By the UKPropertyCalculator team • Published 23 February 2026 • Last reviewed 4 October 2026
A £400,000 house is not an average UK purchase. On the latest UK House Price Index, the average property in the UK sold for £273,000 in July 2026, the average in England for £293,479, and the average first-time buyer paid £229,302. So £400,000 is roughly 1.7 times what a typical first-time buyer spends. It buys a three-bed semi in a good Manchester suburb or a two-bed flat in outer London, and at that price the deposit decision stops being cosmetic.
The usual answer to this question is "5%, so £20,000". That is arithmetically true and practically misleading, for two reasons that have both got worse during 2026. First, the deposit is not the only cash you need on completion day. Second, mortgage rates have risen a long way this year, and the gap between the 95% LTV shelf and the cheaper bands is now worth real money every month.
This matters before anything else, because every monthly figure below depends on it. The Bank of England's Bank Rate has sat at 3.75% through 2026, but fixed mortgage pricing has moved up independently of it. On 3 October 2026 the market-wide average two-year fix was 5.56% and the average five-year fix 5.53%, on data covering about 95% of the mortgage market. Average rates by LTV band looked like this:
| LTV | Deposit on £400k | Average 2-year fix | Average 5-year fix |
|---|---|---|---|
| 95% | £20,000 (5%) | 6.06% | 6.02% |
| 90% | £40,000 (10%) | 5.68% | 5.63% |
| 85% | £60,000 (15%) | 5.50% | 5.48% |
| 75% | £100,000 (25%) | 5.43% | 5.40% |
| 60% | £160,000 (40%) | 5.15% | 5.11% |
Two things are worth noticing. The 95% to 90% step is the big one, at 0.39 percentage points on a five-year fix. After that the curve flattens hard: going from 90% to 75% buys you only another 0.23 points. If you are choosing where to stop saving, 90% is the threshold that pays for itself fastest. There is no published average at 80% LTV in this dataset, but it sits between the 85% and 75% rows in practice.
If you read a guide written in the first quarter of 2026 quoting 4.3% at 85% LTV, it was right at the time and is now about 1.2 percentage points out of date. On a £340,000 loan that error is worth roughly £240 a month.
95% LTV. Average 5-year fix 6.02%, so about £2,453/month over 25 years.
90% LTV. Average 5-year fix 5.63%, so about £2,239/month.
80% LTV. Priced between the 85% and 75% bands, so roughly £1,950/month.
These figures assume a 25-year repayment term and that the average rate for the band is held for the whole term, which no real mortgage does. Treat the interest column as a comparison between bands rather than a forecast of what you will pay.
| Deposit | Loan | Rate (5-yr avg) | Monthly (25 yrs) | Total interest |
|---|---|---|---|---|
| £20,000 (5%) | £380,000 | 6.02% | £2,453 | £355,898 |
| £40,000 (10%) | £360,000 | 5.63% | £2,239 | £311,625 |
| £60,000 (15%) | £340,000 | 5.48% | £2,084 | £285,152 |
| £100,000 (25%) | £300,000 | 5.40% | £1,824 | £247,317 |
| £160,000 (40%) | £240,000 | 5.11% | £1,418 | £185,532 |
It is worth separating the two effects, because a lot of articles muddle them and end up quoting a saving that is roughly double the real one.
Effect one: you borrow less. Obvious, and it accounts for most of the difference.
Effect two: you get a cheaper rate on what you do borrow. To isolate this, hold the loan constant. Borrow £360,000 at the 95% band's two-year average of 6.06% and you pay £2,333 a month. The same £360,000 at the 90% band's 5.68% costs £2,250. That is £83 a month, or about £24,900 over 25 years, purely for crossing the LTV line.
Put both effects together and the real comparison is a £380,000 loan at 6.02% against a £360,000 loan at 5.63%:
So spending an extra £20,000 of your own cash saves you roughly £44,000 of interest. That is a good trade, and it is not the £51,000-plus that guides written when the 95%/90% spread was wider used to claim. The spread moves, so this number moves with it. Check it rather than inheriting it.
The deposit is one line on the completion statement. Here is the rest of it for a £400,000 purchase in England, with first-time buyer and home mover columns separated because the stamp duty difference is £5,000.
| Cost | First-time buyer | Home mover |
|---|---|---|
| Deposit (10% example) | £40,000 | £40,000 |
| Stamp duty on £400,000 | £5,000 | £10,000 |
| Conveyancing and searches | £1,500 to £3,000 | £1,500 to £3,000 |
| Survey (RICS Level 2 or 3) | £400 to £800 | £400 to £800 |
| Lender arrangement fee | £0 to £1,500 | £0 to £1,500 |
| Removals | £600 to £2,000 | £600 to £2,000 |
| Total cash needed | £47,500 to £52,300 | £52,500 to £57,300 |
The non-deposit costs come to between £2,500 and £7,300 on top of stamp duty, and they do not change with your deposit size. So the cash floor at each tier is simply the deposit plus £7,500 to £12,300 as a first-time buyer:
| Deposit | First-time buyer total | Home mover total |
|---|---|---|
| 5% (£20,000) | £27,500 to £32,300 | £32,500 to £37,300 |
| 10% (£40,000) | £47,500 to £52,300 | £52,500 to £57,300 |
| 15% (£60,000) | £67,500 to £72,300 | £72,500 to £77,300 |
| 20% (£80,000) | £87,500 to £92,300 | £92,500 to £97,300 |
| 25% (£100,000) | £107,500 to £112,300 | £112,500 to £117,300 |
The arrangement fee can usually be added to the loan, which helps on completion day and costs you interest for the rest of the term. On a £1,499 fee at 5.63% over 25 years you will pay about £1,300 of interest on it. If you can find the cash, pay it upfront.
