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No Deposit Mortgage for First-Time Buyer

Looking for a zero-deposit mortgage as a first-time home buyer? Learn all there is to know about zero-deposit mortgages, how they work and their pros and cons.
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As a first-time home buyer, it’s natural that you may not have as much of a deposit to put towards your first home. 

While scouring the market for a no deposit mortgage for first-time buyer, you may realise that such products are not common to find.

Most lenders prefer that the borrower pay a lump sum (aka deposit) before the loan mortgage begins as this protects the borrower and the lender if they ever needed to repossess the property to retrieve their loan.

That said, there may be other options to explore where a deposit is not needed.  

Below is a comprehensive guide on how no deposit mortgages for first-time buyers work and how you can get one.

How Mortgage Deposits Work?

Mortgage lenders typically ask a borrower to provide atleast 5% of a deposit towards purchasing a property. This figure is based on the full market value of the property or the purchase price of the property. 

What Is The Average First-Time Buyer Deposit

For first-time buyers, the UK government has a 95% mortgage scheme that can help first-time buyers find a mortgage with only a 5% deposit.

This scheme was launched in an effort to put first-time homeowners on the property ladder and strengthen the housing sector.

Note that this is limited to houses valued at £600,000 or less.

Can You Get A No-Deposit Or Zero-Deposit Mortgage?

Zero-deposit mortgages were more common in previous years but now are few and far between.

Recently, in May 2023, one lender launched a new product to help first-time buyers with no deposit who are currently renting a property and want to get on the property ladder.

You must meet certain criteria in order to be approved for the mortgage, so consider speaking to our mortgage advisor or specialist, who can check your eligibility. 

How To Get a No Deposit Mortgage for First-Time Buyer

While it is quite uncommon to find a 100% LTV or 0% deposit mortgage in the UK, there are options to explore as a first-time buyer.

Considering Shared Ownership properties that are offered by housing associations could be one option.

A shared ownership mortgage is where your purchase a share of a property rather than the full market value and then you pay rent on the other half that is still owned by the housing association.

Some lenders may allow you to borrow 100% of your share from a bank or building society which would mean you wouldn’t have to provide a deposit of your own. 

Advantages Of No-Deposit Mortgages

The most obvious advantage of no-deposit mortgages is that it allows a borrower to purchase a property and build equity in a property moving forward without having to provide upfront funds in order to purchase a home. 

This is beneficial for those who may be struggling to save for a deposit but are ready to get their foot on the property ladder. 

Disadvantages Of No-Deposit Mortgages

There are a few notable disadvantages to no-deposit mortgages, which are worth considering before making the decision to purchase a property with no deposit. 

You may pay higher interest rates due to the lender taking on a higher risk.

The reason for this is that if you were unable to pay your mortgage and the lender needed to sell your property in order to retrieve the money they have lent to you, the amount you owe could be more than the property is worth therefore leaving you in negative equity.

This would mean after the property is sold, you could still owe the lender money and it may be difficult for them to retrieve the full amount. 

Guarantor Mortgages

Another option you may look to explore is Guarantor mortgages. This is where a relative or close family member is willing to guarantee your mortgage payments to the lender if you were unable to pay them.

A guarantor may be able to link their savings to your mortgage which would act as your deposit. Some lenders may even consider using the guarantors home as security.

Again, you must meet certain criteria to be eligible for this type of mortgage so it’s worth considering talking to a mortgage advisor or approaching a lender directly to discuss your options. 

Gifted Deposits

Gifted Deposits

Whilst a borrower may not have a deposit themselves, they may have family or friends who are generous enough to help them towards purchasing a property.

Most lenders are happy to accept gifted deposit from family members and close relatives with some also offering gifted deposits from non-family members.

In addition, some new build developers may offer incentives where they can gift you your deposit in order for you to purchase their property. 


1. Are no-deposit mortgages cheaper than regular mortgages?

No-deposit mortgages can be more expensive than standard mortgages as usually the amount of deposit that you provide towards a mortgage, the lower the mortgage interest rates are. 

But this could be a good option for a borrower who has the affordability for a mortgage but may not be able to save for a deposit. 

2. What are the risks of 100% LTV mortgages?

The main risk involved with 100% LTV mortgages, particularly for first-time buyers, is the

Possibility of being in negative equity. Should house prices begin to fall, this could result in you owing more to the lender than your property is worth. 

3. Are there any alternatives to zero-deposit mortgages?

In addition to guarantor mortgages, first-time buyers may be able to benefit from new-build developer incentives, shared ownership properties and even personal loans in order to purchase a property. All will depend on meeting the lender’s criteria, as not all lenders will accept these types of cases.

Your home may be repossessed if you do not keep up repayments on your mortgage.

All content is written by qualified mortgage advisors to provide current, reliable and accurate mortgage information. The information on this website is not specific for each individual reader and therefore does not constitute financial advice.

CeMAP & CERER Qualified Mortgage Adviser

I am CeMAP & CERER qualified mortgage adviser and have helped a number of clients realise their dreams when they thought it would not be possible. I’m skilled at getting mortgages sorted for people with a history of missed payments, CCJs, defaults, debt management programmes, IVAs and bankruptcies.

Mortgage & Protection Advisor | 03337892035

I am CeMAP (Certificate in Mortgage Advice and Practice) qualified mortgage adviser with a strong background in Finance. I specialise in providing expert advice on a range of mortgage products, including first-time buyers, remortgages, buy-to-let mortgages and bad credit mortgages.

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