5% deposits are back: Can you now stop renting?

If you’re in your 20s or early 30s, you’ve probably had the same advice from others about needing to save for a big deposit if you want to buy a house.

The problem is that while you’re trying to save, rent is eating up a huge chunk of your income. For many young buyers, the idea of putting down a 10% or 20% deposit has felt completely unrealistic.

We’ve already highlighted that there’s a big mortgage deposit myth around how much you need to save for a deposit. While it’s great if you can save more for a deposit, you shouldn’t rule yourself out if you’ve only saved a small amount.

But there’s a clear return of 5% deposit mortgages with new low-deposit lending options and government-backed schemes changing the conversation. For the first time in a while, some buyers are asking whether buying now actually be within reach?

Why 5% deposits are making headlines again

A 5% deposit means you only need to save 5% of the property price, rather than 10% or more. On a £200,000 home, that’s £10,000 instead of £20,000.

Many lenders are actively offering 95% loan-to-value (LTV) mortgages, and the UK government’s Mortgage Guarantee Scheme has been made permanent to encourage lenders to provide mortgages with deposits as small as 5%.

You can read more about the scheme on the government’s website.

Renting is expensive

One reason the 5% deposit comeback feels important is that renting has become increasingly expensive across much of the UK.

According to the Office for National Statistics, the average UK monthly private rent increased by 3.3% (to £1,388) in the 12 months to June 2026.

Every month spent renting is cash that isn’t building any ownership in a property. Many young people have reached the point where their rent is similar to what a mortgage payment could be on a modest home.

Buying isn’t automatically cheaper, of course! There are maintenance costs (you’ll have no landlord to ask about fixing a leak), legal fees and moving expenses to consider. But the gap between renting and buying has narrowed in many areas, especially outside the most expensive parts of the country.

In the North East, for example, average first-time buyer deposits remain significantly lower than in southern England, which means a 5% deposit can be a much more achievable target.

Remember, 5% doesn’t mean easy

Here’s the reality check: A smaller deposit means a larger mortgage, and larger mortgages usually come with higher interest rates than 10% or 15% deposit deals.

Lenders will also look carefully at:

• your income,

• your monthly spending,

• existing debts,

• credit history, and

• whether the mortgage remains affordable if interest rates change.

So, a 5% deposit isn’t a shortcut around affordability checks. Here is a useful guide about how deposit sizes affect mortgage rates.

Why does 2026 different?

The truth is that 5% mortgages didn’t disappear completely, but availability has improved. That’s because lender competition has increased and government support is encouraging more low-deposit lending.

There are also more routes into home ownership than many buyers realise.

In 2026, first-time buyers may be able to combine a 5% deposit with schemes such as:

• Lifetime ISAs, which add a government bonus to your savings,

• First Homes Scheme in England, and

• Other low-deposit initiatives.

This guide from Rightmove gives a good overview of current first-time buyer schemes

So, should you stop renting?

You may feel it’s time to stop spending so much on renting. So, the first question to ask is: could you realistically buy within the next 6–18 months?

If you have a stable income, a good credit record and around 5% saved, it may be worth speaking to a mortgage broker sooner rather than later.

One useful exercise is to compare three numbers:

• Your current monthly rent

• The mortgage payment on a property you’d actually consider buying

• The total upfront costs (deposit, legal fees, survey and moving costs)

For some people, buying will still be out of reach. For others, the numbers may be closer than expected.

The bottom line

Saving a huge deposit while paying rising rent has been one of the biggest barriers to home ownership.

The return of 5% deposit mortgages doesn’t solve every problem, but it does reduce one of the biggest obstacles.

The 5% deposit comeback won’t be right for everyone. But if you’ve been assuming that buying is impossible, this might be the year that assumption deserves a second look.

What to do next

If you want to explore the options available to you and whether you can stop renting, contact one of our friendly team today for a free introduction.

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