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Ultimate first time buyer guide: how much money do you need to buy a house?

You will need somewhere between £5,000 and £10,000 to buy a cheap home, £10,000 to £20,000 for the UK average, and around £40,000 to £50,000 if you're buying in London (or an expensive home elsewhere).

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Mortgages for holiday letsUltimate first time buyer guide: how much money do you need to buy a house?

Buying a home is an expensive business and for most of us is the single biggest transaction of our lives, eating up most of our life savings. We take a closer look at all the costs that could arise when buying your first home and how you could make your money go further.

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The guide below assumes you already know the basics about how mortgages work and buying a home, if you're just starting out you might want to check out the guides below too.

The minimum savings you need to buy a house

We've compiled the estimates below to give a bit of guidance on how much money you would need to buy a house. But note, these are estimates only, so you might need to save up a bit more (which couldn't hurt) or you might even get away with spending a bit less.

Cheap (assuming the bare essentials and cheapest upfront deals)

Property value: £100,000

Help to buy equity loan: £20,000 (20%)

Mortgage size: £95,000 (if buying unassisted); £75,000 (with 20% equity loan)

Annual income needed: £23,750 (if buying unassisted); £18,750 (with 20% equity loan)


5% deposit: £5,000 

Mortgage fees: £1,150 (£0 booking fee, £100 account fee, £50 transfer fee, £150 valuation fee, £800 conveyancing fee)

Stamp duty: £0

Insurance: £100 a year

Moving costs: £0 (assuming you move with your own, or friend or family's car)

Furnishings: £500

Decorating and home improvements: £100

Total upfront cost: £6,850

Typical (around the UK average)

Property value: £200,000

Help to buy equity loan:  £40,000 (20%) - £80,000 (40% - only available in London boroughs)

Mortgage size: £190,000 (if buying unassisted); £150,000 (with 20% equity loan); £110,000 (with 40% equity loan)

Annual income needed: £47,500 (if buying unassisted); £37,500 (with 20% equity loan); £27,500 (with 40% equity loan)


5% deposit: £10,000 

Mortgage fees: £2,950 (£1,000 booking fee, £150 account fee, £50 transfer fee, £250 valuation fee, £1500 conveyancing fee)

Stamp duty: £0

Insurance: £150 a year

Moving costs: £200

Furnishings: £1,000

Decorating and home improvements: £500

Total upfront cost: £14,800

Expensive (typical for London)

Property value: £500,000

Help to buy equity loan:  £100,000 (20%) - £200,000 (40% - only available in London boroughs)

Mortgage size: £475,000 (if buying unassisted); £375,000 (with 20% equity loan); £275,000 (with 40% equity loan)

Annual income needed: £118,750 (if buying unassisted); £93,750 (with 20% equity loan; £68,750 (with 40% equity loan)


5% deposit: £25,000 

Mortgage fees: £4,550 (£2,000 booking fee, £200 account fee, £50 transfer fee, £300 valuation fee, £2000 conveyancing fee)

Stamp duty: £10,000

Insurance: £250 a year

Moving costs: £500

Furnishings: £1,500

Decorating and home improvements: £5,000

Total upfront cost: £46,800

Average house prices

The average house price for a first time buyer in the UK in 2020 is £265,668, according to the HM Land Registry.

Of course, house prices vary greatly depending on location, for example a typical home would cost an average of £489,000 in London, whereas in Newcastle you could find a home for nearer £132,000.

And to further complicate matters, house prices are extremely localised. There are cheaper neighbourhoods (or even just cheaper streets) appearing in expensive regions, and vice versa.

So, you will need to do your research to determine what you will need to budget for. If you look hard enough you could likely find a bargain in your ideal area.

But, the adage "you get what you pay for" can often prove true with property, so before you snap up a bargain think about:

  • Resale value (will the price race up, or could it slide down? Impossible to know, but you can make an educated guess looking at trends, Hometrack's index is a good place to start)

  • How long you think you'll live there

  • Job prospects in the area

  • Transport links

  • Local schools

  • Crime rates

  • Flood risks

  • Building developments

  • How much work will need to be done on the home (and what it will cost)

You can compare house prices and find out information on the local area with our partner site Zoopla.

Can you get a mortgage?

You will usually need to have a deposit of at least 5% of the value of the home you want to buy. You can get a mortgage without any deposit, but that is a risky and unorthodox method.

It's wise to have a larger deposit than 5% (the traditional standard was 25%) but it's common for first time buyers to have small deposits.

Getting better mortgage deals

If you have a larger deposit you can enjoy access to better mortgage rates, which means smaller monthly repayments as a consequence.

