First-Time Buyer Guide 2026: Deposits, Schemes, Mortgages and Total Costs

First-Time Buyer Guide UK 2026

Buying your first home is the largest financial transaction most people ever make — and one where incomplete information can cost thousands of pounds. This guide covers every step from saving your deposit through to completion, with 2026 rates, costs, and government schemes.

Step 1: How Much Can You Borrow?

Most mortgage lenders use income multiples as the primary affordability metric:

Joint purchase: Combined income × 4.5 for most lenders.

But lenders also stress-test affordability at rates approximately 3% above the current mortgage rate, ensuring you could still afford payments if rates rose. Your actual maximum may be lower than the income multiple suggests.

Step 2: Your Deposit

The minimum deposit for most lenders is 5%, but the sweet spots are:

Gifted deposits: Most lenders accept deposits partially or fully gifted from family, with a signed gift letter confirming it is not a loan. Some require the giftor to confirm they have no interest in the property.

Step 3: Government Schemes

Lifetime ISA (LISA)

• Save up to £4,000/year; government adds 25% (up to £1,000/year)
• Maximum lifetime bonus: up to £32,000
• Use for properties up to £450,000
• Must be a first-time buyer, property used with repayment mortgage
• Open to ages 18–39; access bonus from age 60 for retirement
• Best tool for those who can start saving 3+ years before purchase

Mortgage Guarantee Scheme

• Government backstops lenders offering 95% LTV mortgages
• Enables more lenders to offer 5% deposit mortgages
• No direct benefit to buyer beyond broader product availability

Shared Ownership

• Buy between 10% and 75% of a new or existing property
• Pay subsidised rent to housing association on remaining share
• Can "staircase" — buy additional shares over time
• Eligibility: household income under £80,000 (£90,000 in London)
• Useful for those who cannot afford to purchase outright in their area

First Homes Scheme

• New-build homes at 30–50% discount to first-time buyers and key workers
• Discount preserved on resale — must sell at same discount to another first-time buyer/key worker
• Available through specific housebuilders and local authorities

Step 4: First-Time Buyer Stamp Duty Relief

First-time buyers in England and Northern Ireland buying a property up to £500,000 benefit from enhanced SDLT relief:

Saving vs standard rates on a £280,000 property: £3,100

Step 5: Understanding All the Costs

Many first-time buyers focus on the deposit but underestimate total buying costs:

Budget approximately £5,000–£15,000 in addition to your deposit for buying costs.

Step 6: The Buying Process

Weeks 1–4: Pre-approval and offer

1. Get an Agreement in Principle (AIP) from a lender or broker — takes 1 hour online
2. Start viewing properties
3. Make an offer — negotiate, typically 3–5% below asking price

Weeks 4–8: Solicitor and survey 4. Instruct a solicitor/conveyancer (do this early — good ones get booked up) 5. Arrange a survey — HomeBuyer Report for most properties 6. Submit full mortgage application

Weeks 8–16: Exchange and completion 7. Solicitor conducts searches (local authority, water, environmental, drainage) 8. Mortgage offer issued (2–6 weeks from application) 9. Exchange of contracts — legally binding; you pay deposit to solicitor 10. Completion — balance transferred, you get the keys

Using a Mortgage Broker

Independent whole-of-market brokers typically find better deals than going direct, particularly for first-time buyers:

• Access to lenders who don't take direct applications
• Knowledge of which lenders are flexible on specific property types or income structures
• Manage the application process

Free brokers (paid by lender) include Trussle, Habito, and many high-street advisers. Fee-based brokers (£300–£600) may offer more comprehensive whole-of-market access.

Frequently Asked Questions

Q: Can I use Help to Buy equity loan in 2026? No — Help to Buy equity loan closed for new applications in October 2022. Existing borrowers with Help to Buy loans continue under existing agreements.

Q: I have a CCJ from 3 years ago — can I get a mortgage? Possibly, with specialist lenders ("adverse credit" or "bad credit" mortgages). You will pay higher rates, need a larger deposit (typically 15–25%), and face more limited product choice. After the CCJ drops off your credit file (6 years), your options improve significantly.

Q: My solicitor says there's a problem with the survey — should I pull out? Not necessarily. Many surveys reveal issues that are normal for older properties. Get a specialist quote for repairs, then renegotiate the purchase price to reflect the cost. Only pull out if issues are structural, undisclosed, or unresolvable.

Q: Should I overpay my mortgage from the start? Only after you have an emergency fund of 3 months' expenses and maximum employer pension matching. Early overpayments are most valuable (reduce balance when the interest-to-capital ratio is highest), but building financial resilience first is more important.