Government schemes for 5% deposit mortgages

If you’re aiming to buy with a 5% deposit, you may be looking for ways to make a high loan-to-value (LTV) mortgage more achievable. In the UK, a small number of government-backed initiatives can support lenders to offer high-LTV mortgages (subject to the scheme rules and lender criteria).

This guide explains the main options that may be relevant, how they work in practice, and what to consider before you apply.

Related guidance:

• Mortgage Guarantee Scheme (95% LTV): questions answered
• 95% LTV mortgages (5% deposit) explained
• First Homes Scheme eligibility

What does a “5% deposit mortgage” mean?

A 5% deposit typically means you’re borrowing around 95% of the property price. That high LTV can make mortgages harder to secure because lenders take on more risk.

Government schemes don’t automatically guarantee approval, but they can reduce lender risk in specific circumstances, so the right scheme can open doors to products that might otherwise be unavailable.

Government schemes that may help with a 5% deposit

Mortgage Guarantee Scheme

The Mortgage Guarantee Scheme was introduced to encourage lenders to offer higher LTV mortgages again. Under the scheme, the government provides a guarantee that covers part of the lender’s risk for eligible borrowing.

Key points to check:

• Deposit range: typically for borrowers with a deposit between 5% and 9%
• Property value limit: the property must be under £600,000
• New-build restriction: the scheme cannot be used for new-build properties
• Not limited to first-time buyers: it can apply beyond first-time buyers

Because the scheme is tied to specific rules, the exact outcome will depend on your circumstances, the property, and the lender’s own criteria. It’s important to confirm the property and your deposit fall within the scheme parameters before you invest time in an application.

Note: Scheme rules and lender participation can change. Always check the latest guidance before applying.

First Homes Scheme (via discounted purchase price)

The First Homes Scheme isn’t a “5% deposit scheme” in the same direct way. Instead, it can help you reach a more mortgage-friendly LTV by allowing you to buy a new-build home at a discount.

How it can help:

• If the purchase price is discounted, your deposit effectively goes further.
• That can make it possible to borrow at high LTV (including around 95% in some cases), depending on the final price and your deposit.

Typical eligibility themes include:

• You must be a first-time buyer.
• The home must be a new build.
• You must meet local and scheme requirements, including the “local connection” element.
• Discounts: commonly 30% to 50% off the market value (the final discount is determined locally)
• You still need a deposit (the deposit required depends on the mortgage product and your circumstances)

If you’re set on a new-build home, this scheme can be a practical route to improving affordability, even if your cash deposit is relatively modest.

How lenders and brokers approach high-LTV lending under schemes

Even when a government scheme is available, lenders still assess your application using their normal affordability and risk checks. In practice, this means:

• Your income, outgoings, and credit history still matter.
• The property must meet the scheme’s rules.
• The lender must be willing to use the scheme for your case.

A broker who regularly handles high-LTV lending can help you avoid wasted applications by steering you toward the most suitable route first.

Which lenders may offer these products?

Mortgage Guarantee Scheme products are offered by a limited set of lenders, and availability can change over time.

For First Homes, lenders that support the scheme may also be limited, and they may have additional requirements around the property and application process.

Rather than focusing on brand names, it’s usually more useful to focus on whether:

• the lender actively supports the relevant scheme, and
• the product is suitable for your LTV, term, and affordability profile.

If you can’t use a 5% deposit scheme

If the property you want doesn’t meet the scheme rules, or you don’t meet the eligibility requirements, you may still have options.

Right to Buy (where applicable)

If you rent from your local council and meet the Right to Buy requirements, the discount can reduce the amount you need to borrow, which may help with deposit/LTV considerations.

Other ways to reduce your LTV

Common alternatives include:

• Shared ownership: you buy a share of the home and usually pay rent on the remainder, which can reduce the mortgage size needed.
• Guarantor mortgages: a guarantor may support the application, which can help some borrowers access higher LTV borrowing.

High-LTV options without the scheme

Some lenders offer high-LTV mortgages outside of government-backed routes, but these products can be more limited and may come with stricter underwriting.

What to prepare before you apply

To give yourself the best chance of a smooth application, it helps to have key information ready, such as:

• proof of income (and details of any non-standard income)
• deposit evidence
• identification and address history
• information about the property (especially for scheme-restricted purchases)

A broker can also help you understand what documentation is likely to be requested and how to present your application clearly.

Next step

If you’re considering a high-LTV mortgage using a government scheme, the most effective starting point is to review your deposit, the property type, and your eligibility against the scheme rules, then match that to lenders that can actually consider your application.

The rates below illustrate residential first-time buyer mortgages at 95% LTV; they are not necessarily available through either government scheme. Check the product and scheme criteria before applying.