For many aspiring homeowners, saving a large deposit remains one of the biggest barriers to getting on the property ladder. That's why the return of 95% mortgages may come as welcome news for first-time buyers and movers alike.
But are 95% mortgages really "back", and are they the right choice for you?
The short answer is yes they are available once again. Many lenders (including Nationwide, Lloyds, Halifax, NatWest, HSBC and others) are once again offering mortgages that allow buyers to borrow up to 95% of a property's value, meaning you may only need a 5% deposit to purchase a home. However, these products come with important considerations that every buyer should understand before applying.
Important: this article is provided for general information only and should not be relied upon as financial or mortgage advice. Mortgage eligibility, affordability assessments and product availability vary by lender and individual circumstances. We recommend speaking to a qualified mortgage adviser before making any mortgage-related decisions. Your home may be repossessed if you do not keep up repayments on your mortgage.
In this guide, we'll explain how 95% mortgages work, who's eligible, the advantages and disadvantages, and what buyers should consider before taking the plunge.
What is a 95% mortgage?
A 95% mortgage is a mortgage with a 95% loan-to-value (LTV) ratio.
This means:
- The lender provides 95% of the property's value.
- You contribute the remaining 5% as a deposit.
For example:
|
Property price |
5% deposit (you) |
Mortgage required (lender) |
|
£200,000 |
£10,000 |
£190,000 |
|
£300,000 |
£15,000 |
£285,000 |
|
£400,000 |
£20,000 |
£380,000 |
Because you're borrowing a larger proportion of the property's value, lenders generally view these mortgages as higher risk than products available to borrowers with larger deposits.
Why are 95% mortgages making a comeback?
Following the pandemic, many lenders withdrew high loan-to-value products due to economic uncertainty. Since then, the market has recovered to enough of an extent that lenders feel more confident .
A combination of factors has helped increase the number of 95% mortgage deals available, including:
- Greater competition among lenders
- Government support through the Mortgage Guarantee Scheme
- Strong demand from first-time buyers
- Recognition that affordability, rather than monthly repayments alone, is often the biggest hurdle for buyers
As a result, borrowers with smaller deposits now have more choice than they did just a few years ago.
How does the Mortgage Guarantee Scheme work?
The UK Government's Mortgage Guarantee Scheme was introduced in 2025 and is designed to support participating lenders in offering eligible mortgages between 91% and 95% LTV. It’s important to note, not every mortgage is offered through the government scheme and not every lender participates in it.
Under the scheme, the government provides lenders with a partial guarantee on qualifying loans. This reduces some of the lender's risk and helps support lending to buyers with smaller deposits.
For borrowers, the process is largely the same as applying for any other mortgage.
You will still need to:
- Pass affordability assessments
- Meet the lender's criteria
- Provide proof of income
- Demonstrate responsible credit behaviour
The guarantee protects the lender, not the borrower, so you're still responsible for making mortgage repayments in full.
Who can get a 95% mortgage?
95% mortgages are most commonly associated with first-time buyers, but they're not exclusively for them.
You may be eligible if you're:
- A first-time buyer
- Moving home with limited equity
- Remortgaging in certain circumstances
- Buying alone or jointly
It is important to note eligibility does not guarantee acceptance. Individual lenders apply their own affordability, credit and underwriting criteria. Eligibility differs between products. Some 95% mortgages may be available to first-time buyers or home movers, while other circumstances, including remortgaging, will depend on the individual lender and product. Government-scheme eligibility may differ from eligibility for other 95% mortgages.
Lenders will typically look at:
Your income
Most lenders assess how much you earn and whether you can comfortably afford the repayments.
Your credit history
A strong credit score can improve your chances of approval and access to competitive rates. Lenders will review your credit history as part of their assessment. Their criteria and the information they use vary, and a particular credit score does not guarantee acceptance or a specific interest rate.
Your outgoings
Regular expenses, loans, credit card balances and other financial commitments will all be considered.
Employment status
Whether you're employed, self-employed or working on a contract basis can affect lender criteria.
What are the advantages of a 95% mortgage?
