First-time buyer mortgage guide 2026

A first-time buyer mortgage is simply a mortgage taken out by someone who has never previously owned a residential property in the UK or abroad. Many lenders and schemes use the same definition — if you have previously owned property in any country, you typically do not qualify as a first-time buyer.

In practice, first-time buyer mortgages are not a separate product category. You can access the same mortgage products as any other buyer. What the status unlocks is access to certain government schemes, stamp duty relief and occasionally improved product terms from lenders who actively target this segment of the market.

Some lenders apply more flexible affordability criteria to first-time buyers — for example, accepting lower deposit contributions or using higher income multiples. Others apply stricter criteria on the basis that first-time buyers have less property ownership experience. Working with an adviser who knows the market means your application goes to lenders whose actual criteria suit your specific situation.

The minimum deposit for a residential mortgage in the UK is typically 5% of the purchase price. On a £250,000 property, that means a £12,500 deposit. However, the rate you pay and the number of lenders available to you increases significantly as your deposit grows.

At 5% deposit (95% loan-to-value), you are in the highest-risk bracket for lenders. Products exist at this level, but rates are higher and the number of lenders is smaller. At 10% (90% LTV), a broader range of lenders become available. At 15–20% (85–80% LTV), you generally access the most competitive mainstream rates.

Your deposit can come from savings, investments or a gift from family. In all cases, lenders will want to see evidence of the deposit source — bank statements showing the build-up of savings, or a gifted deposit letter if money has been received from a relative. Some lenders accept 100% gifted deposits; others require you to contribute a proportion yourself.

Deposit and LTV in practice

Lifetime ISA

The Lifetime ISA (LISA) is the primary savings vehicle for most first-time buyers. You can contribute up to £4,000 per year, and the government adds a 25% bonus — up to £1,000 per year. The money can be used as part of your deposit on a property worth up to £450,000. You must be aged 18 to 39 to open one. Withdrawals for any purpose other than buying a first home or retirement before 60 carry a 25% penalty, effectively removing the bonus and part of your own contributions.

Shared Ownership

Shared Ownership lets you buy a share of a property (typically 25% to 75%) and pay rent on the remainder to a housing association. You can increase your share over time in a process called staircasing, up to 100% ownership in most cases. This scheme can make homeownership achievable at lower income levels, but the structure is more complex than a standard purchase and the ongoing rental obligation needs to be factored into affordability.

First Homes

First Homes is a government scheme offering newly-built homes at a minimum 30% discount to first-time buyers who are local key workers or meet local connection requirements. The discount is retained when the property is resold, keeping it affordable for future first-time buyers. Eligibility criteria and available properties vary significantly by local authority.

Mortgage Guarantee Scheme

The Mortgage Guarantee Scheme underpins 95% LTV lending from participating high-street lenders by providing a government guarantee on a portion of the loan. It enables lenders to offer 95% LTV products with more confidence. You do not interact with the scheme directly — if a lender participates, it is simply reflected in the products they offer.

Stamp Duty Land Tax (SDLT) applies to residential property purchases in England and Northern Ireland. First-time buyers receive a relief that reduces — and in many cases eliminates — the SDLT liability.

From October 2025, the standard rates were adjusted following the autumn Budget changes. First-time buyers pay no SDLT on the first £300,000 of a purchase price (reduced from £425,000 previously), and 5% on the portion from £300,001 to £500,000. For properties above £500,000, first-time buyer relief does not apply and standard rates are used.

On a £350,000 first-time buyer purchase, the SDLT liability is £2,500 — the 5% rate applied to the £50,000 between £300,001 and £350,000. On a £280,000 purchase, no SDLT is payable. Use our stamp duty calculator to confirm the figure for your situation.

An Agreement in Principle (AIP) — also called a Decision in Principle (DIP) or Mortgage in Principle — is a conditional indication from a lender of how much they would be prepared to lend you. It is not a mortgage offer and is not legally binding on either side, but it serves an important practical purpose: it tells estate agents that you are a credible buyer, and it gives you a realistic budget before you start viewing.

