Saving a mortgage deposit can feel like the biggest obstacle to buying your first home. With rent, bills and everyday costs all competing for your money, it is understandable if building a deposit seems difficult.
The good news is that you do not necessarily need a 20% deposit. Many first-time buyer mortgage products are available with a 5% deposit, while government schemes such as the Lifetime ISA can help your savings grow faster.
This guide explains how to save for a house in the UK in 2026, how to set a realistic target and which options could help you reach it sooner.
1. Set a realistic mortgage deposit target
Before cutting costs or opening a savings account, work out what you are aiming for.
Start with three figures:
- Your likely property budget
- The deposit percentage you want to save
- The amount you can realistically put away each month
A 5% deposit may be enough for some mortgages. For example:
- A £180,000 home with a 5% deposit requires £9,000
- A £220,000 home with a 5% deposit requires £11,000
- A £250,000 home with a 10% deposit requires £25,000
A 10% deposit may give you access to more mortgage products and potentially lower interest rates. However, waiting several extra years to reach 10% is not always the best choice if a suitable 5% mortgage is affordable now.
Remember to budget for more than the deposit. You may also need money for:
- Solicitor and conveyancing costs
- A mortgage broker fee, if applicable
- A survey
- Moving costs
- Buildings insurance
- Furniture and essential repairs
- An emergency fund
If you are looking around Oldham, compare current asking prices in the areas you like rather than relying on a national average. A lower property budget may mean you can reach your deposit target sooner, but you still need to check that the monthly mortgage payment fits comfortably within your budget.
2. Give yourself a clear savings timeline
Once you know your target, divide it into a monthly goal.
For example, suppose you want to save £18,000 over three years:
- £18,000 divided by 36 months = £500 per month
That may sound challenging, but you can combine different sources of help. If you put approximately £333 per month into a Lifetime ISA, you could contribute around £4,000 each tax year and receive the maximum £1,000 annual government bonus, if eligible.
Over three years, your figures could look roughly like this:
- Your own savings: £18,000
- Lifetime ISA bonus: up to £3,000
- Total before interest: approximately £21,000
This is only an example. Interest rates, account rules and your personal circumstances will affect the final amount. The key point is that a fixed monthly target makes the goal easier to track and adjust.
Build in some flexibility too. If you miss a month because of an unexpected bill, do not abandon the plan. Simply restart your regular payment when your finances allow.
3. Consider a Lifetime ISA
A Lifetime ISA, often called a LISA, can be one of the most useful tools for a first-time buyer saving a mortgage deposit.
You can pay up to £4,000 into a LISA each tax year, and the government adds a 25% bonus. This means:
- Save £1,000 and the government adds £250
- Save £4,000 and the government adds £1,000
You must generally:
- Be aged between 18 and 39 to open one
- Be a first-time buyer
- Use the money towards a property costing £450,000 or less
- Have held the LISA for at least 12 months before using it for a home purchase
- Buy the property with a mortgage
You can find the current rules on the official Lifetime ISA guidance on GOV.UK.
A LISA can be held as cash or investments. If you expect to buy within the next few years, a cash LISA may be easier to understand and less exposed to investment market movements. Always check the account’s interest rate, withdrawal rules and terms before opening one.
The government bonus is valuable, but do not withdraw the money for holidays, cars or other non-qualifying reasons. A 25% withdrawal charge can apply, except in certain circumstances.
4. Automate your savings and pay yourself first
One of the simplest ways to save a deposit is to move the money before you have a chance to spend it.
Set up automatic transfers for the day after you are paid. You could divide the payment between:
- Your Lifetime ISA
- A separate house deposit account
- An emergency savings account
This is often called “paying yourself first”. Instead of saving whatever remains at the end of the month, you save first and plan your spending around what is left.
You can also increase your savings gradually. For example, start with £250 per month and increase it by £25 every few months. Small increases can make a meaningful difference over a two- or three-year period.
Keep your deposit savings separate from your everyday account. Seeing the balance grow can make it easier to stay motivated and avoid dipping into the money.
5. Cut the biggest expenses first
Small savings are helpful, but reducing your biggest regular costs usually makes the greatest difference.
Rent and housing
Rent is often the largest monthly expense. If possible, consider whether you could:
- Move into a cheaper property temporarily
- Take a lodger, where suitable and permitted
- Share with friends
- Live with family for a planned period
- Move to a less expensive area while saving
Moving home has costs, so calculate whether the saving would justify the change. A lower rent that allows you to save an extra £300 each month could add £3,600 to your deposit in one year.
Cars and travel
Review the full cost of your car, including finance, fuel, insurance, servicing and parking. Could you use public transport, share journeys or change to a cheaper vehicle?
Avoid taking on new car finance shortly before applying for a mortgage. Regular credit commitments can affect how much a lender is willing to offer.
Subscriptions and regular spending
Check your bank statements for recurring payments. You may find subscriptions you no longer use, including:
- Streaming services
- Gym memberships
- Apps
- Meal or beauty boxes
- Unused insurance add-ons
You do not need to remove everything enjoyable from your life. Choose the costs that make the least difference to you and redirect the savings towards your deposit.
6. Reduce holidays and large one-off spending
Large purchases can delay your first-time buyer mortgage plans more than you expect.
Before booking a holiday or buying a new phone, ask:
- Is this necessary now?
- Could I choose a cheaper option?
- Would delaying it bring my buying date closer?
- Can I use money already set aside rather than taking credit?
