To get a first-time buyer mortgage in the UK in 2026, save a deposit of at least 5% (10% gives you noticeably better rates), check your credit file, get an Agreement in Principle from a lender or broker, and apply for a residential mortgage on a property worth £500,000 or less to qualify for first-time buyer stamp duty relief. Lenders typically allow borrowing of around 4.5 times your annual income, subject to their own affordability tests. Most first-time buyers choose a two- or five-year fixed rate; in May 2026 those rates sit broadly in the high-3% to mid-5% range depending on loan-to-value (LTV). Schemes that remain live include the Lifetime ISA (25% government bonus), the Mortgage Guarantee Scheme (95% LTV mortgages), First Homes (30-50% discount on new-builds), and Shared Ownership.
Updated May 2026. This pillar guide is refreshed annually to reflect current stamp duty thresholds, scheme rules, and the prevailing rate environment.
How much deposit do you need in 2026?
The minimum deposit for a UK residential mortgage is 5% of the purchase price. A handful of lenders accept smaller deposits under specific guarantor or family-assist arrangements, but for the vast majority of first-time buyers, 5% is the floor and 10% is the realistic target for a meaningfully better rate.
On the UK average first-time buyer house price of roughly £240,000-£250,000 (per Halifax and Nationwide house price indices), that means saving between £12,000 and £25,000 just to clear the deposit hurdle — before adding the legal, survey, and moving costs covered later in this guide.
Loan-to-value (LTV) is the key number lenders price off. The lower your LTV, the lower the interest rate. The table below shows typical 2-year fixed rates available in May 2026 across the LTV brackets first-time buyers usually fall into.
| Deposit | LTV | On a £250k home, deposit = | Typical 2-yr fix (May 2026) |
|---|---|---|---|
| 5% | 95% | £12,500 | around 5.2-5.6% |
| 10% | 90% | £25,000 | around 4.8-5.2% |
| 15% | 85% | £37,500 | around 4.5-4.9% |
| 20% | 80% | £50,000 | around 4.3-4.7% |
| 25%+ | 75% or less | £62,500+ | around 4.1-4.5% |
| Indicative best-buy rates from Moneyfacts/lender panels, May 2026. Your individual rate depends on credit profile, property type, and lender. | |||
Use our mortgage payment calculator to see what each of these rates means as a monthly payment on the loan size you’re considering.
First-time buyer schemes still active in 2026
The first-time buyer landscape has thinned out since the boom-years of multiple parallel schemes. Here is what is live in May 2026 — and, just as important, what has ended.
Lifetime ISA (LISA)
You can pay in up to £4,000 a tax year and the government adds a 25% bonus — up to £1,000 per year. You must be 18-39 to open one, and you can keep paying in (and earning the bonus) until you turn 50. Funds can be used penalty-free toward your first home, provided the property costs £450,000 or less and you’ve held the LISA for at least 12 months. Withdrawals for any other reason before age 60 attract a 25% government penalty, which works out as a small loss of your own money (not just the bonus). See our full Lifetime ISA guide for the mechanics. Source: gov.uk/lifetime-isa.
Mortgage Guarantee Scheme
The Mortgage Guarantee Scheme was made permanent from July 2025 and rebranded as the Permanent Mortgage Guarantee Scheme. Under it, the government underwrites a portion of the lender’s risk on 91-95% LTV mortgages, giving high-street banks the confidence to offer 5% deposit products. It applies to properties up to £600,000 across the UK, and the borrower pays the same rates as any other 95% LTV deal — there is no “scheme premium.” You don’t apply directly; you simply take a 95% LTV mortgage from a participating lender.
First Homes scheme
First Homes gives local first-time buyers in England a 30-50% discount on selected new-build properties. The discount stays with the property in perpetuity, so when you sell, the next buyer gets the same percentage off. You must earn no more than £80,000 a year (£90,000 in London), be a first-time buyer, and be able to secure a mortgage for at least half the discounted price. Source: gov.uk/first-homes-scheme.
Shared Ownership
You buy a share of a home (typically 10-75%) and pay subsidised rent on the remainder, usually to a housing association. You can “staircase” — buy further shares over time, up to 100% in most cases. The deposit is calculated only on the share you buy, which dramatically lowers the upfront cost. The trade-off is that you pay both a mortgage and rent, plus 100% of service charges.
What has ended
- Help to Buy Equity Loan — closed to new applications in March 2023. Do not factor it into your plans.
- Help to Buy ISA — closed to new accounts in November 2019. Existing holders can keep saving until November 2029, but the LISA is more generous for most buyers.
- Stamp Duty holiday thresholds — the temporary higher nil-rate bands ended on 31 March 2025 and have reverted to lower levels (see next section).
