Government Schemes For 5% Deposit Mortgages

If you’re keen to get on the property ladder but are worried that you don’t have enough deposit saved for a down payment, options that may make your purchase possible are available.

Here, we look at getting a mortgage through Government schemes with a 5% deposit. We identify what initiatives there are and how to apply. We also suggest lenders who could be possibilities and the typical interest rates charged.

Finally, we explore if there are any alternatives for your situation and if there are schemes that could help if you have less than 5% saved.

Which government schemes will help you get a mortgage with a 5% deposit?

Currently, as of July 2025, the following could be options for you:

Mortgage guarantee scheme

The UK government set up the mortgage guarantee Scheme in the wake of the pandemic to encourage lenders to offer 95% loan-to-value mortgages again. The Government guarantees a portion of any borrowing offered under the scheme, so the risk to lenders is lower. Unlike some previous Government schemes, this initiative is not just for first-time buyers. 

The scheme itself has several specific criteria, such as:

First Homes Scheme

While this scheme isn’t directly targeted at those with low deposits of 5%, it can help, as properties are offered at a discounted price. Thanks to the lower purchase price, your LTV ratio improves, bringing it to 95% or lower as your deposit increases. As a result, the scheme can make it easier to get a mortgage. Discounts can be between 30% and 50% off the market value.

The First Homes Scheme must be used for new build properties. The discount finally offered is decided between your local council and the property’s developer.

In addition to buying a new build, other eligibility criteria include:

How to get a mortgage with a 5% deposit scheme

Your first step should be to find a specialist mortgage broker with experience in this area. This will boost your chances of getting approved at the best terms available.

Using our broker-matching service, you can speak directly with the right broker by simply making an enquiry online.

They’ll be able to help with:

• Readying all the necessary paperwork
• Downloading your credit reports
• Finding the right lender and securing the best deal for you

Which lenders can help?

A handful of big high-street banks, such as HSBC, Virgin Money, and Barclays, offer products under the mortgage guarantee scheme. In general, any rates offered will be higher with a 95% mortgage as the LTV is high—regardless of the Government guarantee. To give an idea of rates offered, with Barclays, the initial rate for a 2-year fix is 6.4%, while the 5-year fixed rate product is 6.62%.

Lenders such as Leeds Building Society, Skipton Building Society and Darlington Intermediaries support the First Homes scheme. In terms of rates, using Leeds Building Society as an example, they currently offer a 5-year fix with a 5.92% rate. Again, your final rate will depend on your specific LTV.

The above rates are correct as of January 2023, but rates offered by all lenders are subject to change at any point.

Are there any government schemes if you have less than a 5% deposit?

The Right to Buy scheme is an option if you rent a property from the council. It allows tenants to purchase their homes at a big discount to the market value. Many lenders are happy to use the discount as the deposit itself. Discounts can be anywhere up to 70% and start at 35% for houses and 50% for flats.

The size of the discount you receive depends on how long you have lived in the home.

What are the alternatives?

If none of these schemes are available or helpful to you, you could try making an application with a lender who offers 95% mortgages as part of their product range. They’re more scarce, but they do exist.

A broker would be your best bet to help identify one for which you are eligible, considering other factors in your application, such as income, income source, and creditworthiness. Plus, they also have access to more products than the general public.

Or, with a broker, you could look at:

• Shared ownership: This government scheme lets you buy just a portion of a property and rent the rest. It means you need a smaller mortgage, so your deposit goes further, improving your LTV to a level that more mortgage providers accept.
• Guarantor mortgages: These allow a family member to secure your mortgage against a property they own or another asset. It means they are financially liable for your loan if you miss your mortgage payments.

Speak to a broker who specialises in Government schemes

While there are lenders available who offer high LTV mortgages and accept applications under these schemes, there are fewer. Therefore, being accepted on your own is harder. Using a broker specialising in 5% deposit mortgages is very useful as they have in-depth knowledge of the lenders who offer these products and their eligibility criteria.

Our broker-matching service will connect you with the right mortgage advisor. Call us on 0330 818 7026 or make an enquiry, and we’ll set up a chat with a broker today.