How to save for your first home

Getting onto the property ladder can be a difficult task, but not impossible. Our guide below discusses some key measures you can take when buying your first home, whether you’ve already begun saving for your deposit, or are just getting started.

How much of a deposit do you need?

Saving for your deposit is arguably one of the most important aspects to consider when buying your first home. The more money you can put down upfront, the more likely you are to qualify for more competitive mortgage deals with lower interest rates.

First-time buyer mortgages typically offer either 90% or 95% loan-to-value (LTV) which is the ratio of what you borrow against the amount you pay as a deposit. For example, if you were looking to buy a property costing £200,000 with a 90% LTV mortgage, you would need a £20,000 deposit.

As of March 2025, the average deposit for a first-time buyer is about £67,592, according to data from UK Finance, giving you a rough idea of how much you may need to save.

A good first step when calculating the size of your deposit will therefore be to look at property prices. Take the time to research what you want from your first home – this could be the number of bedrooms or location, for example, and will give you a reasonable idea of your budget.

Next, consider any additional expenditures. This could include costs from using mortgage advisers, solicitors, removal companies and surveys, for instance. It may be worth factoring in these prices into your ‘deposit savings fund’ to avoid being caught short later down the road.

You should also consider whether you’ll need to pay Stamp Duty Land Tax (SDLT). As of April 2025, first-time buyers are liable to pay the duty if the property costs over £300,000, so keep this in mind if you’re thinking about a more expensive home.

Build up a savings habit

Maintaining good savings discipline is key to building your deposit, and there are a few different options you can use to help stick to your goals.

A tried and tested approach is to work out how much you can afford to save each month and set up a standing order to pay into a dedicated savings account just after you’ve been paid. This can limit the temptation to spend your hard-earned cash on other things and allows you to save automatically.

Regular savings accounts can also be a good way to consistently save month-on-month with the added benefit of receiving high interest rates. These accounts often require a minimum deposit each month, making them useful for putting away any spare cash you may have.

Alternatively, some accounts or apps allow you to create savings goals so you can easily track your progress; some even encourage you to round up payments and save the difference, helping you to build your pot when spending.

Remember, while it can be hard fighting the urge to dip into your savings, focusing on building up your deposit could mean buying your home faster.

Review savings rates

Once you’ve worked out how you plan to save, it’s then important to review your savings to ensure you’re seeing competitive returns.

Easy access accounts and easy access ISAs tend to pay some of the higher rates on the market, though these variable returns are vulnerable to change, meaning you may need to regularly move between accounts to keep up with the latest leading rates.

Meanwhile, fixed rate bonds and fixed rate ISAs offer guaranteed returns, and may be the better option for saving over longer periods, though this usually means you won’t be able to touch your money until the end of the term. You’ll also need to make sure your money will be available to you by the time you’re ready to buy.

Open a Lifetime ISA

A Lifetime ISA (LISA) has become a crucial tool for saving for your first home, but it does come with certain conditions to be aware of. LISAs can be opened by those aged 18 to 39 and are specifically designed for saving towards your first house or retirement.

With a LISA, you can save a maximum of £4,000 each year (which counts towards your ISA allowance), with the Government adding an extra 25% annual bonus to your balance. Provided you save the maximum amount each year, this could see you earn an additional £1,000 on your annual investment. As you can continue paying into a Lifetime ISA until you’re 40, this means you could theoretically receive a total of £32,000 in bonus cash.

There are two types of LISA to choose from, the standard cash ISA variant where the provider pays interest on your pot (inclusive of the Government bonus), or the stocks and shares option. The latter allows you to invest your ISA allowance into the stock market instead of receiving interest. Keep in mind that while this offers the potential for higher returns, this isn’t guaranteed, and you could lose more than you initially started with.

Also be aware these ISAs can only be used for the aforementioned purposes, and you will incur a 25% penalty of your total balance if you withdraw funds for any other reason – this would cost you your bonus and a portion of your savings.

Cut back on spending

Lower expenses

If you’re finding it difficult save for your first home, it may be time to consider cutting back on your spending. A productive first step could be to review your total outgoings for the month to find ways of reducing costs, whether that’s cutting out things you don’t need, or switching to cheaper alternatives for your essentials.

Finding better deals on your broadband or utilities, even if it’s only a slight saving, can have an impact on your overall costs month-on-month. You could also consider shopping at more budget-friendly supermarkets, making sure to always shop with a list to limit any impulse purchases. If you need help creating and managing a personal budget, our guide can give you more information.

Minimise debt

Outstanding debt can detract from your house savings goals, so it’s important to manage payments effectively where you can. Debt consolidation could make it easier to streamline payments, which could help you whittle down debt faster, though make sure to consider your options carefully to ensure you’re not increasing what you owe overall.

Saving while renting

Renting is expensive and can be one of the main obstacles in becoming a homeowner for the first time, especially for those living in more expensive areas. If you’re living alone, you could consider moving in with others or renting out rooms to help spread the cost or even move back in with family where possible.

Try to earn extra income

Alongside cutting down on spending, finding ways to boost your income, even temporarily, can help reduce the time it takes to save for a house.

If you’re employed full-time, you could seek out overtime or consider freelance work in your free time to increase your income. This extra money could then be put aside to be used exclusively for your house fund, for example. If you have more long-term plans, trying to find a higher-paying job could help cut down on the time to save, or even allow to you to up your budget.

You might also think about selling items you don’t need any more to both earn extra cash and potentially declutter your home ready for the big move. Old clothes, books, unused furniture and digital devices, among others, can all be sold relatively easily these days and can all help contribute to your overall fund.

Additionally, optimising your finances can give you a much-needed boost. Cashback credit cards could see you reclaim a portion of your spending at selected retailers, while current account switch offers could earn you lump sums, usually upwards of £100, for moving between accounts.

Buy with someone else

Simply put, buying with someone else can drastically decrease how much you need to save individually, as ideally you would be halving costs down the middle.

However, it’s worth considering that buying a house with another person is a serious commitment and shouldn’t be undertaken lightly. You’ll both be responsible for keeping up payments even if you fall out, and if you apply for a joint mortgage, keep in mind you’ll also be linking your credit scores. This means both scores will be considered if you apply for credit in the future.

How long does it take to save for a house?

There’s no set timeframe for buying your first home, as everyone’s circumstances will be different depending on their income, outgoings and budget. However, between April 2021 and March 2023, data from the English Housing Survey found the average age for a first-time buyer in England to be 32 years old.

Ultimately, whatever plan you initially come up with is likely to change over time as your financial situation develops. This could include updating your initial budget to account for rising house prices or increasing your monthly savings contributions where you can afford to. Taking the time to regularly review and update your strategy can help you be better prepared for any surprises and give you a realistic idea of your progress.

Should I speak to a mortgage broker?

If you’re unsure about where to start when buying your first home or need help finding the best mortgage for your situation, it may be worth seeking professional advice from a mortgage broker.

Mortgage brokers remove a lot of the paperwork and hassle of getting a mortgage, as well as helping you access exclusive products and rates that aren’t available to the public. Mortgage brokers are regulated by the Financial Conduct Authority (FCA) and are required to pass specific qualifications before they can give you advice.

Speak to an award-winning mortgage broker today