An AIP usually involves either a soft credit search (which does not affect your credit score) or a hard search (which does). A broker will know which type each lender uses. The Lockhart Murphy Mortgage Passport provides a personalised borrowing estimate without a credit search, giving you a clear starting point before any formal application.

If you have been refused an AIP by a lender, it is worth understanding why before applying elsewhere — multiple rejected applications can harm your credit file. An adviser can assess your position and identify which lenders are most likely to approve your application before any credit search takes place.

Once you have had an offer accepted on a property, the mortgage application process begins. This is the formal stage where the lender assesses your finances and the property in detail before issuing a mortgage offer.

Documents you will need

• Last three months' payslips (employed) or two to three years' tax calculations and tax year overviews (self-employed)
• Last three to six months' bank statements
• Proof of identity (passport or driving licence)
• Proof of address (utility bill or bank statement)
• Evidence of your deposit (savings statements showing build-up, or gifted deposit letter)
• P60 from the most recent tax year (employed)

What happens next

The lender will conduct a hard credit search and instruct a valuation of the property. The valuation confirms the property is worth approximately what you are paying for it — it is not a survey and does not assess the condition of the property in detail. The lender's underwriter reviews the application, which can take anywhere from a few days to several weeks depending on the lender and complexity of your case.

If the application is approved, the lender issues a formal mortgage offer. This is a binding offer to lend, valid for three to six months. Your solicitor will receive a copy and will proceed to exchange of contracts once all searches and enquiries are complete.

Mortgage lenders assess every application against a combination of income, credit history, outgoings, deposit size and the property itself. Understanding what they weigh most heavily helps you prepare a stronger application.

Income and affordability

Most lenders use an income multiple — typically 4 to 4.5 times gross annual income — as their headline borrowing cap. Some go higher for certain professions or above specific income thresholds. Beyond the headline multiple, lenders run a more detailed affordability calculation that accounts for your regular outgoings: loan repayments, credit card minimums, car finance, childcare costs and living expenses. The mortgage payment is also stress-tested against a higher-than-current interest rate to ensure you could afford it if rates rise.

Credit history

A clean credit history — no missed payments, defaults, county court judgements (CCJs) or recent applications for credit — is the single biggest enabler of a smooth mortgage application. The longer your clean history, the better. If you have any marks on your credit file, some lenders will decline your application and others will accept it on different terms. Knowing which lenders are most appropriate for your credit profile before you apply is one of the key benefits of using an adviser.

Deposit and LTV

A larger deposit reduces the lender's risk and typically results in a lower interest rate. It also expands the pool of lenders available to you. Even moving from 5% to 10% deposit makes a material difference to both rate and lender choice.

The property

Some property types restrict which lenders will accept the application — for example, flats above commercial premises, high-rise blocks, properties with non-standard construction or short lease lengths. If you are buying an unusual property, it is worth checking lender eligibility before you get deep into the purchase process.

• Applying to multiple lenders simultaneously. Each hard credit search can leave a mark on your file. Multiple searches in a short period can reduce your score and signal financial distress to lenders.
• Making large purchases or taking new credit before applying. New car finance, a credit card or a personal loan in the months before your mortgage application can affect both your credit score and your affordability assessment.
• Not accounting for all the costs of buying. Beyond the deposit, first-time buyers face solicitor fees (typically £1,500–£3,000), survey costs (£400–£1,500 depending on type), mortgage arrangement fees and moving costs. Having a buffer beyond the deposit is important.
• Assuming the cheapest rate is the best deal. A low rate can come with a high arrangement fee, a long tie-in period or restrictive conditions. The total cost of credit over the initial term is a better comparison metric than the headline rate.
• Not getting protection in place. A mortgage creates a significant financial obligation. Life insurance, critical illness cover and income protection ensure the mortgage can be serviced if something goes wrong — and they are generally cheapest to set up at the point of taking the mortgage.

The typical timeline from offer accepted to completion is 8 to 16 weeks, though this varies considerably. Properties without a chain and simple legal situations can complete in as little as six weeks. Complex chains or properties requiring additional searches can take five to six months.

Running your mortgage application and conveyancing in parallel — rather than waiting for one to complete before starting the other — is the most effective way to avoid unnecessary delay.