A Complete Guide to Buying with a 5% Deposit
Saving a large deposit can be one of the biggest challenges for first-time buyers and home movers. A 95% mortgage allows you to buy a property with just a 5% deposit, making homeownership more achievable for many buyers across the UK.
This guide explains how 95% mortgages work, who qualifies, how affordability is calculated, current lender criteria, and how these products compare with options like Shared Ownership or improving your deposit to reach a lower Loan-to-Value (LTV) band.
What Is a 95% Mortgage?
A 95% mortgage is a home loan where the lender offers you up to 95% of the property’s value, meaning you only need a 5% deposit.
Example:
- Property price: £300,000
- 5% deposit: £15,000
- 95% mortgage: £285,000
These mortgages are popular among first-time buyers and people with lower savings who still meet affordability requirements.
Who Offers 95% Mortgages?
Many high-street and specialist lenders offer 95% mortgages, including those participating in the government Mortgage Guarantee Scheme. These include a wide mix of banks, building societies and lenders with flexible criteria for first-time buyers.
Even outside of the scheme, lenders often provide 95% LTV products depending on economic conditions and their risk appetite.
Who Can Get a 95% Mortgage?
Criteria vary, but you may be eligible if you:
- Have a 5% deposit from savings or a gifted deposit
- Have a stable income (PAYE, contractor or self-employed)
- Have a clean or stable credit profile
- Pass the lender’s affordability checks
Self-employed and contractor applicants may still qualify — for more tailored guidance, see our self-employed mortgage guide.
How Lenders Assess Affordability for 95% Mortgages
Affordability checks are slightly more cautious at 95% LTV because you have less equity. Lenders look closely at:
- Income level and stability
- Credit score and repayment history
- Debt commitments (loans, cards, car finance)
- Monthly spending and outgoings
- Mortgage term
To understand borrowing limits in more detail, explore our full guide: How Much Can I Borrow?.
How Much Deposit Do You Actually Need?
You only need 5% of the purchase price — but improving your deposit slightly may take you into a lower LTV band with cheaper interest rates.
Example:
- 5% deposit → 95% LTV
- 10% deposit → 90% LTV (better rates)
- 15% deposit → 85% LTV (much better rates)
If you are close to the next deposit band, increasing savings may save money over the long term. For a full breakdown of deposit bands, see our Deposit Guide.
Credit Requirements for 95% Mortgages
Lenders usually require a clean or relatively stable credit profile. Minor issues may be acceptable, but recent major adverse credit can make approval harder.
If you have had issues such as CCJs, defaults or payday loans, review:
- Mortgages with CCJs
- Mortgage After Defaults
- Payday Loans & Mortgages
Some specialist lenders may still consider applications depending on how old the issues are and whether they have been satisfied.
Types of Borrowers Who Commonly Use 95% Mortgages
- First-time buyers
- Buyers with smaller deposits
- Renters transitioning to ownership
- Buyers using gifted deposits
- Applicants who want a smaller upfront commitment
These mortgages can be a good alternative to Shared Ownership or guarantor/booster-style borrowing.
Are Interest Rates Higher on 95% Mortgages?
Yes — rates at 95% LTV tend to be higher than those at 90%, 85% or 75% LTV. This is because higher LTV borrowing carries more risk for the lender.
However, many lenders offer competitive 95% products, especially during periods where the government Mortgage Guarantee Scheme is active.
How 95% Mortgages Compare to Shared Ownership
95% Mortgage:
- Own 100% of the home
- No rent to pay
- Deposit from 5%
- Higher monthly payment than Shared Ownership
Shared Ownership:
- Lower deposit (based on share you buy)
- Lower entry cost
- Good for lower incomes
- Rent + mortgage + service charge
Your choice often depends on income, deposit size and long-term plans. For a deeper look at Shared Ownership, see our complete guide.
Can You Use 95% Mortgages for New-Builds?
Some lenders will allow 95% on new-build houses, but most require higher deposits on new-build flats. Always check criteria carefully as new-build lending is more restrictive.
What Type of Mortgage Can You Get at 95% LTV?
- Fixed-rate mortgages
- Tracker mortgages
- Mortgage Guarantee Scheme products
- Specialist first-time buyer products
For help deciding between fixed or variable options, see our guide: Fixed vs Variable Rates.
How to Improve Your Chances of Getting Approved
- Strengthen your credit score
- Reduce unsecured borrowing
- Keep bank accounts tidy for 3–6 months
- Increase deposit if possible
- Choose a realistic property price based on affordability
To get a sense of borrowing limits, use our mortgage calculators or explore the full How Much Can I Borrow? guide.
Next Steps for Buyers With a 5% Deposit
If you’re ready to explore 95% mortgage options, compare rates or check whether you meet affordability, we can connect you with FCA-regulated advisers who specialise in high-LTV applications.
You can also explore related guides such as Deposit Requirements or our Homebuyer Guide.
All mortgage advice is provided by FCA-regulated advisers. Your home may be repossessed if you do not keep up repayments on your mortgage.
FAQs
Do all lenders offer 95% mortgages? No, but many high-street banks and building societies do depending on the economic climate.
Can I get a 95% mortgage with bad credit? It depends on the severity and age of the credit issues. See our CCJ and Defaults guides for details.
Can I buy a new-build with a 5% deposit? Some lenders accept this for houses but new-build flats often require higher deposits.
Is a 95% mortgage more expensive? Yes — rates are higher than lower LTV bands because the risk is greater.
Can parents gift the whole deposit? Yes — most lenders accept gifted deposits with a simple declaration letter.