Stamp duty for first-time buyers in 2026
This is the most important policy change first-time buyers need to understand for 2026. On 1 April 2025, the temporary stamp duty thresholds set during the post-pandemic period expired and reverted to the lower, pre-2022 bands. That means more first-time buyers now pay some SDLT on purchases that previously fell within the nil-rate.
Standard residential SDLT bands (England and Northern Ireland)
| Portion of price | Rate |
|---|---|
| Up to £125,000 | 0% |
| £125,001 to £250,000 | 2% |
| £250,001 to £925,000 | 5% |
| £925,001 to £1,500,000 | 10% |
| Above £1,500,000 | 12% |
First-time buyer SDLT relief
| Portion of price | FTB rate |
|---|---|
| Up to £300,000 | 0% |
| £300,001 to £500,000 | 5% |
| Above £500,000 | No relief — standard rates apply on the whole price |
| Source: gov.uk/stamp-duty-land-tax/residential-property-rates. Relief applies only if all buyers are first-time buyers and the property is your only home. | |
Critical caveat: if the purchase price is over £500,000, you get no first-time buyer relief — you pay the standard rates from £125k upwards. Buy at £499,999 and you save thousands compared with £500,001.
The chart below shows the SDLT a first-time buyer pays at different purchase prices, alongside what a non-FTB pays for comparison.
Two takeaways from the chart: relief is generous up to £300,000 (zero SDLT), useful between £300k and £500k (5% on the portion above £300k), and disappears entirely above £500k — at which point you pay the same as any other buyer, calculated from the £125k threshold.
What rate can you actually get?
The Bank of England Bank Rate has come down from its 2023 peak of 5.25%, and by May 2026 sits in the low- to mid-4% range following a series of cautious cuts through 2024 and 2025. Mortgage pricing follows swap rates more than the headline Bank Rate, but the broad direction matters. Two-year fixed rates have fallen meaningfully from the panic-pricing of late 2022, although they remain well above the sub-2% rates that were common before the 2022 mini-budget.
The chart below sketches typical best-buy 2-year fixed rates across the LTV bands relevant to first-time buyers. Treat them as approximate — your individual offer will depend on credit score, property type, and lender appetite.
The jump from 90% to 95% LTV is typically the most expensive step. If you can scrape together an extra 5% deposit, the rate saving usually outweighs the delay. A useful exercise: model both scenarios in our mortgage payment calculator and compare monthly payments over the term.
How much can you borrow?
The headline rule of thumb is 4.5 times your gross annual income. For a couple jointly earning £40,000 and £35,000, that’s £75,000 × 4.5 = £337,500 of potential borrowing. Add a 10% deposit and you’re looking at a £375,000 budget.
But “4.5x salary” is just one input. Since the Bank of England’s Financial Policy Committee removed the mandatory 3% mortgage affordability stress test in August 2022, lenders apply their own affordability rules. Most still stress-test against a notional pay rate (typically the lender’s standard variable rate plus 1-3%) and most still cap loan-to-income (LTI) at around 4.5x — but some specialist products allow up to 5.5x or even 6x for higher earners or certain professions.
What lenders actually do:
- Calculate your gross household income from payslips, contracts, or accounts (typically 2 years for self-employed).
- Subtract committed outgoings: childcare, credit cards, loans, car finance, student loans, child maintenance.
- Apply a stress-rate test — can you still afford the payment if rates rose to (say) 8%?
- Cap the total against an LTI multiplier (typically 4.49x for residential, occasionally higher).
If you’re buying with someone who isn’t on the mortgage (a parent helping out), look at a Joint Borrower Sole Proprietor (JBSP) mortgage. The helper’s income is added to the affordability calculation, but they don’t appear on the property deeds — so the buyer keeps full first-time-buyer SDLT relief and the helper doesn’t pay the 5% additional-property SDLT surcharge.
Lender criteria first-time buyers should know
Beyond income, lenders look at the texture of your finances. The areas that catch first-time buyers out:
- Credit history. Six months of clean records is the minimum. Missed payments on a phone bill, an overdraft that regularly bumps the limit, or a payday loan in the last two years are all red flags. Check your file with all three CRAs (Experian, Equifax, TransUnion) at least three months before applying.
- Deposit source. Lenders need to verify where the money came from. Saved deposits are straightforward — provide statements. Gifted deposits from family need a signed gifted deposit letter confirming the money is a gift, not a loan, and the giver has no claim on the property. Foreign gifts may need additional source-of-funds checks.
- Employment history. Two years of continuous employment is the comfort zone. New job, recent move, or a probation period? Some lenders will still take you, but the panel is narrower. Get a broker if so.
