Buying with a 5% deposit under the Mortgage Guarantee Scheme

A 5% deposit mortgage lets you buy a home with a loan covering the other 95% of the price. On a £300,000 home, a 5% deposit is £15,000, and on a £200,000 home it is £10,000¹. Lenders have always offered some of these deals, but the government's Mortgage Guarantee Scheme is what keeps them widely available: it insures the lender, not you, against part of its losses if the mortgage goes wrong³.

The scheme is open to first-time buyers and home movers throughout the United Kingdom, and it is now permanent³. It is not a grant, it does not pay any of your deposit, and it does not give you a special rate. What it does is make 95% lending less risky for the lender, which is why the deals exist at all⁴.

The current version replaced the temporary scheme that ran from 2021, which itself replaced the old Help to Buy mortgage guarantee that closed to new loans on 31 December 2016⁴. If you are trying to work out whether you qualify, what a 5% deposit costs in pounds, or how this differs from Help to Buy, the sections below set out the rules and the alternatives.

How the Mortgage Guarantee Scheme works: the government backs 95% mortgages

The scheme does not lend you anything. It works behind the scenes by giving participating lenders a government-backed guarantee, insuring them against a portion of their potential losses on high loan-to-value mortgages³. The purpose is to sustain the availability of 95% loan-to-value mortgages, so that buyers with small deposits are not shut out when lenders get nervous³.

That matters because a 95% loan is the riskiest kind a lender writes. If property prices fall and the borrower cannot pay, the lender is exposed to the loss. The guarantee shifts part of that risk to the government, which is why lenders are willing to offer the deals at all⁴. The Nottingham describes it as working behind the scenes to encourage lenders to offer 95% mortgages by giving them a guarantee⁶.

The mechanics have been consistent across versions of the scheme. Under the earlier Help to Buy mortgage guarantee, the government offered lenders the option to purchase a guarantee on mortgage loans where the borrower had a deposit of between 5% and 20%⁴. The guarantee applied down to 80% of the purchase value of the guaranteed property, covering 95% of the lender's net losses, and the lender retained a 5% risk in the portion covered⁴. The current scheme follows the same principle: a partial guarantee, not a full insurance policy³.

For a buyer, the practical effect is simple. You apply to a lender in the normal way, the lender decides whether to lend, and if it does, the guarantee sits behind the loan. You do not apply to the government, you do not deal with a government body, and you do not repay anything to the government. Your mortgage, its rate, its fees and its terms are entirely between you and the lender³.

Who can use it: first-time buyers and home movers across the UK

The 2025 Mortgage Guarantee Scheme is open to eligible first-time buyers and home movers, and it operates throughout the United Kingdom³. That is a wider group than many people assume. You do not have to be buying your first home, and you do not have to be buying a new build.

The earlier version of the scheme was equally broad. When the 2021 scheme launched, it was reported as not restricted to first-time buyers or new-build homes, though prospective buyers still had to have a regular income⁷. First-time buyers and home movers were both eligible⁸. Experian's guidance on the scheme says the same: it is open to first-time buyers as well as people looking to move home⁹.

Being eligible for the scheme is not the same as being approved for a mortgage. The lender still runs its own affordability checks, and those checks are the real gate. You will usually need a deposit of at least 5% of the property's value to get a mortgage in the first place, scheme or no scheme⁵. Lenders also look at your income, your regular outgoings, your credit history and, for many, how stable your employment is¹⁰.

There is no separate application form for the guarantee and no government eligibility test you sit. The lender decides whether the loan qualifies under the scheme's rules and whether you qualify for the loan. If a lender is not signed up to the scheme, it may still offer 95% mortgages on its own terms, or it may not offer them at all³.

How much deposit you need: from 5% of the price

Five per cent is the floor for mainstream mortgages. You will usually need a deposit of at least 5% of the property's value to get a mortgage⁵, and the same figure appears across official and independent guidance: at least five per cent of the house price¹¹, at least 5% of the property's value¹², at least 5% of the price of the property¹⁰, and at least a 5% deposit to buy a house¹³.

The scheme itself is aimed at the band just above that floor. The 2025 scheme supports 95% loan-to-value mortgages, which means deposits of 5%³. Under the earlier Help to Buy mortgage guarantee, the government offered lenders the option to purchase a guarantee on loans where the borrower had a deposit of between 5% and 20%⁴, and the policy was described as offering a guarantee to lenders who offer mortgages to people with a deposit of between 5 per cent and 20 per cent¹⁴.

