By James Crawford • Published 23 February 2026 • Last reviewed 8 March 2026
By James Crawford, Lead Market Analyst
A £400,000 property sits right in the dangerous middle ground of the UK market. It's an attainable 3-bed semi in Manchester or a cramped 1-bed flat in London. But here is the brutal truth I tell my clients: the deposit percentage you choose at this price point will literally dictate your wealth for the next decade.
Most guides will cheerfully tell you that you only need a 5% deposit (£20,000) to buy a £400,000 house. They are mathematically correct, but financially irresponsible. I am going to show you exactly why scraping together just £20,000 is a trap, and what the real cash requirement looks like on completion day.
Lenders price mortgages based on your loan-to-value (LTV) ratio. The lower your LTV, the lower your interest rate — and the lower your monthly payments for the full term. Here's what each deposit level unlocks:
95% LTV — highest rates, typically 5%+
90% LTV — rates around 4.3–4.8%
80% LTV — rates around 4.0–4.5%
The difference between a 5% and 10% deposit is more than just the extra £20,000 saved. At 95% LTV, lenders typically charge roughly 0.5–0.75% more in interest than at 90% LTV. On a £380,000 mortgage over 25 years, that 0.75% gap costs approximately £51,000 more in total interest. This is why stretching for a 10% deposit is nearly always worth it if you can.
The deposit is just one part of the upfront cash requirement. Here's a realistic breakdown for a £400,000 purchase, assuming you're a home mover (not a first-time buyer) in England:
| Cost | 5% Deposit | 10% Deposit | 20% Deposit |
|---|---|---|---|
| Deposit | £20,000 | £40,000 | £80,000 |
| Stamp Duty (home mover) | £10,000 (same at all deposit levels) | ||
| Solicitor / Conveyancing | £1,500 – £3,000 | ||
| Survey (Homebuyer Report) | £400 – £800 | ||
| Mortgage Arrangement Fee | £0 – £1,500 (or added to loan) | ||
| Removal costs | £600 – £2,000 | ||
| Estimated Total | ~£34,000 | ~£56,000 | ~£96,000 |
Use our Stamp Duty Calculator to get your exact SDLT figure — for a £400k purchase as a home mover, it's £10,000. First-time buyers pay £5,000 in stamp duty on a £400k property (5% on the £100,000 above the £300,000 nil-rate threshold).
Stamp duty is a significant cost that many buyers underestimate. Since 1 April 2025, the rates in England and Northern Ireland are:
| Buyer Type | Rate | Stamp Duty on £400k |
|---|---|---|
| Home mover / standard | 0% up to £125k, 2% £125k–£250k, 5% £250k–£925k | £10,000 |
| First-time buyer | 0% up to £300k, 5% £300k–£500k | £5,000 |
| Additional property (BTL/second home) | Standard rates + 5% surcharge on everything | £30,000 |
Your deposit size and your income both determine what you can borrow. Most UK lenders apply an income multiple of 4–4.5 times your gross annual income (or joint income if buying with a partner).
| Deposit | Mortgage Required | Income Needed (4.5x) | Income Needed (4x) |
|---|---|---|---|
| 5% (£20k) | £380,000 | £84,444 | £95,000 |
| 10% (£40k) | £360,000 | £80,000 | £90,000 |
| 15% (£60k) | £340,000 | £75,556 | £85,000 |
| 20% (£80k) | £320,000 | £71,111 | £80,000 |
| 25% (£100k) | £300,000 | £66,667 | £75,000 |
Some lenders — particularly those using specialist underwriting — will go to 5x or even 5.5x income for high earners or professionals (doctors, solicitors, accountants). These "professional mortgages" are worth exploring if you're income-constrained but have a stable, growing career. Use our Mortgage Calculator to model different income and deposit combinations.
If you're a first-time buyer aged 18–39 and you haven't opened a LISA yet, stop reading this and go open one right now. Seriously. The government adds a 25% bonus on up to £4,000/year of contributions. You put in £4,000, they give you £1,000. That's a guaranteed 25% return before you've invested a penny. I genuinely don't understand why more people aren't using these.