The best mortgage deals are generally offered to borrowers with at least a 40% deposit, but it's unusual for first time buyers to have a deposit this large.

Mortgage deals are split into different loan to value (LTV - house value minus deposit) brackets (or tranches) that change by increments of 5%. Generally as a rule, the lower the LTV, the cheaper the mortgage.

In essence, mortgage deals are available in following brackets (listed in ascending price order) 60% LTV, 65% LTV, 70% LTV, 75% LTV, 80% LTV, 85% LTV, 90% LTV, 95% LTV and 100% LTV.

This means if you are on the edge of a bracket, it's worth saving to edge into the next bracket. For example, if you have a 9% deposit you can access cheaper rates by saving slightly more to get a 10% deposit.

How much you can borrow

The traditional way to determine how much you can borrow with a mortgage would be to multiply your income by four. So, for example if your salary was £25,000 you could borrow a maximum of £100,000.

However, some lenders may allow you to multiply your income by more than four so you could get a larger mortgage.

If you are buying with a partner, you can combine your incomes. This is usually done one of two ways:

  • Add both incomes together and use a lower multiplier (i.e. times by three, instead of four)

  • Multiply the higher income and add the lower one on top

Usually a lender will use whichever method gives the largest figure.

Lenders will also undertake affordability checks, which will involve looking at your outgoings and credit score to decide if you can reliably meet your monthly repayments.

Your options with the Help to Buy scheme

If you're struggling to get money together for a deposit there are a few ways you could get some help from the government's Help to Buy scheme.

The Help to Buy equity loan

With the Help to Buy scheme you can access a government-backed interest-free equity loan that can boost a 5% deposit to 25% (in London your 5% deposit can be boosted by as much as 40%).

You can only use the equity loan to buy a new-build property as a first time buyer.

You will need to pay £1 each month as long as you have the loan. After five years you will need to start paying an annual interest fee of 1.75% (rising at the rate of inflation). These charges do not contribute to repaying the loan, so you should have a plan to repay the loan as soon as possible after five years.

The loan is held against the value of the property, so the government will in effect own up to a 40% share of the value of your home. When you come to repay the loan, you must repay the equity percentage, not the capital amount, you initially borrowed.

So, if you had a 20% equity loan to buy a house worth £200,000 you would have borrowed £40,000. If the value of your home increases to £250,000 over five years you will need to repay 20% of £250,000, which is £50,000, £10,000 more than you initially borrowed.

The loan is intended to be repaid by either remortgaging or selling your home, so remember to factor this into your mortgage plans after five years.

The above assumes; you bought a house worth £200,000; with a 5% (£10,000) deposit of your own; a 20% (£40,000) equity loan; £150,000 mortgage on a 2% rate fixed for 5 years; and a 2% annual growth in the value of your home. It shows how much you would need to remortgage in order to repay the equity loan in year 5.

Help to Buy scheme 2021 to 2023

A new Help to Buy: Equity Loan scheme is now available until 2023. This scheme is broadly similar although it is more regionalised, with price caps set for house prices in different parts of the country. Below is a list of the maximum price cap by region from highest to lowest:

  • London: £600,000

  • South East: £437,600

  • East of England: £407,400

  • South West: £349,000

  • East Midlands: £261,900

  • West Midlands: £255,600

  • Yorkshire and The Humber: £228,100

  • North West: £224,400

  • North East: £186,100

Boost your savings with a Lifetime ISA or Help to Buy ISA

There are two savings accounts designed for first time buyers in which the government can boost your savings towards a deposit by 25%. These are the Lifetime ISA and the Help to Buy ISA.

The Help to Buy ISA is closed to new customers but existing customers are still able to pay into them. Here we outline the key differences between the two savings schemes. 

Lifetime ISA (LISA)

How much can you deposit? You can deposit up to £4,000 each year, until you are 50 years old.

What can you pay in? 

Cash, as well as stocks and shares.

Who can get one? Anyone over 18 and under 40 years old who has never owned a property anywhere in the world before.

What is the government bonus? 

You can receive a 25% bonus each year up to a maximum of £1,000; this is only paid on contributions into the ISA, so interest or stocks and share growth don't affect the bonus.

What can you use it for? 

You can withdraw your money to pay for both the home deposit and mortgage deposit on your first home; once you're over 60; or if you're terminally ill.

If you wish to withdraw at any other time, not only will you not get the bonus, but a 25% charge will apply.

What's the biggest bonus you can get? 

