The Mortgage Guarantee Scheme and the Help to Buy guarantee

The Mortgage Guarantee Scheme is a government programme that pushes lenders to keep offering mortgages to people with small deposits. Under it, the government gives participating lenders a guarantee that insures them against a portion of their potential losses on mortgages with a loan-to-value of between 91% and 95%, which means buyers can purchase with a deposit as small as 5% of the purchase price¹. The scheme is open to first-time buyers and home movers throughout the United Kingdom, and since July 2025 it has been permanent¹.

The idea is not new. An earlier version, the Help to Buy mortgage guarantee, ran from 8 October 2013 until it closed to new loans on 31 December 2016². The 2021 scheme was launched after 95% mortgages all but disappeared during the Covid-19 outbreak, and it was originally due to close to new mortgages on 30 June 2025 before being made permanent³. A key point runs through all of these versions: the guarantee protects the lender, not the borrower. If you cannot pay, the government does not step in for you⁴.

What the scheme offers buyers

For a buyer, the Mortgage Guarantee Scheme is invisible at the point of use. You do not apply to the government, pay it a fee, or receive a certificate. Instead, participating lenders offer 95% loan-to-value mortgages on the high street, and the government guarantee sits behind those loans, making them less risky for the lender to offer⁷. The scheme's stated purpose is to sustain the availability of 91% to 95% loan-to-value mortgages, which tend to be the first products withdrawn when lenders become cautious¹.

The problem the scheme addresses is straightforward. A 95% mortgage is a loan for 95% of a property's price, with the buyer putting down a 5% deposit to cover the rest⁶. Lenders regard these loans as riskier than those with bigger deposits, because if house prices fall even slightly, the loan can be worth more than the property. After the Covid-19 outbreak in 2020, 95% mortgages disappeared almost entirely, and it was not possible to get a 95% fixed-rate mortgage without a guarantor⁸. The guarantee gives lenders a reason to keep lending at that level in all market conditions.

The scheme is one of several routes to homeownership with a small deposit, and it is worth comparing it with the alternatives before committing. Shared ownership, the First Homes scheme and guarantor mortgages each work differently and suit different circumstances, and the first-time buyer schemes guide sets them side by side. A guaranteed 95% mortgage is a straightforward purchase: you own the whole home from day one, with no landlord, no rent on a share and no government stake to buy back later.

The guarantee covers lenders, not borrowers

This is the point most often misunderstood. The guarantee is a form of insurance that the lender buys, not the borrower. Lenders pay a percentage fee to HM Treasury for specific loans, and in exchange HM Treasury guarantees to cover potential losses on those loans³. If a borrower defaults and the property is repossessed and sold for less than the outstanding debt, the guarantee compensates the lender for part of the shortfall.

The official guidance is unambiguous about where the borrower stands:

The earlier Help to Buy guarantee worked on the same principle, with the government making available up to £12 billion of guarantees⁹. Under that scheme the guarantee applied down to 80% of the purchase value of the guaranteed property, and the lender retained a 5% risk in the portion of losses covered by the guarantee, so lenders kept some skin in the game⁵. The practical consequence for borrowers is the same in every version: your legal relationship is with the lender alone. The mortgage deed, the repayment obligation and the risk of repossession all sit with you, exactly as with any other mortgage.

This is also what separates a government mortgage guarantee from a guarantor mortgage, where a family member offers their home or savings as security and agrees to cover the payments if you default¹¹. With the government scheme, no family member is on the hook, but neither is the government standing behind you.

Who can use a guaranteed 95% mortgage

The scheme is open to both first-time buyers and home movers, throughout the United Kingdom¹. It is not restricted to new-build homes, which marked a deliberate difference from the Help to Buy equity loan, though prospective buyers must still have a regular income⁹. Lenders may set their own, tighter rules on top of the scheme rules: when 95% mortgages first returned in 2021, one building society's deal was not available on flats or new-build houses, or to people who were furloughed¹².

