First-Time Buyer Guide (UK): Deposits, Stamp Duty Relief & the LISA

Buying your first home in the UK runs on three numbers: the deposit (5% minimum, 10–15% for meaningfully better rates), the income multiple lenders will offer (typically ~4.5× salary), and the upfront costs beyond the deposit — where first-time buyers get two genuine advantages: stamp duty relief and the Lifetime ISA bonus.

How much can you borrow?

Most lenders cap lending around 4.5× annual income (single or joint), with some stretching to 5–5.5× for higher earners or specific professions — all subject to an affordability assessment that stress-tests your outgoings against a rate higher than today's. A £35,000 salary supports roughly £157,000 of borrowing; a £60,000 joint income roughly £270,000. Existing commitments — car finance, loans, childcare — reduce it. Check where you stand with the affordability calculator and the UK debt-to-income checker.

The deposit: what each band actually buys

UK mortgages are priced by loan-to-value band, and each 5% of deposit you add typically unlocks a cheaper rate tier:

• 5% deposit (95% LTV) — possible, including via the mortgage guarantee scheme, but rates are the most expensive tier and lender choice is thinnest.
• 10% (90% LTV) — the realistic mainstream entry point; noticeably better pricing.
• 15–25% — each band cheaper again; 75% LTV pricing is where rates get genuinely competitive.

On a £250,000 home, that's £12,500 / £25,000 / £37,500–£62,500 respectively. The trade-off mirrors the US PMI question without the insurance: a smaller deposit means buying sooner at a higher rate, versus more years renting while you save. The deposit calculator totals the cash needed at each level, and rent vs. buy runs the waiting math.

The Lifetime ISA: a 25% bonus you shouldn't skip

If you're 18–39 and a year or more from buying, the Lifetime ISA is the best deposit-building vehicle available: pay in up to £4,000/tax year and the government adds 25% — up to £1,000 free per year. Conditions that matter: the account must be open 12+ months before you use it, the property must cost £450,000 or less, and withdrawing for anything other than a first home (or age 60) costs a 25% penalty that takes back more than the bonus. Two buyers purchasing together can each use one. Saving £333/month into a LISA for three years builds roughly £15,000 including bonuses — track your own plan with the savings goal calculator.

Stamp duty: your relief is worth thousands

First-time buyers in England & Northern Ireland pay no SDLT up to £300,000, then 5% on the portion to £500,000 (no relief above that). A £350,000 first home costs £2,500 in stamp duty instead of the £7,500 a mover would pay. Scotland (LBTT) and Wales (LTT) run their own systems with their own first-time buyer relief. The stamp duty calculator applies the current bands and relief to your price.

The other upfront costs

• Conveyancing: £1,000–£2,000 including searches
• Survey: £400–£1,500 depending on level — skip the bare valuation, buy at least a HomeBuyer Report on older stock
• Mortgage fees: £0–£1,500 product fee (a fee-free deal at a slightly higher rate often wins on smaller loans)
• Moving, immediate fixes, furniture: budget £1,000–£3,000

All-in beyond the deposit: typically £3,000–£8,000. Keep an emergency fund alive after completion — size it here.

The process, in order

1. Mortgage in principle — a soft-check certificate of roughly what a lender would offer; agents expect it before viewings.
2. Offer — negotiated via the agent; nothing is binding yet in England & Wales.
3. Full application + valuation — lock the actual product. Decide fixed-term length: 2-year fixes bet on better rates later, 5-year fixes buy certainty. Check the overpayment allowance (usually 10%/year penalty-free) — it's your future overpayment headroom.
4. Conveyancing + survey — searches, contracts, enquiries; typically 8–16 weeks.
5. Exchange — contracts become binding and the deposit is committed. Get buildings insurance live from exchange.
6. Completion — funds move, keys released. Your solicitor files the SDLT return.

Mistakes UK first-time buyers make most

• Maxing the income multiple. The affordability stress test protects the lender; your budget needs slack for rate rises at remortgage time.
• Ignoring leasehold details. Service charges, ground rent, and short leases (under ~90 years) hit both monthly costs and resale. Factor service charge into the affordability math.
• Opening credit or missing payments mid-application.
• Letting the fix lapse onto the SVR later — diarise remortgage three months before the fix ends. The remortgage calculator shows the break-even.
• Forgetting the LISA 12-month clock — open it with £1 today even if serious saving starts later.

The bottom line

A realistic UK first purchase needs a 10% deposit, plus £3,000–£8,000 of costs, with stamp duty relief and the LISA bonus doing real work for you. Get the mortgage in principle early, never plan at the maximum multiple, and treat the overpayment allowance as the feature it is: the cheapest path from 90% LTV to a better band by remortgage time.