The rules you need to know:
A couple where both partners save into LISAs can accumulate up to £8,000 per year in contributions plus £2,000 per year in government bonuses. Over four years, that's £40,000 in contributions plus £8,000 in bonus — enough to cover a 10% deposit on a £400k home.
Look, I know telling someone to save £40,000 when they're paying £1,200/month in rent is borderline insulting. If a full deposit feels impossible, shared ownership lets you buy a slice of the property (typically 25%–75%) and pay subsidised rent on the rest to a housing association. Your deposit and mortgage only cover your share — which makes the numbers dramatically more achievable.
On a £400,000 property where you buy a 50% share (£200,000):
Shared ownership has trade-offs. You'll pay service charges, you're restricted on subletting, and "staircasing" (buying more shares) is available but involves additional legal costs each time. Still, for buyers stuck in the deposit trap, it's a legitimate route to getting on the ladder in areas where full ownership at £400k is realistic.
If your income or deposit doesn't quite get you there, a guarantor mortgage lets a family member (usually a parent) put their property or savings on the line as extra security. It sounds scary — because it is, for the guarantor. But it can unlock a bigger loan or a better rate without them having to hand over cash directly.
Two main types worth knowing about:
Guarantor mortgages carry real risk for the guarantor. If payments are missed, their credit file and assets can be affected. Both parties should take independent legal advice before proceeding.
To make this concrete: Minh and Sarah Nguyen are looking at a £395,000 terraced house in Didsbury, Manchester. Neither has owned property before. Minh earns £52,000 and Sarah earns £38,000 — joint income of £90,000.
The numbers work — just. Their monthly cost goes up by £110, but they're building equity on £395,000 of asset. In Manchester's current market, at 3.5% annual price growth, that property is worth approximately £468,000 after five years. Their equity (after mortgage repayments) would be around £165,000. That's the equity compounding argument for buying — use our Buy vs Rent Calculator to model your specific numbers.
Lenders price mortgages in LTV bands. The key thresholds where rates improve are typically 90%, 85%, 80%, 75%, and 60%. For a £400k purchase:
| LTV | Deposit | Typical Rate (2026) | Monthly Payment (25yr) |
|---|---|---|---|
| 95% | £20,000 | ~5.2% | ~£2,280 |
| 90% | £40,000 | ~4.6% | ~£2,010 |
| 85% | £60,000 | ~4.4% | ~£1,880 |
| 80% | £80,000 | ~4.2% | ~£1,740 |
| 75% | £100,000 | ~4.0% | ~£1,590 |
Rates based on typical 2-year fixed products available in early 2026. Use our Mortgage Calculator for exact payment figures with your specific rate.
No. The minimum 5% deposit is £20,000. Add stamp duty (£5,000–£10,000 depending on buyer type) and legal costs, and you need at least £30,000 in cash. Some lenders do offer 100% mortgages backed by a family guarantor, but these are specialist products with significant risks.
Usually yes — the interest savings over a 25-year term far outweigh the opportunity cost of keeping that cash invested. The exception is if you're getting an exceptional return elsewhere (e.g. in a company pension with employer matching at 100%). Most financial planners recommend hitting at least 10% deposit before buying.
Yes. Gifted deposits are accepted by most lenders, but you'll need a signed letter from the donor confirming the money is a gift (not a loan) and that they have no claim on the property. Your solicitor will request this. The gift-giver should also confirm where the money came from (for anti-money laundering checks).
A basic valuation survey is required by the lender and typically costs £200–£400. But that survey protects the lender, not you. A RICS Homebuyer Report (£400–£800) or a full building survey (£700–£1,500+) is money well spent on any property above £300k — a missed structural defect can cost tens of thousands.
Yes — the LISA property price cap is £450,000, so a £400k property qualifies. Both buyers in a couple can use their own LISAs toward the same purchase, doubling the bonus. Just ensure both LISAs are at least 12 months old before you use them.
Ready to run the full numbers on your specific situation?
Compare Buying vs Renting Costs →Sources: HMRC gov.uk/stamp-duty-land-tax, ONS House Price Index, UK Finance mortgage data Q4 2025. This article is for information only and does not constitute financial advice. See our Disclaimer.