Eligibility in practice is decided less by the scheme and more by the lender's affordability assessment. The scheme sets the outer limits, a 5% deposit and a £600,000 property, but each lender decides who it will lend to within those limits. A few groups face higher hurdles:

• Self-employed buyers: lenders usually require a deposit of at least 10% of the purchase price from self-employed applicants, more than the scheme's 5% minimum, along with several years of accounts or tax returns¹³.
• Buyers with poor credit: a first-time buyer with a small deposit and a series of missed payments may struggle to borrow at such a high loan-to-value¹⁴.
• Joint buyers: buying with someone else can combine incomes for the affordability assessment, and the rules on buying a home jointly affect how the property is owned.

Home movers should note one practical point: the scheme applies to the mortgage on the home you are buying, not to the sale of the one you are leaving. If your existing property has not sold, most lenders will not count its equity towards the new deposit, and the higher rates for additional properties can apply in the meantime.

Property and mortgage rules: homes up to £600,000, repayment only

The scheme rules set a hard ceiling on the price of the property. Loans can only be offered on properties priced up to £600,000, and lenders may set lower maximum amounts of their own⁵. The same £600,000 cap applied to the earlier Help to Buy guarantee, where the property value had to be £600,000 or less¹⁰.

The mortgage itself must be a repayment mortgage, with lenders offering repayment mortgages at between 91% and 95% loan-to-value⁶. Interest-only mortgages are excluded, because the guarantee is designed around loans that are being paid down month by month. Buy-to-let purchases and second homes are outside the scheme: a buy-to-let loan is a business loan secured on the property rather than a regulated residential mortgage, and the scheme exists to help people buy a home to live in.

There is no requirement to buy a new build, which is worth emphasising because several other government schemes are new-build only. The Help to Buy equity loan in England, for example, applied to new build homes with a maximum value of £600,000¹⁵, and the First Homes scheme offers discounted new builds to first-time buyers¹⁶. A guaranteed 95% mortgage can be used on an ordinary second-hand house or flat, subject to the lender's own lending criteria and the property being mortgageable.

What a 5% deposit mortgage costs

The deposit is the smallest part of the cost. A 5% deposit on a £200,000 home is £10,000, and the mortgage covers the remaining £190,000. You will usually need a deposit of at least 5% of the property's value to get a mortgage at all¹⁷, and the scheme's whole purpose is to keep that end of the market supplied.

The larger cost is the interest rate. High loan-to-value mortgages are priced higher than those with bigger deposits, because the lender is taking more risk on the same loan. This site does not carry individual rates, but the pattern is consistent: the smaller your deposit, the more you pay over the life of the mortgage, both through a higher rate and because you are borrowing more in the first place. Over the life of the mortgage, the difference between a 95% mortgage and a 90% one can run to many thousands of pounds in interest.

Alongside interest, buying costs money regardless of the scheme: stamp duty, conveyancing, surveys and moving costs. The costs of buying a house page breaks these down, and first-time buyers may qualify for stamp duty first-time buyer relief. Some buyers top up a 5% deposit with help from family, and a gifted deposit is accepted by most lenders provided it is a genuine gift, not a loan.

Is the Mortgage Guarantee Scheme still running?

Yes, and it is now permanent. The 2021 scheme ran from 19 April 2021 and was originally open to new 95% mortgages until 30 June 2025². Rather than letting it expire, the government introduced a new, permanent Mortgage Guarantee Scheme from July 2025, replacing the temporary scheme which had expired¹. Previous mortgage guarantee schemes are now closed to new applications¹.

The Treasury publishes official statistics on the scheme quarterly, covering the number of mortgage completions, the types and values of properties, borrower incomes and geographical breakdowns¹⁹. The statistics to 30 June 2025 are the most recent full picture of the temporary scheme's operation²¹.

