£5k deposit mortgages: Lloyds launches new first time buyer deal

• Lloyds has launched a new mortgage that allows first time buyers to purchase a home with just a £5k deposit.
• The lender says the mortgage, which will also be available through Halifax, is aimed primarily at renters who are already managing significant housing costs but find it difficult to save tens of thousands of pounds for a traditional deposit without financial support from family.
• Some 64% of aspiring first time buyers say raising a deposit is now the hardest part of buying a home, and for those without access to the Bank of Mum and Dad, the challenge is even greater, says Lloyds.
• The new £5,000 deposit mortgage, which will be available up to a maximum 98% LTV, will be launched on 18 May 2026.

To see if the £5k deposit mortgage is right for you, get free expert advice from award-winning mortgage brokers L&C. They will help arrange the best mortgage for you.

Mortgage Finder

Get fee free mortgage advice from our partners at L&C. Use the online mortgage finder or speak to an advisor today.

Find a mortgage

How does the £5k deposit mortgage work?

Here’s how this £5k deposit mortgage works:

• The £5,000 deposit mortgage from Lloyds is available as a 5 year fixed rate mortgage at 5.89%. It has no product fees and a mortgage term of up to 40 years.
• You must have saved the £5,000 deposit yourself: this mortgage is only available for those without financial support from family towards a deposit.
• Available on properties worth up to £300,000, with a maximum loan to value of just over 98%.
• Maximum loan to income ratio of 4.5x.
• Available to both employed and self-employed applicants.

You can’t get this mortgage if:

• Your deposit is less than £5,000 or is a gifted deposit
• You are buying a new build home or flat, or new build conversion.
• You are using a home ownership scheme like Shared Ownership or Right to Buy.
• You’re purchasing a Buy to Let property.

Applicants will need to pass strict affordability and credit checks, and the product will not be suitable for all first-time buyers.

The move by Lloyds follows Newcastle Building Society’s launch of the First Step mortgage in September 2025, which allows people to borrow up to £350,000 with a £5,000 deposit – or 2% of the property’s value, whichever is higher. This is also available as a 5 year fix at 5.89%, with no product fees.

How much deposit will I need?

To get this new mortgage, you’ll need to put down a £5,000 deposit.

• For example, if you want to buy a house for £300,000 with a £5k deposit, you’ll borrow £295,000 on a mortgage with just over a 98% loan to value.
• By comparison, lenders usually require you to have at least a 5% deposit. This would mean you’ll need a £15,000 deposit.

	5% deposit mortgage (Up to 98.34% mortgage)	95% mortgage
House price	£300,000	£300,000
Mortgage amount	£295,000	£285,000
Deposit	£5,000	£15,000
Loan to Value	98.34%	95%

How do mortgage rates compare?

The £5k deposit mortgage from Lloyds is available at up to 98% loan to value as a 5 year fixed rate mortgage at 5.89%.

• This rate is higher than the best mortgage rates on the market this month if you have a 5% deposit. For example, the best mortgage rate on a 5 year fixed deal if you have a 5% deposit is from Nationwide at 5.25% (plus scheme fees of £999). The lender also offers a fee-free rate of 5.34%.
• The Lloyds £5k deposit mortgage rate is also slightly higher than Skipton Building Society’s 100% Track Record Mortgage, available as a 5 year fixed rate mortgage at 5.85%. This mortgage lets you buy a house with no deposit but there are criteria you’ll need to meet including having a track record of making rent payments.

However, each mortgage has different criteria and the right mortgage for you will depend on your personal circumstances, so it’s important to get expert advice from a mortgage broker.

Our view on £5k deposit mortgages

Paula Higgins, CEO of the HomeOwners Alliance, says:

“However, it won’t work for everyone – for example, the property price cap of £300,000 will make it less appealing in areas with higher house prices, and it may not suit people who are looking for a higher loan to income ratio.

“Also, depending on your circumstances, you may be able to get a better deal on a different low deposit mortgage or if you can save a bigger deposit. The key is to get expert advice to make sure you get the best mortgage for you.“

To see if the £5k deposit mortgage is right for you, get free expert advice from award-winning mortgage brokers L&C. They will help arrange the best mortgage for you.

Mortgage Finder

Get fee free mortgage advice from our partners at L&C. Use the online mortgage finder or speak to an advisor today.

Find a mortgage

Related Articles

Sign up to our FREE weekly newsletter

for the latest news, advice and money saving offers

Latest News