You could receive a maximum bonus of £33,000, assuming you deposit the £4,000 maximum every year between the ages of 18 and 50.

It will take you at least three years to get a £3,000 bonus.

How soon can you use it? 

You have to have the Lifetime ISA for at least 12 months before making a withdrawal.

What's the most expensive house you can buy? 


Couples can each take out their own LISA and use them to buy a home together. LISAs can be transferred to other providers. 

LISA holders can also save into a Cash ISA each year, but the £4,000 LISA limit will count towards your annual ISA limit (which is currently £20,000).

Help to Buy ISA – now closed to new accounts

The Help to Buy ISA was a Government savings scheme to help first time buyers get onto the property ladder. While this scheme closed to new subscribers on 30 November 2019, anyone that had already opened a Help to Buy ISA is able to continue saving into the account until November 2029.

How much can you deposit per month? 

Existing savers can deposit up to £200 a month. You will only receive the bonus on savings up to £12,000

What can you pay in? 

Cash only.

What is the government bonus? 

You can receive a 25% bonus on your deposits, this will be paid to your mortgage lender via your solicitor when you complete the purchase of your first home.

What can you use it for? 

You can only use the money saved in the ISA, plus the 25% bonus, to pay for the mortgage deposit for buying your first home.

You can withdraw your money at any time, but you won't receive the bonus.

How soon can you use it? 

After you've saved at least £1,600, which will take at least three months (£1,200 lump sum plus two monthly deposits of £200).

What's the most expensive house you can buy? 

£250,000 (£450,000 in London)

You cannot combine the bonus from your own Help to Buy and Lifetime ISAs to buy a home.

However, you can combine your bonus with a partner's when buying a home (provided you're both first time buyers). For example, if you and your partner each had £4,000 savings in a Lifetime/Help to Buy ISA, you could enjoy a £2,000 bonus between you.

Could shared ownership be the route for you?

Shared ownership enables you to buy part of a property with a housing association. You can buy a share worth between 25% and 75%, and then pay rent on the remaining share.

For example, if a home is worth £200,000, you could buy a £50,000 share of it and pay rent on the remaining £150,000 to the local housing association. This means you'd only need to qualify for a £50,000 mortgage.

The amount of rent charged can vary between housing associations, but is usually charged at 2-5% of the value of the housing association's share and is split up to be paid on a monthly basis.

For example, 3% of £150,000 is £4,500, this divided by 12 is £375, so you would need to pay £375 a month in addition to your mortgage.

Traditionally, to qualify for shared home ownership you had to meet criteria as set by local housing authorities, but from April 2016 the scheme was opened up to any household with an annual income of less than £80,000 (£90,000 in London).

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Could a guarantor or family assisted mortgage help?

There are a few ways your family could help you get on the property ladder. The most obvious being if they simply gift you the money for the deposit, but for most, this simply isn't an option, and sometimes it's still not enough to get a mortgage.

There are a few specialist products on the market that could help.

Guarantor mortgage

Even with a deposit, first-timer buyers can struggle to meet borrowing criteria; they may be self-employed or have a poor credit score. This is where a guarantor mortgage could help, which effectively enables you to piggyback on someone else's credit worthiness.

With a guarantor mortgage the guarantor (normally a close family member) promises to meet the mortgage repayments if the borrower fails to do so. The guarantor is locked-in to the agreement until the loan to value ratio (LTV) has sufficiently reduced (typically over 80%).

For many guarantor loans the borrower still needs a deposit, but there are guarantor mortgages up to 100% available where the guarantor offers their own property as security. But these are very risky, as it's possible the guarantor could lose their home if the borrower defaults.

Family assisted deposit

A family deposit mortgage can help boost your deposit, without the need for anyone to gift the money.

A family member can deposit money into an account linked to the borrower’s mortgage, this money is then offset against the mortgage. Often a borrower will need to deposit at least 5% themselves, but this will vary between lenders.

Once a set period of time has passed, or enough of the mortgage has been repaid, the family member will then get their money returned in full, and often with interest paid.

Mortgage fees

When considering your budget, it's not just the mortgage deposit you need to consider, there are a number of additional fees that you might need to pay to get a mortgage.

Mortgage arrangement or booking fee

This will likely be the largest of the additional mortgage costs, it can cost up to £2,000. Most mortgages will have a mortgage arrangement or booking fee, but there are also many mortgages that don't (but normally have a higher interest rate), so it's worth shopping around.

As the cost of this fee can be quite substantial, you can usually add it to your total mortgage debt, but you’ll have to pay interest on this, so in the long term it always works out cheaper to pay upfront.