- Contract type. Permanent PAYE is easiest. Self-employed usually need two years of accounts or SA302s. Day-rate contractors, zero-hours staff, and those on fixed-term contracts can still get mortgages but with a smaller lender pool.
- Address history. Three years of UK address history is standard. Short-term lets, returning from abroad, or no electoral roll entry all complicate things.
- Recent borrowing. Applying for a credit card, BNPL, or car finance in the three months before your mortgage application can knock your affordability and your credit score. Stop opening accounts six months ahead.
Step-by-step: from saving to completion
- Build your deposit. Open a Lifetime ISA early (the 12-month qualifying period catches people out) and use it for the bonus. Aim for at least 10% to clear the worst rate cliff at 95% LTV.
- Check your credit file. All three CRAs, 6 months before applying. Fix errors. Pay off small revolving debts.
- Calculate budget. Run your numbers through a mortgage calculator at realistic rates and confirm the monthly payment fits your take-home pay.
- Speak to a broker (or go direct). A whole-of-market broker compares hundreds of products. Brokers usually charge £300-£800 or take commission from the lender, occasionally both.
- Get an Agreement in Principle (AIP/DIP). A soft-credit check that gives you a non-binding indication of how much you can borrow. Estate agents will ask to see it before they take an offer seriously.
- Find a property and offer. Once your offer is accepted, instruct a conveyancing solicitor.
- Apply for the full mortgage. Submit payslips, bank statements, ID, and the gifted-deposit letter if relevant. Lender does a valuation survey.
- Arrange your own survey. Homebuyer Report (£400-£900) for most modern homes; full Building Survey (£600-£1,500) for older or unusual properties.
- Mortgage offer issued. Typically valid for 3-6 months. Read the conditions carefully.
- Exchange contracts. You pay your deposit. From this point, you’re legally committed.
- Completion. Solicitor transfers funds, you get the keys. SDLT is paid by your solicitor within 14 days.
Worked example: buying a £250,000 home
Let’s run the numbers for a realistic first-time-buyer purchase in May 2026: a £250,000 property with a 10% deposit, a 30-year term, and a 2-year fixed rate of 4.6%.
| Purchase price | £250,000 |
| Deposit (10%) | £25,000 |
| Mortgage required | £225,000 |
| LTV | 90% |
| Rate (2-yr fix) | 4.6% |
| Term | 30 years |
| Monthly payment | £1,153 |
| Total repaid over 30 years (at this rate) | £415,180 |
| Total interest (at this rate) | £190,180 |
| SDLT (first-time buyer, price under £300k) | £0 |
| Monthly payment calculated with the standard repayment mortgage formula. Total assumes the 4.6% rate is held for the entire term, which it won’t be — you’ll remortgage. Use our calculator to model your own numbers. | |
Compare what changes if the same buyer pushes to a £320,000 property with the same £25,000 deposit:
- LTV becomes 92.2% — likely still in the 95% LTV pricing band, with a higher rate (call it 5.2%).
- Monthly payment rises to roughly £1,622 — almost £470 a month more.
- SDLT becomes (£320,000 – £300,000) × 5% = £1,000.
A £70k step up in price costs roughly £470/month and £1,000 in stamp duty. That’s the leverage maths first-time buyers need to understand: small price differences become large monthly differences when the deposit doesn’t move.
Costs beyond the deposit
Most first-time buyers underestimate the “other” costs of buying. Budget for these as well:
| Cost | Typical range |
|---|---|
| Conveyancing solicitor | £900-£1,800 inc. searches and Land Registry |
| Lender valuation | £0-£400 (often free) |
| Homebuyer survey | £400-£900 |
| Building survey (older homes) | £600-£1,500 |
| Mortgage product fee | £0-£1,499 (often added to the loan) |
| Mortgage broker fee | £0-£800 (some are commission-only) |
| Stamp Duty Land Tax | £0 up to £300k FTB; varies above |
| Buildings insurance (first year) | £150-£350 (required from exchange) |
| Removals | £300-£1,500 |
| Initial furnishing, white goods, decorating | £1,000-£5,000+ |
Total non-deposit costs typically run £3,000-£8,000 for a straightforward purchase. Don’t drain your savings into the deposit and leave nothing for these. Buildings insurance is legally required from exchange — see our guide to home insurance. Lenders may also require life cover equal to the mortgage as a condition of the offer.
Fixed vs tracker vs variable
Three core product types:
- Fixed rate (2, 3, 5, 10 years). The rate is locked. Payments don’t change. Most first-time buyers choose 2-year or 5-year fixes. 5-year fixes are typically a touch cheaper than 2-years in 2026, and they give certainty across the most expensive early years.
- Tracker. The rate follows the Bank of England base rate plus a margin (e.g. base + 0.6%). Payments rise and fall with the base rate. Useful if you expect rates to fall meaningfully — but you wear the upside risk.