You need a smaller deposit
This is the most obvious benefit. For many renters, saving a 5% deposit is significantly more achievable than saving 10%, 15% or 20%.
For some buyers, it may allow them to enter the housing market sooner than if they waited to save a larger deposit.
You may be able to stop renting earlier
Rising rental costs often make it difficult to save. A 95% mortgage could help some buyers transition into homeownership sooner and begin building equity in their own property.
More choice than before
The number of available 95% deals has increased substantially, giving buyers more options and greater flexibility.
What are the disadvantages?
Higher interest rates
Because the lender is taking on more risk, 95% mortgages usually come with higher interest rates than lower LTV mortgages. Even a small difference in rates can significantly affect monthly repayments over time.
Higher monthly payments
Borrowing more means repaying more. A larger loan balance naturally results in higher monthly mortgage costs.
Greater risk of negative equity
Negative equity occurs when your property's value falls below the amount you owe on your mortgage. For example, if you buy with a 5% deposit and house prices fall significantly, you could owe more than the property is worth.
While this shouldn't necessarily concern buyers planning to stay put for many years, it's something worth considering.
Is a 95% mortgage right for first-time buyers?
A 95% mortgage may be suitable for some buyers who have a stable income but are finding it difficult to save a larger deposit. Whether it is appropriate will depend on their individual financial circumstances, borrowing needs and attitude to risk. However, getting approved isn't simply about having the minimum deposit.
Before applying, ask yourself:
- Can I comfortably afford the repayments if my circumstances change?
- Do I have emergency savings left after buying?
- Have I budgeted for legal fees, surveys and moving costs?
- Have I compared multiple mortgage products?
- Have I spoken to a qualified mortgage advisor about the options available to me?
It's often worth speaking to a qualified mortgage adviser who can assess your circumstances and explain the options available.
How can you improve your chances of getting approved?
If you're planning to apply for a 95% mortgage, consider the following steps:
- Check your credit report: review your credit history and correct any errors before applying.
- Reduce existing debts: paying down loans and credit card balances can improve affordability calculations.
- Save additional funds where possible: even having a little more than the minimum 5% deposit may open up better mortgage products.
- Get a mortgage Agreement in Principle: = An Agreement in Principle can give you a clearer idea of how much you may be able to borrow and demonstrates to sellers that you're a serious buyer. Although, it does not guarantee that a lender will ultimately approve a mortgage application
- Keep your finances stable: avoid taking on new debts or making large credit applications shortly before submitting a mortgage application.
What alternatives are available?
If a 95% mortgage isn't suitable, there are other ways to get on the property ladder.
Options may include:
- Shared Ownership
- First Homes Scheme
- Family-assisted mortgages
- Deposit contribution schemes from developers (find out more from our 2026 guide to help-to-buy schemes)
- Help to Buy Wales
- Regional equity loan schemes
Exploring all available options may help you find a route into homeownership that better suits your financial circumstances.
Availability, eligibility criteria and terms vary across schemes and providers. Independent advice may help you understand which options are available and suitable for your circumstances.
The takeaway
The good news for aspiring homeowners is that 95% mortgages are widely available once again, giving buyers with smaller deposits more opportunities to purchase a home.
While 95% mortgages may help some buyers purchase a home with a smaller deposit, they will not be suitable for everyone. Borrowing more of a property's value can lead to higher monthly repayments and greater exposure to changes in property prices. Before proceeding, buyers should carefully consider affordability and seek advice from a qualified mortgage adviser where appropriate.
The key is to look beyond the deposit requirement and consider the overall cost of borrowing, your long-term plans and how comfortable you'll feel managing repayments.
Understanding the costs, risks and available alternatives can help buyers make a more informed decision about whether a 95% mortgage may be appropriate for their circumstances.
Disclaimer: This content is for general information purposes only and does not constitute financial, mortgage, legal or tax advice. Information was believed to be accurate at the time of publication but may change. Mortgage products, rates, criteria and government schemes are subject to change. Always seek professional advice before making financial decisions. Your home may be repossessed if you do not keep up repayments on your mortgage.