Mortgage account fee

A mortgage account fee is often charged to cover the cost of the set up, maintenance and closing down of your account, and is normally somewhere between £100 to £300.

The telegraphic transfer fee

This is the fee charged by the lender for transferring the mortgage money to the seller’s solicitor; this is normally about £50.

Valuation fee

This fee is charged by your lender for commissioning a mortgage valuation (property inspection), to ensure that the property is worth the mortgage amount. This could cost you anything between £150 and £1,500, depending on the property’s value, but will sometimes be offered by lenders for free.

Higher lending charge

A higher lending charge could be implemented by your mortgage provider if you’re taking out a mortgage that covers more than 80% of the property’s value.

This is likely to be 1.5% of the property’s value, but providers will set their own rates, so it’s important to factor in this cost if your deposit can’t cover at least 10% of the property value.

Conveyancing and solicitor's fees

Conveyancing is the legal transfer of ownership of a property from the seller to the buyer. You will need to pay a solicitor or conveyancer (a specialist in conveyancing) to handle it.

Conveyancing usually costs somewhere between £800 and £2,000 but this can vary depending on the cost of the property and the amount of additional legal work required.

Stamp duty

Stamp duty is a lump sum tax that is owed when purchasing a property or land that is valued over a certain amount. 

First time buyers in England and Northern Ireland receive a discount that means they will pay no stamp duty when purchasing a property priced at £300,000 or less. 

If purchasing a property costing more than £300,000 you will pay stamp duty at the normal rate (5%).

So, if you bought a home worth £500,000, you would still be liable to pay stamp duty at 5% on the remaining £200,000.

The stamp duty exemption does not apply if a first time buyer purchases a home worth more than £500,000.


Buildings insurance covers your home being damaged or destroyed (but not your possessions within it). Lenders will require you to take this out. The cost will vary depending on the value and location of your home, but is typically between £100 and £200 a year.

It's worth shopping around for a quote before taking the cover offered by your lender, as you might be able to get a cheaper deal elsewhere.

You should also consider adding contents insurance to your cover, it will add between £50 and a few hundred pounds to your annual premium, but is worth the peace of mind that your possessions will be covered in the event of fire, theft or floods.

Could you get a better deal on your building and home insurance?

Our home insurance comparison service is free and simple – and could save you money when you compare and switch.

Moving costs

How much it costs you to move depends entirely on how much you own, how far you'll need to travel to move in.

If you only have a few possessions and own a car, or have friends and family that do, you could move home for only the cost of the petrol in your tank.

If you need to move a few more things, renting a van (or "man with a van" if you want some help) will typically cost you between £50-£300 for a day depending on how much you have to move and how far you need to go.

The cost of professional removal services (in essence a truck and crew) will vary again with your possessions and distance, but will likely start from around £300 and could go up to the thousands if you're moving lots of bulky items hundreds of miles.


It's common for first time buyers to have little or no furnishings, having previously been either renting furnished flats or living with parents.

You should check what will come with your new home, but it's likely you will need to buy your own essential furnishings such as:

  • Fridge/freezer

  • Washing machine

  • Sofa

  • Bed

  • Dining table and chairs

All of the above will probably set you back at least £500-£1000. You could be inventive and find second hand furniture online or in charity shops for little money, or even free.

Be wary of 0% finance deals offered by retailers, make sure to read all the small print and check that your payments won't shoot up after a few months.

Fortunately as your credit score will likely be in great condition if you've just got a mortgage, you should be eligible for the market-leading credit card deals.

You could consider buying furnishings with a 0% purchase card, which charges no interest on new purchases for a year or two, and gradually pay it off over a couple of years.

Improving your home and DIY

If you've bought a home that requires a bit of fixing up you should set aside some budget to at a minimum make the place liveable.

How much you'll need to spend will vary depending on much work needs doing and you should have had a full building survey carried out before you formalised your offer. As a rule, you should deduct the cost of any essential building work from your offer price.

We have a guide on the rough cost of home improvements if you want to know more, but here's an estimate of a few below:

  • Adding a property extension (or major building work): between £10,000 and £40,000

  • Loft conversion: between £15,000 and £50,000

  • Conservatory: around £9,000

  • Kitchen refurbishment: at least £500, or up to well over £10,000

Even if you don't have any major building work planned, you will likely want to at least do some decorating and gardening. You'd probably need to set aside anything between £100 to £1000 to pay for this. As with furnishings a 0% purchase credit card could also help.

Compare first time buyer mortgages

Compare a huge range of first time buyer mortgages on our comparison tables