For a buyer, the change from temporary to permanent makes little practical difference to how you apply: you still approach a participating lender, which may or may not mention the scheme at all, since the guarantee is an arrangement between the lender and the Treasury. What permanence does change is confidence that 95% mortgages will continue to exist in a downturn, which was the scheme's original purpose.

The earlier Help to Buy mortgage guarantee

The Help to Buy mortgage guarantee scheme opened on 8 October 2013 and was available across the United Kingdom¹⁰. It closed to new loans on 31 December 2016⁴. Like its successor, it was designed to increase the availability of high loan-to-value mortgages: the government offered lenders the option to purchase a guarantee on mortgage loans where the borrower had a deposit of between 5% and 20%²².

The scheme was administered on behalf of the Treasury, with lenders required to provide information to it and subject to audit requirements²³. The government made available up to £12 billion of guarantees over the life of the scheme¹⁰. It was controversial at the time: critics worried it would inflate house prices, and any future extension of the scheme required the agreement of the Bank of England's Financial Policy Committee²⁴.

Buyers who took a Help to Buy guaranteed mortgage in that period hold ordinary mortgages today. The guarantee ran between the lender and the government, and its closure to new loans in 2016 did not change the terms of existing loans. If your circumstances change, the guidance is to contact your lender as explained in the terms and conditions of the mortgage⁴.

An even earlier scheme, NewBuy, also used guarantees to support high loan-to-value lending on new build homes before Help to Buy; it too has closed, and the NewBuy scheme page covers what happened to it.

Applying for a 95% mortgage: affordability, documents and credit checks

You apply to the lender, not to the government. The application process is the same as for any mortgage, and the guarantee changes none of it. Lenders assess the full range of your income, your regular outgoings and any debt, and they stress test whether you could still afford the payments if interest rates were to rise⁶.

As a rough guide to borrowing capacity, you can usually borrow up to four and a half times your salary, or combined salary if you are buying with someone else⁶. On that basis, a £190,000 loan for a £200,000 home with a £10,000 deposit would usually need a salary of at least £42,000, or the same combined for a couple⁶. These are typical multiples, not entitlements: the lender's affordability calculation, not a rule of thumb, decides the final figure.

Documents and checks follow the standard pattern for any mortgage application²⁵:

1. Proof of identity and address.
2. Payslips and bank statements, typically several months' worth, or accounts and tax returns if you are self-employed.
3. Evidence of the deposit, including its source, so the lender can rule out borrowed deposits.
4. A credit check, with missed payments, defaults and county court judgments all reducing the options at high loan-to-value¹⁴.
5. A property valuation, paid for by you, to confirm the home is worth the price.

The self-employed face extra scrutiny. Lenders will usually require a deposit of at least 10% of the purchase price if you are self-employed, along with evidence of trading income over at least two or three years¹³. That puts many self-employed applicants above the 5% deposit the guarantee allows in theory, whatever the scheme's headline terms say.

Risks of borrowing 95%: negative equity and remortgaging

Borrowing 95% of a home's price concentrates risk on the buyer. Your starting equity is just 5%, so a modest fall in house prices can wipe it out entirely. If you bought a £200,000 home with a £20,000 deposit and an £180,000 mortgage and prices fell 25%, your home would be worth £150,000 while you still owed the bank £155,000, leaving you in negative equity by £5,000²⁶. Buyers choosing low deposit deals such as 2% or 5% deposit mortgages are most at threat from this²⁷.

Negative equity has two main consequences. First, remortgaging to a better rate when your deal ends can be difficult, because a lender is unlikely to approve a new deal where the property would not be sufficient security²⁶. Second, moving home is harder: you cannot remortgage and borrow more if you are in negative equity²⁸. Some lenders run negative equity schemes for existing borrowers with a good payment record, which may allow you to borrow up to 125% of the value of your new home when you move, but these are porting arrangements, not fresh lending²⁹.