- Standard Variable Rate (SVR). The lender’s default rate once your initial fixed or tracker deal ends. Typically much higher than best-buy rates — usually 7-8% in 2026. Never sit on SVR. Remortgage before your fixed period ends.
The decision usually comes down to certainty versus optionality. If a £50/month payment increase would break your budget, fix. If you have headroom and a view that rates will fall, a tracker can save money.
Common first-time buyer mistakes
- Stretching to the maximum borrowing. Just because a lender will lend you 4.5x salary doesn’t mean you should borrow it. Stress-test your own budget at 7-8% rates before signing.
- Forgetting the SDLT cliff at £500,000. Buying at £500,001 costs thousands more in SDLT than buying at £499,999 — relief is lost entirely.
- Opening credit accounts during the application. A BNPL on a sofa or a 0% car finance can blow up the affordability calculation.
- Letting the AIP expire. Most Agreements in Principle are valid 60-90 days. Refresh before viewings re-start.
- Choosing a 2-year fix on autopilot. 5-year fixes are often cheaper in 2026 and remove remortgage cost/risk for an extra three years.
- Ignoring product fees in the comparison. A 4.4% rate with a £1,499 fee is not necessarily cheaper than a 4.55% fee-free deal on a smaller loan. Compare the true cost over the deal period.
- Skipping the survey. The lender valuation protects the lender, not you. Pay for at least a Homebuyer Report.
- Sitting on SVR after the fix ends. Set a reminder for 4 months before expiry and start a remortgage.
Frequently asked questions
What is the minimum deposit for a first-time buyer mortgage in 2026?
5% of the purchase price. The Permanent Mortgage Guarantee Scheme allows 95% LTV mortgages on properties up to £600,000. A few specialist 100% mortgages exist but require a guarantor or deposit-replacement product. 10% is the realistic target for a noticeably better rate.
Do I pay stamp duty as a first-time buyer in 2026?
No SDLT on the first £300,000 of the price. 5% on the portion between £300,001 and £500,000. If the property costs more than £500,000, first-time buyer relief is lost entirely and you pay standard rates on the whole price (0% up to £125k, 2% £125k-£250k, 5% £250k-£925k).
How much can I borrow?
Typically 4.5x your gross annual income, subject to the lender’s own affordability stress test. Joint applications combine both incomes. Some lenders offer 5.5x or 6x for higher earners or specific professions.
Can I use a gifted deposit?
Yes. Lenders accept gifted deposits from close family, provided the giver signs a gifted-deposit letter confirming it’s a gift (not a loan) and that they don’t expect any share of the property. Source-of-funds checks apply.
Is the Help to Buy Equity Loan still available?
No. The Help to Buy Equity Loan closed to new applications in March 2023. If anyone suggests it as an option in 2026, they’re working from outdated information.
What’s the difference between an AIP and a mortgage offer?
An Agreement in Principle (AIP, also called DIP) is a non-binding indication of how much a lender will lend, based on a soft credit check. A mortgage offer is the full, formal commitment after underwriting, valuation, and document checks. Estate agents accept AIPs as proof of seriousness; only a formal offer lets you exchange contracts.
Should I use a broker or go direct?
For most first-time buyers, a whole-of-market broker is worth the fee. Brokers see lender criteria you don’t, place applications with the right lender first time, and handle the paperwork. Go direct only if you have a clear-cut profile (employed, good credit, mainstream property) and prefer to do the legwork yourself.
How long does it take to buy a first home?
From offer accepted to completion, expect 12-16 weeks for a typical purchase. Chain-free new-builds can be faster (6-10 weeks). Complex chains, leasehold properties, or non-standard construction can push it to 5-6 months.
The bottom line
The first-time buyer route in 2026 is more navigable than it looked at the rate peak in 2023 — mortgage rates are well off their highs, the Mortgage Guarantee Scheme is permanent, and Lifetime ISAs continue to deliver a 25% government top-up on deposit savings. But the stamp duty change in April 2025 has reintroduced friction for purchases above £300,000, and the 4.5x salary limit still bites in expensive parts of the country.
The three highest-leverage moves: get to 10% deposit if you possibly can (the 90% to 95% LTV gap is where the worst rates live), keep your credit profile boring for six months before applying, and use a whole-of-market broker. Everything else is detail.
— Karl Johnson, Editor, GetSmartSaver.Uk. Rates and thresholds verified against gov.uk (SDLT and Lifetime ISA), gov.uk/first-homes-scheme, and Moneyfacts mortgage panels as of May 2026. Bank Rate and indicative best-buy rates are approximate; check the Bank of England Monetary Policy page and current lender best-buy tables before committing.