com/mortgages/first-home-scheme-guide/ Used for: total upfront costs beyond deposit · reservation fee typical amounts · survey and solicitor cost ranges · buildings insurance from exchange
[11] GOV.UK — SDLT residential property rates Publisher: HM Government and HMRC · Last updated: October 2024 https://www.gov.uk/stamp-duty-land-tax/residential-property-rates Used for: Stamp Duty calculated on discounted price · first-time buyer nil-rate £300,000 · zero SDLT on sub-£300,000 First Homes purchases · London Stamp Duty worked example
[12] GOV.UK — Help to Buy: ISA Publisher: HM Government · Last updated: November 2023 https://www.gov.uk/help-to-buy-isa Used for: Help to Buy ISA bonus claim deadline November 2030 · cannot use both LISA and Help to Buy ISA bonus on same purchase · bonus paid to solicitor at completion
[13] Nationwide — Gifted deposit requirements Publisher: Nationwide Building Society · Verified May 2026 https://www.nationwide.co.uk/mortgages/first-time-buyers/ Used for: gifted deposit letter requirements · gifter confirms gift not loan · no financial interest in property · source of funds evidence