Nearly 80% of UK adults now say that saving a deposit is one of the biggest barriers to buying a home, according to recent research. That figure isn’t just a statistic — it reflects the real frustration I hear about from readers who feel stuck renting while house prices keep climbing. Over the years covering the UK property market, I’ve noticed the same pattern: most first-time buyers don’t fail because they can’t afford a home. They fail because they don’t know which schemes, mortgages, or steps actually apply to them.
The average first-time buyer deposit now sits at £61,090 — roughly 20% of the purchase price. That’s a daunting number if you’re starting from scratch. But the good news is that government schemes exist specifically to lower that barrier, and most buyers don’t use them because they simply don’t know they exist. Here’s what you actually need to know.
What First-Time Buyer Schemes Actually Do
The core idea behind these schemes is simple: they make buying possible with less upfront cash. Most people assume you need a 20% deposit, but that’s not true for everyone. The Mortgage Guarantee Scheme, for example, encourages lenders to offer 95% mortgages by giving them a government-backed guarantee. That means you only need a 5% deposit. More than 53,000 mortgages have been completed through this scheme since it launched.
What I’d do if I were starting today: open a Lifetime ISA as soon as possible. Even if you’re not ready to buy for a few years, that 25% bonus is essentially a guaranteed return you won’t get anywhere else. Just remember there’s a penalty if you withdraw the money for anything other than a first home or retirement.
Why the Right Scheme Changes Everything
The biggest challenge facing first-time buyers isn’t just house prices — it’s the deposit. Research shows that 79% of UK adults rank saving a deposit as a top concern. That’s nearly four out of five people. If you’re trying to save £61,090 on an average salary, it can take years. But schemes like Shared Ownership change the maths entirely.
Take a typical scenario: you want to buy a home worth £226,000. With a standard mortgage, you’d need a deposit of around £45,000. With Shared Ownership, you could buy a 25% share for £56,500 — and your deposit would be just 5% of that share, or £2,825. That’s a massive difference. The trade-off is that you pay rent on the remaining share and may have service charges, but it gets you on the ladder much sooner.
Location also matters more than most people realise. The average first-time buyer house price in London is £472,000 — more than double the UK average. In the North East, it’s just £139,000. If you’re flexible about where you live, your buying power goes much further. What I tend to notice is that buyers fixate on a specific area without checking whether a scheme like First Homes is available there. That discount can make a property affordable that otherwise wouldn’t be.
Where First-Time Buyers Commonly Slip Up
After watching hundreds of readers go through the process, I’ve seen the same mistakes crop up again and again. Here are the ones that cost the most.
Ignoring the Lifetime ISA Penalty
The Lifetime ISA bonus is generous — 25% on up to £4,000 a year — but it comes with a catch. If you withdraw the money for anything other than buying your first home or retirement, you lose the bonus and pay a penalty. That penalty effectively eats into your own savings. I’ve seen people dip into their LISA for an emergency, only to realise they’ve lost hundreds of pounds. If you’re saving for a home, keep your emergency fund in a separate account.
Overlooking Shared Ownership Service Charges
Shared Ownership properties are almost always leasehold. That means you’ll pay a monthly service charge and may be liable for major maintenance costs. A lot of buyers focus on the low deposit and forget to budget for these ongoing costs. Before you commit, ask the housing association for a full breakdown of service charges for the past two years. If they’re rising fast, factor that into your monthly budget.
Not Checking Regional Scheme Availability
Not every scheme is available everywhere. First Homes, for example, is a local scheme — it’s only offered in certain areas and for specific new-build developments. If you’re looking in a region where it’s not available, you’re wasting time. Before you start viewing properties, check which schemes operate in your target area. The government’s own website lists participating developments.
Assuming You Need a 20% Deposit
This is the most common misconception I encounter. The Mortgage Guarantee Scheme, now made permanent from July 2025, means 95% mortgages are widely available. You don’t need a 20% deposit. You need 5%. The difference between saving £11,300 and £45,200 is enormous. If you’ve been putting off buying because you think you can’t afford the deposit, check whether a 95% mortgage is an option for you.
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| Region | Average House Price | Average Deposit |
|---|---|---|
| London | £472,000 | £124,688 |
| South East | £299,000 | £61,744 |
| North East | £139,000 | ~£27,800 |
| Scotland | £155,000 | ~£31,000 |
What I’d do: if you’re in London or the South East, look seriously at Shared Ownership or First Homes. The deposit gap in those regions is so wide that standard saving alone will take most people a decade or more.