The other risks are the ordinary ones of high loan-to-value borrowing, and they deserve equal weight⁶:

• Higher interest rates than lower loan-to-value deals.
• Difficulty remortgaging to a better rate when your deal ends.
• The risk of negative equity if the value of your home falls.

Stretching the term to make payments affordable has its own cost: a longer repayment term lowers the monthly payment but increases the total interest paid, and buyers choosing low deposit deals are the group most exposed to price falls²⁷. The dedicated negative equity page covers the options if it has already happened.

If you cannot pay: where help comes from

The guarantee gives you no protection here, so it is worth knowing what does. Under the scheme, the borrower is responsible for paying the mortgage, and if you do not make payments on a Help to Buy supported mortgage, you could lose your home⁴. That is the position with any mortgage, guaranteed or not.

If you fall behind, the lender may arrange a forbearance agreement with you, which allows you to repay any missed payments⁴. Contacting the lender early, before a missed payment rather than after, gives the widest range of options. If you have lost your job or are too ill to work, check whether you have mortgage protection insurance to cover the payments³⁰.

Beyond the lender, free help exists:

• StepChange Debt Charity and other debt advice charities offer free mortgage debt advice³¹.
• Support for Mortgage Interest, a repayable benefit, can help some people on qualifying benefits with mortgage interest payments, for mortgages or loans secured on the property up to a total maximum of £200,000³².
• MoneyHelper, the government-backed money guidance service, provides free information on mortgage arrears.

If the worst happens and the home is repossessed, the debt may not end there: a shortfall debt can remain after repossession, and mortgage protection insurance protects the lender, not you, in some arrangements³³. The debt section of this site explains the full range of debt solutions and where to get free advice.

How many buyers the schemes have helped, and where

The earlier Help to Buy guarantee has the fullest record. There were 104,763 mortgage completions through the scheme to the end of June 2017, representing 2.7% of all residential mortgage completions in the UK over that period¹⁰. Of these, 83,569 were to first-time buyers and 21,194 to other buyers¹⁰.

The scheme's use was heavily weighted away from London: 95% of mortgage completions through the scheme were on properties outside London¹⁰. The regional split shows the pattern:

¹⁰

Most of the lending was on modestly priced homes: 57% of all mortgage completions through the scheme were on properties worth £150,000 or less¹⁰. The median household income for borrowers using the scheme was £40,831, lower than the market-wide median of £45,688 for house purchases with a mortgage¹⁰. In its first six months alone, 7,313 mortgages were completed with the scheme's support³⁴.

For the 2021 scheme, around 40,000 first-time buyers have been supported to access homeownership since 2021, according to a policy assessment³⁵, and the Treasury's official statistics cover completions, property values, borrower incomes and regional breakdowns to 30 June 2025²¹. The figures are of a different order to the equity loan side of Help to Buy, through which over 387,000 properties were purchased in England, 328,000 of them by first-time buyers²².

Help to Buy ISA savings and the deposit

A Help to Buy ISA can sit alongside a guaranteed 95% mortgage, because the two work on different sides of the purchase. The ISA helps you build the deposit; the mortgage covers the rest. The scheme gave people saving for their first home a 25% bonus to their savings from the government when the home was bought³⁶.

The rules that matter for a 95% buyer are the price limits. The bonus applied to homes costing £250,000 or less, or £450,000 in London³⁶. Since a guaranteed mortgage can be used on homes up to £600,000, there are properties where a 95% mortgage is possible but the Help to Buy ISA bonus is not. The accounts closed to new savers in 2019, but existing savers can keep saving, and the government bonus must be claimed by 1 December 2030³⁶.

The Lifetime ISA carries the same 25% government top-up on savings and remains open to new savers, which is why many deposit-builders now use it instead²². The comparison between the two accounts, including their different price caps and withdrawal rules, is covered in the guide to a Lifetime ISA or Help to Buy: ISA. Either way, the bonus arrives at completion through the conveyancer, boosting the deposit on the day rather than beforehand.