These are the rates in England and Northern Ireland as published by HMRC. Scotland and Wales have their own taxes with different bands.
| Buyer type | How it is calculated | SDLT on £400,000 |
|---|---|---|
| First-time buyer | 0% to £300,000, then 5% on £300,001 to £500,000 | £5,000 |
| Home mover or previous owner | 0% to £125,000, 2% to £250,000, 5% to £925,000 | £10,000 |
| Additional property or second home | Standard rates plus a 5% surcharge on the whole price | £30,000 |
Checking the mover figure by hand: nothing on the first £125,000, 2% of the next £125,000 is £2,500, and 5% of the remaining £150,000 is £7,500. Total £10,000. The additional-property figure is that £10,000 plus 5% of the full £400,000, so £30,000. There is also a 2% non-resident surcharge if you have not been in the UK for at least 183 days in the 12 months before completion, which would take an additional-property purchase to £38,000.
Lenders cap lending at a multiple of income, typically 4 to 4.5 times gross salary or joint salary. That cap exists partly because of the Financial Policy Committee's loan-to-income flow limit, which since 2014 has recommended that no more than 15% of a lender's new mortgage lending be at 4.5 times income or above. The FPC loosened how that limit is applied in July 2025, letting individual lenders exceed 15% on their own books provided the market total stays in line, and the Prudential Regulation Authority consulted in April 2026 on removing the firm-level cap from its rulebook altogether. The practical effect is that above-4.5x lending has become easier to find during 2026, not that the cap has gone.
| Deposit | Loan needed | Income at 4x | Income at 4.5x | Income at 5x |
|---|---|---|---|---|
| 5% (£20,000) | £380,000 | £95,000 | £84,444 | £76,000 |
| 10% (£40,000) | £360,000 | £90,000 | £80,000 | £72,000 |
| 15% (£60,000) | £340,000 | £85,000 | £75,556 | £68,000 |
| 20% (£80,000) | £320,000 | £80,000 | £71,111 | £64,000 |
| 25% (£100,000) | £300,000 | £75,000 | £66,667 | £60,000 |
Treat these as a ceiling rather than an answer. The income multiple is the easy constraint; the binding one is usually affordability. FCA rules require a lender to assess your income net of income tax and National Insurance against your committed expenditure and essential living costs, so car finance, childcare, credit card balances and school fees all reduce what you are offered regardless of what the multiple allows. Two households on an identical £90,000 can be quoted £60,000 apart.
Some lenders will stretch to 5 or 5.5 times for qualifying professionals such as doctors, dentists, solicitors and chartered accountants, on the argument that income growth is predictable. If you are income-constrained and in one of those careers it is worth asking a broker specifically about professional ranges. You can model combinations with our mortgage calculator.
If you are a first-time buyer under 40 without a Lifetime ISA, open one this week. The government adds a 25% bonus on up to £4,000 of contributions per tax year, capped at £1,000 of bonus a year. On a £400,000 purchase the LISA is squarely usable, because the property price cap is £450,000.
The rules that matter:
Run the couple's arithmetic carefully, because this is where the internet gets it wrong. Two partners each maxing a LISA contribute £8,000 between them per year and collect £2,000 of bonus. Over four tax years that is £32,000 of contributions and £8,000 of bonus, giving £40,000 in total. That happens to be exactly the 10% deposit on a £400,000 house, which is a tidy coincidence and not the £48,000 you get if you mistakenly add the bonus on top of a contributions figure that already includes it.
One live caveat. On 22 June 2026 the Treasury opened a consultation on a new First Time Buyer ISA, describing a simpler product that "once available … will be offered in place of the Lifetime ISA". The consultation closed on 18 August 2026 and no outcome has been published. Nothing has been withdrawn, the £450,000 cap has not moved, and there is no replacement product to wait for. Waiting only burns your 12-month clock. We compare the two existing accounts in detail in Help to Buy ISA vs LISA.
Telling someone to find £40,000 while they pay £1,400 a month in rent is not always useful advice. Shared ownership lets you buy a share of the property and pay rent to a housing association on the rest. GOV.UK puts the available share at between 10% and 75% of full market value, with 25% to 75% being usual.
On a £400,000 property, buying a 50% share:
Add those up and the monthly cost of a half share can land close to the cost of owning outright at 85% LTV, with none of the capital growth on the other half. Shared ownership solves a deposit problem, not a monthly cost problem. We set out the full picture in Shared Ownership: What It Honestly Costs.