You do not need to cancel every holiday. Instead, set a separate annual spending budget and make sure it does not come from your deposit fund.
Windfalls can also help. Consider putting some or all of the following into your savings:
- Bonuses
- Overtime
- Tax refunds
- Birthday money
- Money from selling unwanted items
7. Look for ways to increase your income
Cutting costs has limits. Increasing your income may help you reach your target without making your lifestyle too restrictive.
Possible options include:
- Overtime or additional shifts
- Freelance work
- Selling unused clothes, furniture or electronics
- Tutoring
- Weekend or evening work
- A small online business
- Asking for a salary review
- Applying for a better-paid role
Keep records of additional income, particularly if you are self-employed or working freelance. Mortgage lenders may ask for evidence of how long you have been earning it and whether it is reliable.
It is also worth reviewing your workplace benefits. A pension contribution, salary sacrifice arrangement or workplace loan may affect your take-home pay and mortgage affordability, so understand the impact before making changes.
8. Use a high-interest savings account
Once you have used your LISA allowance, put additional savings somewhere suitable.
Depending on your timescale, you might consider:
- An easy-access savings account for flexibility
- A regular saver account for monthly deposits
- A fixed-rate account if you are unlikely to need the money soon
- A cash ISA for tax-efficient savings
Compare the interest rate, access conditions and any monthly deposit limits. If you are planning to buy within the next year, keeping your deposit accessible may be more important than locking it away for a slightly higher rate.
Interest rates can change, so review your savings arrangements periodically. Do not move money without checking whether you will lose interest or pay a penalty.
9. Check whether a 5% deposit mortgage could work
A 5% deposit mortgage is also known as a 95% loan-to-value, or 95% LTV, mortgage. It means the lender finances 95% of the property price and you provide the remaining 5%.
The Mortgage Guarantee Scheme helps participating lenders offer some high loan-to-value mortgages. You do not apply directly to the government; you apply for a mortgage with a participating lender.
A 5% deposit may help you buy sooner, but there are trade-offs:
- Interest rates may be higher than with a 10% deposit
- Your monthly payment may be larger
- You may have less choice of products
- You have less protection if property prices fall
The best option depends on your income, credit history, property price and monthly budget. Do not assume that saving for a larger deposit is always better or that a 5% mortgage is automatically unaffordable.
10. Understand the government schemes available in 2026
The old Help to Buy equity loan is no longer open to new applicants, and new Help to Buy ISAs cannot be opened. However, existing Help to Buy ISA holders may still be able to pay in and claim their bonus under the scheme rules. See the Help to Buy ISA guidance on GOV.UK.
Other routes may include:
First Homes
The First Homes scheme can offer eligible first-time buyers a discount of at least 30% on selected homes in England. Local rules may prioritise key workers or people with a connection to the area.
Because the purchase price is discounted, the deposit and mortgage may also be based on the lower price. Availability is limited, so check with the relevant local authority or developer.
Shared Ownership
With Shared Ownership, you buy a share of a property and pay rent on the remaining share. Your deposit is usually based on the share you are buying, rather than the full property value.
This can reduce the upfront deposit needed, although you must also budget for rent, service charges and your mortgage payment.
You can read more about the different options through the government’s affordable home ownership schemes.
How a mortgage advisor can help
A mortgage advisor can help you understand whether your current deposit is enough and how different deposit levels could affect your mortgage.
At Hunter Capital, we compare more than 100 lenders and over 1,000 mortgage products. We can help you consider:
- Whether a 5% or 10% deposit is more suitable
- Which lenders may accept your income and credit profile
- How much you could potentially borrow
- Whether a LISA or other scheme fits your plans
- How to budget for fees and moving costs
- What monthly payment may be comfortable for you
Our first-time buyer mortgage guide for Oldham explains more about preparing for an application and buying locally.
Frequently asked questions
How much deposit do I need as a first-time buyer?
Many first-time buyer mortgages are available with a 5% deposit, although the amount depends on the lender and property. A larger deposit may provide access to more competitive rates.
Is a Lifetime ISA worth using for a mortgage deposit?
It can be, if you are eligible, buying a qualifying property and can leave the money invested for at least 12 months. The 25% government bonus can significantly increase your savings.
Can I use a Lifetime ISA for a house costing more than £450,000?
No. To use the LISA for a qualifying first-home purchase, the property must cost £450,000 or less. Other rules also apply.
Can my parents help with my mortgage deposit?
Some lenders accept gifted deposits from family members, but they usually require a signed declaration confirming that the money is a genuine gift and not a loan. The lender’s rules will apply.
Should I wait until I have a 10% deposit?
Not necessarily. A 10% deposit may improve your mortgage rate, but waiting could mean paying rent for longer or missing a suitable opportunity. Compare the costs and benefits based on your circumstances.
Start planning your deposit today
Saving a mortgage deposit takes time, but a clear target, automatic payments and the right savings products can make the process much more manageable.
Work out your likely budget, check whether you can use a Lifetime ISA, reduce the biggest costs you can control and explore whether a 5% deposit mortgage could be suitable.
For personalised guidance, contact Hunter Capital to book your free mortgage consultation. We will help you understand how much deposit you need, which mortgage options may be available and how to move towards your first home with confidence.
Facebook summary: Saving a deposit for your first home in 2026? From using a Lifetime ISA and automating your savings to cutting major costs and exploring 5% deposit mortgages, these practical tips can help you move closer to owning your first home. Book a free mortgage consultation with Hunter Capital to understand your options.