I want to buy a home but have no deposit: how to start (guide)

The dream of homeownership can feel out of reach when you lack a traditional deposit. However, the UK housing market offers various routes for buyers with limited upfront funds. While most lenders typically require a deposit of at least 5-10% of the property value, alternative solutions exist that can reduce or eliminate this barrier. Understanding these options, along with lender expectations and documentation requirements, is essential for anyone serious about purchasing their first home.

What are lender requirements for high-loan mortgages?

High loan-to-value mortgages, often referred to as 95% or even 100% LTV mortgages, allow buyers to borrow a larger proportion of the property value. Lenders offering these products typically have stricter eligibility criteria due to the increased risk. Most require a strong credit history with no recent defaults, county court judgments, or missed payments. Your credit score should ideally be above 700, though some specialist lenders may consider lower scores with additional conditions.

Income stability is another critical factor. Lenders usually require at least 12-24 months of continuous employment, preferably in a permanent contract. Self-employed applicants face additional scrutiny and typically need two to three years of accounts. The debt-to-income ratio matters significantly—most lenders prefer that your total monthly debt payments do not exceed 40-45% of your gross income. Additionally, you must demonstrate affordability through detailed income and expenditure assessments, proving you can manage mortgage payments alongside living costs.

How does guarantor and family-assisted financing work?

Guarantor mortgages involve a family member or close friend agreeing to cover your mortgage payments if you cannot. The guarantor does not need to provide cash upfront but must have sufficient income or savings to reassure the lender. Some guarantor mortgages allow parents to use their own property as security, while others require them to place savings in a locked account for a set period. This arrangement enables buyers to access mortgages with little or no deposit, as the guarantor’s financial backing reduces lender risk.

Family-assisted schemes take various forms. Some lenders offer family springboard or family deposit mortgages, where relatives deposit 10% of the property value into a savings account held by the lender for three to five years. During this time, the savings earn interest, and if mortgage payments are maintained, the deposit is returned with interest. Another option is the family offset mortgage, where relatives’ savings are linked to your mortgage account, reducing the interest you pay without transferring ownership of those funds. These arrangements require clear legal agreements and financial advice to protect all parties involved.

What are shared ownership schemes?

Shared ownership allows you to purchase a percentage of a property—typically between 25% and 75%—while paying rent on the remaining share owned by a housing association. This government-backed scheme significantly reduces the initial deposit required, as you only need a mortgage for your purchased share. For example, buying a 50% share in a property valued at £200,000 requires a mortgage of £100,000, meaning a 5% deposit would be just £5,000 rather than £10,000.

Eligibility for shared ownership generally requires a household income below £80,000 (£90,000 in London) and priority is given to first-time buyers, existing shared owners, and those who previously owned but cannot afford to buy now. You can increase your ownership share through a process called staircasing, purchasing additional percentages as your finances improve. While shared ownership reduces upfront costs, you must budget for both mortgage payments and rent, plus service charges and maintenance costs. Some housing associations also offer schemes with deposits as low as 5% of your share, making homeownership accessible with minimal savings.

What documents are needed for affordability checks?

Lenders conduct thorough affordability assessments to ensure you can sustain mortgage payments. You will need to provide at least three months of recent payslips and bank statements, though many lenders request six months. Self-employed applicants must supply two to three years of accounts, SA302 tax calculations, and tax year overviews from HMRC. Your bank statements will be scrutinized for regular income, spending patterns, existing credit commitments, and any signs of financial difficulty such as overdraft usage or returned payments.

Additional documentation includes proof of identity (passport or driving licence), proof of address (utility bills or council tax statements), and details of all existing financial commitments including credit cards, loans, and other mortgages. If you receive income from bonuses, overtime, or benefits, you will need evidence of these payments over an extended period. Lenders also assess your future financial resilience by stress-testing whether you could afford payments if interest rates increased. Being prepared with organized, complete documentation significantly speeds up the application process and demonstrates financial responsibility.

How do you compare mortgage products effectively?

Comparing mortgages requires looking beyond the headline interest rate. Consider the Annual Percentage Rate of Charge (APRC), which includes fees and gives a more accurate cost comparison. Arrangement fees can range from nothing to £2,000 or more, and some lenders allow you to add these to the mortgage rather than paying upfront. Early repayment charges are important if you plan to overpay or remortgage before the initial deal ends—these can be substantial, often 1-5% of the outstanding balance.

Fixed-rate mortgages offer payment certainty for two, three, five, or even ten years, protecting you from interest rate rises but preventing you from benefiting if rates fall. Variable-rate mortgages, including tracker and discount mortgages, fluctuate with the Bank of England base rate or the lender’s standard variable rate. First-time buyers often benefit from dedicated products with lower rates or cashback incentives. Using a mortgage broker can be invaluable, as they access products not available directly to consumers and understand which lenders are most likely to approve applications with limited deposits. Online comparison tools provide a starting point, but personalized advice ensures you find the most suitable product for your circumstances.

Prices, rates, or cost estimates mentioned in this article are based on the latest available information but may change over time. Independent research is advised before making financial decisions.

Building your path to homeownership

Buying a home without a deposit requires careful planning, realistic expectations, and thorough research. Start by improving your credit score, reducing existing debts, and demonstrating stable income over time. Explore all available schemes including shared ownership, guarantor mortgages, and family-assisted options. Gather the necessary documentation early and consider consulting a mortgage broker who specializes in helping buyers with limited deposits. While the journey may take longer than traditional routes, homeownership remains achievable with determination and the right financial strategy. Understanding lender requirements and comparing products carefully ensures you secure the most appropriate mortgage for your circumstances, setting a solid foundation for your future as a property owner.