If the income or the deposit is short, a family member can provide security instead of cash. Two structures dominate:
Both put someone else's assets behind your mortgage. The guarantor should take independent legal advice and should understand that their money is tied up for years and genuinely exposed if you miss payments. A gifted deposit, where the money changes hands outright and the donor signs away any interest in the property, is simpler for everyone when it is affordable.
Minh and Sarah are looking at a £395,000 terraced house in Didsbury, south Manchester. Neither has owned property before. Minh earns £52,000, Sarah earns £38,000, so joint income is £90,000. They have £68,000 saved, including two Lifetime ISAs opened four years ago.
They were paying £1,400 a month in rent, so their housing cost rises by £658 a month. That is the part that early-2026 guides got badly wrong: at the 4.3% rate those articles quoted, the same loan would cost £1,826 a month, and the gap would look like £426. The rate move has added more than £200 a month to this purchase.
Two sensible adjustments. Stretching to a 30-year term brings the payment down to £1,902, at the cost of roughly £75,000 more interest if they never overpay. Or they drop to a 12% deposit, hold £12,000 back as a contingency fund, and accept the 90% rate of 5.63%, which costs about £2,164 a month. Having no cash at all on completion day in a 1930s terrace is a worse risk than 50 basis points.
This is where the honest answer differs from the usual one. Taking the £400,000 case with a 10% deposit at 5.63% over 25 years, £37,994 of capital is repaid in the first five years and the balance falls to £322,006. The equity then depends entirely on prices:
| Annual price change | Value after 5 years | Equity | Against £40,000 in |
|---|---|---|---|
| +3.0% | £463,710 | £141,703 | +£101,703 |
| +1.4% (UK, year to July 2026) | £428,795 | £106,789 | +£66,789 |
| 0.0% | £400,000 | £77,994 | +£37,994 |
| −3.3% (London, year to July 2026) | £338,215 | £16,208 | −£23,792 |
The flat-price row is the one to sit with. If prices do nothing, your equity gain after five years is simply the capital you repaid, and you are still better off than you were. Run the same exercise on a 5% deposit at 6.02% and the London row turns into negative equity of £3,625. That is not a forecast. It is what happens if the last twelve months in London repeat for five more, and it is the single strongest argument for the 10% deposit over the 5% one at this price point.
Every figure here is a worked example, not your situation. Put your own deposit, rate and term in and compare against renting.
Buy vs Rent Calculator Mortgage CalculatorNo. The smallest deposit mainstream lenders accept is 5%, which is £20,000 on a £400,000 purchase. Add first-time buyer stamp duty of £5,000 plus legal and survey costs and the realistic floor is around £28,000 in cash. A home mover needs roughly £33,000 because their stamp duty is £10,000 rather than £5,000. Guarantor and family deposit products can reduce the cash you personally provide, but the money still has to come from somewhere.
A first-time buyer pays £5,000, because the first £300,000 is at 0% and the remaining £100,000 is at 5%. A home mover or anyone who has owned property before pays £10,000: nothing on the first £125,000, 2% on the slice to £250,000 and 5% on the slice to £400,000. Someone buying an additional property pays £30,000, which is the standard £10,000 plus the 5% surcharge on the whole price.
At current pricing, yes. Moving from a 5% deposit to a 10% deposit on a £400,000 house cuts the monthly payment from about £2,453 to about £2,239 on a 25-year term, and reduces total interest over the full term by roughly £44,000. Part of that comes from borrowing £20,000 less and part from the cheaper rate band: in early October 2026 the average five-year fix was 6.02% at 95% LTV against 5.63% at 90% LTV.
With a 10% deposit you are borrowing £360,000, which needs about £80,000 of income at 4.5 times salary or £90,000 at 4 times. With a 20% deposit the £320,000 loan needs about £71,000 at 4.5 times. These are income multiple caps rather than affordability results: lenders also stress test the payment against your actual outgoings under FCA rules, so a household with childcare costs or car finance may be offered less than the multiple suggests.
Yes. The Lifetime ISA property price cap is £450,000, so a £400,000 purchase is inside it. Two first-time buyers can each use their own LISA on the same property. Both accounts must have been open at least 12 months before completion, and the provider pays the money directly to your conveyancer rather than to you. Note that the Treasury consulted on a replacement First Time Buyer ISA between 22 June and 18 August 2026 and the outcome has not yet been published.
Yes, and most lenders accept it. You will need a signed letter from the donor confirming the money is a gift rather than a loan and that they retain no interest in the property. Your conveyancer will also ask the donor to evidence the source of the funds for anti-money-laundering purposes, which in practice means bank statements, so start that conversation early rather than a week before exchange.
Monthly payments and total interest in this article were calculated with the standard repayment amortisation formula on a 25-year term unless stated otherwise, holding the quoted rate for the full term. Real mortgages reprice at the end of each fixed period, so treat the total interest figures as a like-for-like comparison between deposit levels rather than a prediction. This article is information, not financial advice. See our Disclaimer.