First-Time Buyer Mortgages in 2026: Challenges, Low-Deposit Deals & Market Outlook

Getting on the property ladder has never felt like a simple task, and 2026 is no exception. But it isn’t all bad news — lenders have been getting more creative about deposits, and the wider economic picture is more stable than it’s been for a while. Here’s what first-time buyers need to know right now about low-deposit mortgages, the current market, and the economy behind it all.

The challenge: saving a deposit still takes years

The biggest hurdle for most first-time buyers remains the deposit. The average first-time buyer deposit in England currently stands at around £63,855, according to UK Finance, with big regional differences — buyers in Wales and Scotland typically put down closer to £30,000–£36,000.

Saving that kind of money takes time. Even putting aside 10% of average take-home pay each month (roughly £320), it takes close to six years to build a 10% deposit on a typical UK home — and closer to nine years for buyers in London, against around four years in the North.

On top of the deposit, buyers are contending with a 2-year fixed mortgage rate averaging around 5.5–5.6%, higher monthly repayments than many were budgeting for a few years ago, and stricter affordability checks. It’s a genuinely tough combination, which is exactly why low-deposit lending — and getting tailored mortgage advice — has become such an important part of the conversation.

The good news: lenders are innovating on deposits

A number of newer and improved products mean first-time buyers no longer need a traditional 10-15% deposit to get moving.

95% mortgages (5% deposit) and 98% mortgages (2% deposit)

Originally introduced in 2021 and now made permanent from July 2025, this government-backed scheme sees the government guarantee a portion of the loan, encouraging major lenders — including Lloyds, Halifax, NatWest, HSBC, Barclays and Santander — to offer 95% loan-to-value deals and some lenders have taken this further offering 98%, 99% and even 100% mortgages. Other innovations like the joint borrower sole proprietor mortgages have offered first time buyers more options to get onto the property ladder. this being said availability has tightened this year: over 200 deals at 95% LTV were pulled from the market in March, and rates on these deals now average around 6%. They’re still a genuine route to ownership, but shopping around (or using a broker) matters more than ever.

99% mortgages (1% deposit)

Yorkshire Building Society now offers a 99% LTV product, meaning eligible first-time buyers need to find only a 1% deposit — a significant shift from where the market stood even two or three years ago.

100% mortgages with no deposit at all — Skipton’s Track Record Mortgage

Perhaps the most striking development: Skipton’s Track Record Mortgage lets renters borrow the full value of a property, up to £600,000, based on 12 months of on-time rent and household bill payments rather than a saved deposit. It’s had a real impact — Skipton says it helped around 26,000 first-time buyers in 2026, accounting for roughly half of all the mortgages it wrote this year.

Other routes worth knowing about

Shared ownership schemes, the Lifetime ISA (which adds a 25% government bonus to money saved toward a first home), and Help to Buy in Wales all remain available and can be combined with certain low-deposit mortgages depending on individual circumstances.

The right option depends entirely on individual circumstances — income, credit history, the type of property, and location all affect what’s available and whether it’s the best value option. It’s also worth using our mortgage and stamp duty calculators to get a feel for costs before you speak to a broker.

Struggling more with borrowing power than the deposit itself? A joint borrower sole proprietor (JBSP) mortgage lets a parent or family member add their income to your application — without joint ownership, and without triggering the second-home stamp duty surcharge.

The bigger picture: where the market and economy stand

It helps to understand the backdrop against which all this is happening.

Interest rates. The Bank of England has now held the base rate at 3.75% for five consecutive meetings, most recently in July 2026, with the next decision due on 17 September. Rates look set to stay roughly where they are for the rest of the year rather than falling further, which means mortgage pricing is unlikely to ease dramatically in the near term.

Inflation. CPI inflation stood at 2.6% in June, having eased from 2.8% in May. The Bank of England expects inflation to stay just under 3% for most of 2026, before ticking up to a little over 3.25% in the final quarter — partly due to higher energy prices linked to ongoing global instability. It remains above the Bank’s 2% target, which is one of the key reasons rates aren’t expected to fall much further this year.

Growth. The UK economy is expected to grow by around 0.7% in 2026 — modest, but positive.

House prices. Prices have been broadly stable with modest growth. Nationwide put the average UK house price at £277,484 in June 2026, while Halifax recorded first-time buyer prices specifically at an average of £238,908 in April. Forecasters are generally expecting price growth of around 2% over the year, with affordability described by Lloyds as its strongest since late 2015 — helped by wage growth outpacing house price growth and easier access to credit.

Put together, it’s a market that’s neither booming nor falling — steady rates, contained (if still slightly above-target) inflation, and gently improving affordability. For first-time buyers, that stability, combined with the wider range of low-deposit products now available, means there are more realistic ways onto the ladder than there have been in years — even if saving a full 10-15% deposit the traditional way remains out of reach for many.

Frequently asked questions

How much deposit do I need to buy my first home in 2026?

It depends on the lender and product. Most mainstream deals still ask for 10%, but 95%, 98% and 99% mortgages are available, Yorkshire Building Society offers a 99% LTV deal (1% deposit), and Skipton’s Track Record Mortgage can lend up to 100% for eligible renters with a strong payment history.

Can I get a mortgage with no deposit at all?

Yes, in specific circumstances. Skipton’s Track Record Mortgage is a 100% LTV product for first-time buyers who’ve paid rent and household bills on time for 12 months, for properties up to £600,000. Eligibility and affordability checks still apply.

Are mortgage rates likely to fall in 2026?

The Bank of England has held the base rate at 3.75% for five consecutive meetings and inflation remains above target, so a further cut this year looks unlikely. The next rate decision is 17 September 2026.

What is the Mortgage Guarantee Scheme?

It’s a government scheme, now permanent since July 2025, that guarantees part of a lender’s loan on 95% LTV mortgages, encouraging banks to keep offering 5%-deposit deals to first-time buyers.

Talk to us

Every one of these options — 95% deals, 99% mortgages, Skipton’s Track Record product, shared ownership, or a Lifetime ISA — comes with its own eligibility rules, pros and cons. If you’re a first-time buyer trying to work out which route makes sense for you, get in touch and we’ll talk you through it.

This article is for general information only and does not constitute financial advice. Mortgage products, rates and scheme eligibility change frequently — please speak to us or check directly with lenders for current terms. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE OR OTHER LOANS SECURED ON YOUR PROPERTY.