How much can first-time buyers borrow?
As a first-time buyer in the UK, the amount you can borrow depends primarily on your income, deposit, existing debts, and the lender's criteria. Most mainstream lenders offer between 4 and 4.5 times your annual income, with some specialist lenders willing to go up to 5.5 times for certain professions or larger deposits.
A first-time buyer earning £30,000 with no significant debts could typically borrow £120,000 to £135,000. A couple earning £30,000 and £25,000 (combined £55,000) could borrow £220,000 to £247,500.
Deposit requirements
The minimum deposit is typically 5% of the purchase price. For a £250,000 property, that means saving at least £12,500. Key thresholds:
- 5% deposit: Minimum for most lenders, highest rates, limited choice
- 10% deposit: Opens significantly more options and better rates. The most common level for first-time buyers
- 15–20% deposit: Much better rates — saving approximately £1,000–£2,000 in interest per year versus 5%
- 25%+ deposit: Access to the best rates available
💡 First-time buyers in England and Northern Ireland pay no stamp duty on properties up to £425,000 (2024/25). On properties between £425,001 and £625,000, you pay 5% only on the amount above £425,000. This saves thousands compared to home movers.
Government schemes for first-time buyers
- Lifetime ISA (LISA): Save up to £4,000 per year with a 25% government bonus (£1,000/year). Available aged 18–39, for homes up to £450,000
- Shared Ownership: Buy a 25–75% share and pay rent on the remainder. Available through housing associations with staircasing options
- First Homes scheme: Properties sold at a minimum 30% discount to eligible first-time buyers
- Right to Buy: Council tenants may buy their home at a significant discount after qualifying period
What affects your affordability
- Student loan repayments: Plan 2 repayments (9% of income above £27,295) can reduce borrowing by £10,000–£20,000
- Credit history: First-time buyers sometimes have thin credit files. Having at least one form of credit used responsibly helps
- Spending patterns: Lenders may review bank statements. Gambling transactions, persistent overdraft use, or erratic spending raise concerns
- Rental history: Some lenders now consider a strong rental payment track record as evidence of housing cost management
Start preparing your finances at least three to six months before applying. Reduce debts, avoid new credit applications, and demonstrate consistent saving.
First-time buyer mortgage types
Fixed-rate mortgages lock your rate for a set period, usually two or five years, giving certainty over monthly payments. Around 95% of first-time buyers choose a fixed rate. Variable-rate mortgages can start cheaper but payments change as interest rates move.
Most first-time buyers opt for a repayment mortgage where each payment covers interest and a portion of capital, guaranteeing the mortgage is fully repaid by the end of the term. Interest-only mortgages are rarely available to first-time buyers.
⚠️ Be cautious about stretching your budget to its maximum. As a first-time buyer, you face additional costs renters don't have: maintenance, repairs, buildings insurance, and potentially service charges. Leave a financial buffer so homeownership does not become a source of stress.
Additional costs to budget for
- Solicitor fees: £1,000–£2,000 including searches and disbursements
- Survey costs: £250 for a HomeBuyer Report up to £600+ for a full structural survey
- Mortgage arrangement fees: £0–£2,000 depending on the product
- Moving costs: £500–£2,000
- Buildings insurance: Required from exchange, typically £150–£400 per year
Budget an additional £3,000 to £6,000 on top of your deposit for these costs.
Get expert help as a first-time buyer
Buying your first home is one of the biggest financial decisions you will make. A specialist mortgage broker can help you navigate the process, access the best rates, and maximise your borrowing. Nesto matches you with experienced mortgage brokers who specialise in helping first-time buyers.