Myth-Busting: Do You Really Need a 10% Deposit to Buy a Home?
Buying your first home can feel exciting, but it can also feel overwhelming, especially when it comes to saving for a deposit. For many first-time buyers, one common concern is whether they need a large lump sum before they can even start thinking seriously about a mortgage.
One of the biggest myths is that you always need at least a 10% deposit to buy a home.
The good news is that this is not always the case. While a larger deposit may give you access to more options, some buyers may be able to access lower deposit mortgage options, depending on their circumstances, affordability and lender criteria.
Your Just Mortgages adviser can help you understand what deposit level could work for you. Every lender has its own criteria, but they will usually want to build a clear picture of your finances. This can include your income, deposit, credit history, household bills, existing commitments and regular monthly outgoings.
Myth: You Need a 10% Deposit
A 10% deposit is often seen as the standard amount needed to buy a home. For example, if you were looking at a property worth £250,000, a 10% deposit would mean saving £25,000.
For buyers who are renting, managing bills and dealing with the rising cost of living, that can feel like a difficult target to reach.
However, needing a 10% deposit is not a rule for every buyer. The deposit you may need can depend on several factors, including the type of mortgage available, the property you want to buy, your income, your credit history and how a lender assesses affordability.
Truth: Lower Deposit Options May Be Available
Some buyers may be able to access mortgage options with a lower deposit than they expected.
This does not mean lower deposit mortgages will be suitable for everyone. Lenders will still need to assess whether the mortgage is affordable and whether the application meets their criteria.
They will usually look at the bigger picture, including your income, regular outgoings, existing credit commitments, credit history and the monthly mortgage repayments. This helps them decide what may be affordable both now and in the future.
A lower deposit may open the door for some buyers, but it is important to understand the options carefully before making any decisions.
What Really Matters to a Lender?
Every lender has its own approach, but they will usually want to understand your overall financial position.
This can include how much you earn, how secure your income is, how much deposit you have saved, what debts or regular commitments you have, and how well you have managed credit in the past.
Your deposit is important, but it is only one part of the mortgage application. Two buyers with the same deposit amount may have different options available, depending on their income, outgoings and credit profile.
That is why it can be helpful to get advice before assuming you need to keep saving for longer.
Adviser Tip: Speak to an Adviser Early
If you are thinking about buying a home, preparation can make a real difference.
Before speaking to an adviser, it can be useful to have a clear idea of:
• Your current deposit amount
• Your monthly income after tax
• Your regular bills and commitments
• Any credit card, loan or car finance payments
• Your expected property budget
• How much you feel comfortable paying each month
The more accurate the information, the easier it is to understand what may be realistic.
Speaking to a Just Mortgages adviser early can help you understand what deposit level could work for you; what options may be available and what steps you could take to get mortgage ready.
Why Advice Can Help
Mortgage affordability is not always straightforward, especially for first-time buyers who may be balancing rent, household bills, saving for a deposit and other monthly commitments.
A mortgage adviser can help explain how lenders may view your circumstances, how much you may be able to borrow and whether lower deposit options could be available.
They can also help you avoid assumptions. Many buyers believe they need a 10% deposit before they can even start the conversation, when in reality, there may be options worth exploring sooner.
Final Thoughts
You do not always need a 10% deposit to buy a home.
While a larger deposit may give you more choice, some buyers may be able to access lower deposit mortgage options, depending on their circumstances, affordability and lender criteria.
If saving for a deposit has made you unsure about whether home ownership is possible, speaking to a Just Mortgages adviser could help you understand your options and take the next step with more confidence.
Thinking about buying your first home? Speak to a Just Mortgages adviser today to find out what deposit level could work for you: https://shorturl.at/hEcUe
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
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