In practice, most buyers put down more than the minimum. The majority of buyers put down at least 5% of the property's price¹⁵, and guidance from Shelter Scotland puts the usual requirement at 5% to 10% of the value of the home¹⁶. The Building Societies Association notes that although mortgages are available with just a 5% or 10% deposit, a bigger deposit may get you a lower mortgage rate or more choice¹⁷.

A small deposit is not the only route to a small upfront cost. No-deposit, 1% and 2% deposit mortgages are available to first-time buyers who meet the affordability checks¹⁵, and low-deposit deals of 5% or 0% generally come with high interest rates and may need a guarantor¹⁸. Those are lender products, not scheme products, and they carry their own risks.

A 5% deposit in pounds: £15,000 on a £300,000 home

Percentages are hard to picture. In pounds, a 5% deposit scales with the price you pay, and the differences between 5%, 10% and 15% are large.

Those figures come from worked examples published by Which? and the HomeOwners Alliance¹. On a £300,000 property, a 5% deposit is £15,000, a 10% deposit is £30,000 and a 15% deposit is £45,000². On a £200,000 property, a 5% deposit is £10,000, a 10% deposit is £20,000 and a 15% deposit is £30,000¹. The Nottingham's own 95% mortgage page uses the same £300,000 and £15,000 example⁶, and Cambridge Building Society uses a £260,000 home with a £13,000 deposit²⁰.

For context on what a typical buyer faces, Which? reported in 2022 that a 5% deposit on an average-priced UK home would be in the region of £12,500²¹. That is a market average from that date, not a rule, and prices have moved since.

The deposit is only part of the upfront money. You will also need to cover the costs of buying and moving, and those do not shrink because your deposit is small. The HomeOwners Alliance estimates the average cost of moving house in 2026 at £13,018, based on buying and selling an averagely priced UK house of £292,000².

The scheme is now permanent: what replaced the old Help to Buy guarantee

The guarantee has been through three phases, and the differences matter if you are reading older advice.

The first was the Help to Buy: mortgage guarantee scheme, which opened on 8 October 2013 and was available across the United Kingdom⁴. It was scheduled to run for three years from January 2014¹⁴, and it closed to new loans on 31 December 2016 as planned⁴. During its life, 80% of mortgage completions through it were purchases by first-time buyers⁴, and 11% of completions were on properties valued at £250,000 and above⁴.

The second was the 95% mortgage guarantee scheme announced in the 2021 Budget and launched on 19 April 2021⁸. It involved the government taking on some of the financial risks faced by banks offering these deals, such as the cost of borrowers defaulting⁸, and it underwrote 95% mortgages on properties worth up to £600,000⁷. First-time buyers and home movers were eligible⁸.

The third is the current scheme. The government introduced a new, permanent Mortgage Guarantee Scheme in July 2025, helping to support homebuyers with a deposit as low as 5%³. It is not time-limited, which means the availability of 95% lending no longer depends on a scheme expiry date. Individual lenders still decide whether to participate and on what terms³.

Is the Mortgage Guarantee Scheme the same as Help to Buy?

No, and confusing the two is common because both carried the Help to Buy name at different times.

Help to Buy was an equity loan. The government lent you between 5% and 20% of the cost of a new-build home, and you needed a 5% deposit on top²³. The 20% equity loan allowed the prospective buyer's deposit to be reduced to 5%¹⁷. It applied to newly built homes, and the loan was repayable, with interest eventually charged on it.

The Mortgage Guarantee Scheme is a guarantee to the lender. It is not a loan to you, it is not repayable by you, and it is not limited to new-build homes³. You need a 5% deposit either way, but with Help to Buy the government's money sat alongside your mortgage as a second charge on the property, while with the guarantee the government's exposure sits behind the lender.

The Help to Buy equity loan scheme has closed to new applications in England, but related schemes continue in the devolved nations. In Wales, the Help to Buy Wales scheme is a shared equity loan for homes up to £300,000 from 1 April 2023, for first-time buyers and home movers who have a 5% deposit²⁴. Buyers must have a minimum deposit of 5% of the purchase price²⁵, and the buyer's guide requires a minimum cash deposit of 5% of the purchase price of the new home at exchange of contracts²⁶.

In Scotland, the First Home Fund is a shared equity scheme where buyers need a deposit of around 5%, subject to lender requirements²⁷, and a buyer must contribute a deposit of at least 5% of the purchase price²⁸. The Help to Buy Scotland Affordable New Build scheme also expected a deposit of around 5%²⁹.

What happens if my deposit is 10% or more?

You do not need the scheme, and you will usually get a better choice without it. A bigger deposit than 5% means a smaller loan-to-value mortgage, which lenders offer as standard products with no government guarantee attached³.