How to Choose and Use the Right Scheme
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Open a Lifetime ISA and Maximise the Bonus
If you’re at least 18 and under 40, you can open a Lifetime ISA. You can deposit up to £4,000 each tax year, and the government adds 25% — that’s up to £1,000 free money annually. The key is to start early. Even if you’re not buying for five years, that bonus compounds. To open one, you’ll need to choose between a cash LISA (offered by banks and building societies) or a stocks and shares LISA (offered by investment platforms). Cash is safer for short-term goals; stocks and shares may grow more over five-plus years but carry risk.
Check Your Eligibility for the Mortgage Guarantee Scheme
The Mortgage Guarantee Scheme is now permanent and works behind the scenes. You don’t apply for it directly — you find a lender that participates and offers 95% mortgages. Most major high street banks are signed up. The scheme applies to properties up to £600,000, so it covers most of the UK market. If you have a 5% deposit, this is likely your best route to a standard mortgage. Use a mortgage calculator to estimate your monthly payments before you start viewing.
Explore Shared Ownership for Lower Upfront Costs
Shared Ownership lets you buy a share of a property — typically between 10% and 75% — and pay rent on the rest. Your deposit is 5% of the share price, not the full property value. You’ll need to meet eligibility criteria, which usually includes a household income under £80,000 (or £90,000 in London). Properties are advertised through housing associations and the government’s Own Your Home website. Be prepared for leasehold terms and service charges. If you’re handy, a carbon monoxide alarm is a sensible purchase for any new home, whether owned or shared.
Look Into First Homes for Discounted New Builds
First Homes offers newly built properties at a 30% to 50% discount compared to market value. The discount stays with the property permanently, so future buyers also benefit. Eligibility is local — you usually need to live or work in the area and have a household income under £80,000. The scheme is still rolling out across England, so availability varies. Check your local council’s website for participating developments.
Understand the Future of Help to Buy Alternatives
The old Help to Buy Equity Loan scheme ended in March 2023. The new permanent Mortgage Guarantee Scheme (sometimes called the Freedom to Buy scheme) replaced it from July 2025. It’s not an equity loan — you don’t borrow from the government. Instead, the government guarantees part of your mortgage, which encourages lenders to offer 95% loans. This is a structural change, not a temporary fix. If you’re planning to buy in the next few years, this scheme will likely be your main option for a low-deposit mortgage.
- 1Check Your Credit ScoreLenders check your credit history before approving any mortgage. Get a free report from Experian, Equifax, or TransUnion and fix any errors before you apply.
- 2Open a Lifetime ISADeposit up to £4,000 per year and get a 25% government bonus. Use it only for your first home or retirement to avoid penalties.
- 3Research Local SchemesCheck if First Homes or Shared Ownership is available in your target area. Visit the government’s Own Your Home website for a full list.
- 4Get a Mortgage Agreement in PrincipleThis shows sellers you’re serious. Most lenders offer one online in minutes based on your income and deposit.
- 5Hire a Property SolicitorYou’ll need a conveyancer or solicitor to handle the legal side. If you need guidance, you can speak to a property lawyer online for advice on contracts and searches.
Frequently Asked Questions
Can I use a Lifetime ISA if I already own a home? ▾
What happens if I withdraw LISA money for something else? ▾
Is Shared Ownership cheaper than renting? ▾
Do I need a 20% deposit for a first home? ▾
Can I use First Homes and Shared Ownership together? ▾
What’s the average age of a first-time buyer in London? ▾
Your Next Move
The single most important thing you can do today is open a Lifetime ISA if you’re eligible. That 25% bonus is free money that no other savings account offers. After that, check whether the Mortgage Guarantee Scheme or Shared Ownership works for your budget and location. Don’t let the average deposit figure of £61,090 discourage you — most first-time buyers don’t pay that much because they use the right scheme. If this was useful, you might also want to read essential tips for property surveys before buying.
Sources and Further Reading
Victorian charm vs new-build bliss — A practical comparison of property styles to help you decide what suits your lifestyle and budget.
Government house buying schemes guide. HomeOwners Alliance, 2026.
First-time buyer statistics 2026. Finder UK, 2026.