The reason is risk. A lender with a smaller loan relative to the property's value has more of its own money protected by your equity, so it can price the deal more keenly and offer more options. The Building Societies Association puts it plainly: although mortgages are available with just a 5% or 10% deposit, a bigger deposit may get you a lower mortgage rate or more choice¹⁷. Experian's guidance on 95% to 100% mortgages notes that with a 5% deposit you will usually pay a higher interest rate³⁰.

That does not make a 5% deposit a bad decision. It makes it a trade-off. A smaller deposit means you buy sooner and borrow more, and you pay for that in a higher rate and a larger mortgage. A larger deposit means you wait and save longer, and you borrow less at a lower rate. Which one suits you depends on your circumstances, not on which is objectively better.

There is also a middle path. Some lenders offer mortgages where a family member deposits cash, typically 5% to 20% of the property price, into a special account as security³¹. That can bridge the gap between what you have saved and what a lender wants, without waiting years to save the difference.

Can family help with a 5% deposit through a family mortgage?

Yes, and there are several distinct routes. The simplest is a gifted deposit: a relative gives you the money, and the lender asks for a letter confirming it is a gift and not a loan. The more structured route is a family deposit or family mortgage, where a relative's savings or property stand behind part of the deposit.

The Loughborough's Family Deposit mortgage range requires the family member to guarantee the deposit of up to 20% of the purchase price or valuation, by way of either a cash sum or a collateral charge³². Family Building Society's Family Mortgage works on a similar principle: a 5% deposit gives a 95% loan, with 15% savings or property security required alongside it³³.

The amounts vary by lender. Some lenders offer mortgages where a family member deposits cash, typically 5% to 20% of the property price, into a special account³¹. Others ask for a guarantee of up to 20% of the purchase price³². The common thread is that the family member's money is at risk if you default, and they need to understand that before signing anything.

There is a separate product family for guarantor mortgages, where a relative's income or property supports the borrowing rather than the deposit³¹. These are not the same as the Mortgage Guarantee Scheme, and they are not government-backed. They are commercial products with their own terms, and the family member's exposure is real.

Other 5% deposit routes across the UK

The Mortgage Guarantee Scheme is not the only way to buy with a small deposit, and the alternatives differ by nation.

In England, shared ownership lets you buy a share of a home and pay rent on the rest. You will need to put down a deposit of at least 5% of the share you are buying and take out a mortgage to cover the remainder³⁴. That is a different structure from a 95% mortgage: you own part of the property, not all of it, and you pay rent on the part you do not own.

In Wales, Help to Buy Wales requires a minimum deposit of 5% of the purchase price²⁵, and the scheme covers homes up to £300,000 for first-time buyers and home movers²⁴. Wales also runs other help to buy home schemes²⁴.

In Scotland, the First Home Fund requires a deposit of around 5%, subject to lender requirements²⁷, and at least 5% of the purchase price²⁸. The Help to Buy Scotland Affordable New Build scheme expected a deposit of around 5%²⁹.

In Northern Ireland, the process of buying a home is set out step by step by nidirect, which notes that you will usually need to pay a deposit of at least five per cent of the house price to the seller¹¹. The UK-wide Mortgage Guarantee Scheme applies there too³.

There are also newer-build specific routes. Deposit Unlock enables buyers to buy a new-build home with just a 5% deposit³⁵. The government has announced a First Time Buyer Scheme expected to support 2.5% deposits for prospective first-time buyers purchasing a new-build property from a developer signed up to the scheme³⁶.

Where the protection stops

The Mortgage Guarantee Scheme protects the lender, not you. If you cannot pay your mortgage, the guarantee may reduce the lender's loss, but it does not reduce your debt, stop arrears building up, or prevent repossession. Your obligation to repay is unchanged.

The protections that do apply to you are the ordinary ones. Lenders must assess affordability before lending, and the mortgage is regulated. If you get into difficulty, there are rules about how a lender must treat you, and free help is available. The Financial Ombudsman Service can look at complaints about a lender's conduct, and MoneyHelper provides free, impartial guidance on mortgages and debt.

The risk that matters most with a 95% mortgage is negative equity. If you pay a 5% deposit, your equity to begin with is 5%²². A fall in property values of more than that leaves you owing more than the home is worth, which makes selling difficult and remortgaging harder²². That is not a reason to avoid a 5% deposit, but it is a reason to think about how long you plan to stay.

There is also the question of what happens when your fixed rate ends. A 95% mortgage taken out at a higher rate will reset to the lender's standard variable rate if you do not switch, and that rate is usually higher still. Planning for the end of the initial deal matters as much as affording the first payment.